Why Infosys Share Price Is Falling Despite Strong Q2 Numbers

Infosys Ltd., India’s second-largest IT services company, reported a healthy set of numbers for Q2 FY26, with a 13% year-on-year jump in net profit and revenue growth of 8.6%. Yet, its share price has been under pressure. Here’s what’s driving this disconnect between performance and stock price.

Infosys Q2 Results at a Glance

Other highlights from the quarter include:

• Large deal wins worth $3.1 billion, with 67% being net new business.
• Interim dividend of ₹23 per share.
• FY26 revenue growth guidance raised to 2–3% (from 1–3%).
• Operating margin guidance maintained at 20–22%.
• Announced its largest-ever buyback of ₹18,000 crore at ₹1,800 per share.
• Continued investment in AI, cloud and digital services, along with plans to hire freshers despite industry-wide slowdowns.

On paper, these results indicate steady growth and strong fundamentals. Yet, the Infosys share price has been on a declining trend after the announcement.

Here Are the Key Reasons Behind the Share Price Decline

1. Muted Revenue Growth Guidance Disappointed Investors

While the company raised the lower end of its guidance, the overall 2–3% constant currency growth outlook remains modest. Investors were hoping for a more confident upgrade, especially given the robust deal pipeline. The cautious tone suggests that management is not expecting a sharp near-term rebound, which tempered market enthusiasm.

2. Global IT Spending Slowdown Weighs on Growth Visibility

Infosys derives nearly 85% of its revenue from North America and Europe, both of which are experiencing macroeconomic uncertainty. High interest rates, delayed transformation projects, and tighter client budgets have led to slower deal ramp-ups. Even though the company is winning deals, the actual revenue conversion is likely to remain gradual, making investors skeptical about near-term growth acceleration.

3. Margins Are Stable, But Lack Upside Triggers

Operating margin stood at 21%, almost unchanged year-on-year. Infosys has done well to maintain margins through cost controls, but there were no positive surprises. Some peers have hinted at margin tailwinds from pricing and automation, whereas Infosys’ outlook remains conservative. This relative positioning matters to institutional investors.

4. High Expectations Post Buyback and Big NHS Deal

The ₹18,000 crore buyback and the £1.2 billion NHS contract had already pushed up the stock price in the weeks leading to the results. When Q2 numbers didn’t deliver additional upside, profit-booking kicked in. The stock movement reflects a “buy the rumour, sell the news” pattern often seen in large-cap counters.

5. Valuation Leaves Less Room for Error

Infosys trades at a forward P/E of around 21-22x, which is fair but not cheap given muted growth. Compared to peers like TCS (which commands a premium for its stability) and HCL Tech (which has surprised positively in some verticals), Infosys doesn’t offer a valuation edge, making it more sensitive to negative sentiment.

Bottom Line

Infosys has delivered stable performance, backed by strong deal wins, solid margins, and shareholder-friendly policies. However, short-term share price trends are being influenced more by guidance, global headwinds, and investor expectations than by the quarter’s absolute numbers. For long-term investors, this could be a healthy consolidation phase. But in the near term, without clear catalysts, the stock may continue to face pressure.

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