Shares of Infosys Ltd fell sharply in early trade on Friday, slipping nearly 6% to hit a 52-week low, as weak Q4 earnings and a cautious outlook weighed on investor sentiment.

The stock dropped as much as 5.87% to ₹1,167.70, its lowest level in the past one year, extending losses after the company reported muted growth and a soft revenue outlook for FY27.

Weak growth, cautious outlook weigh

Infosys reported a mixed set of numbers for the March quarter, with dollar revenue declining 1.2% sequentially, missing expectations, even as margins saw only a marginal improvement.

The company guided for 1.5–3.5% constant currency growth for FY27, indicating a muted demand environment and continued uncertainty, which triggered a sharp reaction in the stock.

Management flagged weak discretionary spending and slower decision-making, particularly toward the end of the quarter, reflecting ongoing macro pressures.

‘Tough road ahead’ as AI-led deflation bites

Brokerage firm Motilal Oswal Financial Services flagged a “tough road ahead”, warning that AI-led deflation is beginning to compress the existing book of business.

The brokerage noted that Infosys’ guidance suggests increasing pricing pressure, as productivity gains from AI are being passed on to clients, limiting revenue growth.

It also highlighted that large deal momentum weakened, with total contract value (TCV) at $3.2 billion for the quarter, down 33% sequentially, and a book-to-bill ratio of just 0.6, indicating slower conversion.

Motilal Oswal added that telecom demand remains uncertain, while discretionary spending across sectors continues to stay selective, pointing to a challenging near-term demand environment.

The brokerage further noted that companies, including Infosys, are walking away from large deals due to weak pricing and competitive intensity, reflecting pressure on deal economics.

It expects growth to moderate, with Infosys likely to deliver around 2.5% organic growth in FY27, a deceleration from the previous year.

Margins are also expected to remain under pressure, as benefits from currency movements are being reinvested into AI capabilities, talent and sales, while wage hikes and productivity pass-through act as headwinds.

IT pack under pressure

The weakness in Infosys also dragged the broader IT pack lower, with stocks such as TCS, HCLTech and Tech Mahindra trading in the red, as sentiment across the sector remained fragile following earnings.

The Nifty IT index declined sharply, emerging as the top sectoral laggard in early trade.

CEO stock grants

Separately, the company granted stock incentives worth ₹51.75 crore to CEO Salil Parekh under its performance-linked ESOP plans, as part of its compensation structure. The grants, which are subject to vesting conditions, form a major portion of the CEO’s overall remuneration and are linked to financial and strategic performance metrics.