Infosys loses top 10 status as market value erodes by Rs 2 lakh crore

Infosys is no longer enjoying the strong investor confidence that it once did. This year, the IT giant, long seen as one of Dalal Street's reliable compounders, has come under heavy pressure. The company fallen out of India's top 10 most valued companies, after seeing a wipe out of more than Rs 2 lakh crore in market value. The selloff further gained pace after its latest quarterly update, as the stock fell almost 7% in Friday's session alone. So far this year, the stock is down about 30%, leaving the company's market capitalisation at around Rs 4.9 lakh crore, a sharp drop for a firm that is a key Nifty's bluechip constituent.

This market reaction comes despite a solid performance in the March quarter when Infosys reported a 13% year-on-year rise in revenue to Rs 46,402 crore. At the same time, the firm's net profit stood at Rs 8,501 crore, beating expectations. However, its outlook for FY27, forecasting constant currency revenue growth of 1.5% to 3.5%, fell short of what the market was hoping for, raising concerns about slower growth ahead.

Analysts say the pressure on the company reflects deeper changes in the industry. Axis Securities pointed to weak discretionary spending, with clients focusing more on cutting costs and consolidating vendors. "Demand remains muted across sectors as clients focus on resilience and cost efficiency," the brokerage stated as cited by ET, noting that growth is now being fueled more by productivity improvements than expansion.

This shift is changing how demand looks for IT services firms. While large transformation projects are slowing, interest in artificial intelligence and automation is picking up. Infosys has been stepping up its AI approach through its Topaz platform and partnerships with global technology firms, according to ET. Inside the company, AI tools are already widely used, with over 30,000 developers working on productivity platforms. These efforts are starting to open up new opportunities, especially in areas like data, cloud and automation-led services.

At the same time, analysts warn that AI is also putting pressure on existing business. HDFC Securities noted that the efficiency gains from AI are being passed on to clients. "AI-led productivity gains are being passed on to clients, leading to deflation in the core business," the brokerage said as cited by the financial daily, adding that this is offsetting gains from new deals.

Demand remains uneven across sectors. Financial services and energy are holding up well, backed by continued investment and outsourcing. But sectors like manufacturing, retail and telecom are staying cautious due to macroeconomic uncertainty, geopolitical tensions and weak consumer demand.

On a more positive note, deal wins have stayed strong. Infosys signed contracts worth $14.9 billion in FY26, up 24% year-on-year, with more than half being net new deals. This shows that clients are still committing to long-term projects, even if execution is taking longer.

Meanwhile, Elara Securities has maintained a relatively positive view, pointing to better visibility on client behaviour as the company heads into FY27. It also highlighted improvements in revenue per employee and EBITDA per employee as signs of better efficiency, though it has cut earnings estimates and lowered its price target in line with the softer growth outlook.