Why Did Infosys Fall Out of India’s Top 10 Valuable Companies?

The fall of Infosys from India’s top 10 most valuable companies is not just a stock market event but a signal of a deeper structural shift in the IT services industry. After losing over ₹2 lakh crore in market capitalization and declining nearly 30 percent this year, Infosys is facing a sharp reassessment from investors who are questioning the predictability of growth that once defined the company.

What makes this development more important is the timing. The broader market has remained resilient in parts, yet IT stocks have seen consistent pressure. This divergence highlights a transition phase where traditional growth models are being challenged by new technological and economic realities.

Core Explanation: Growth Slowdown, Not Earnings Weakness

At first glance, Infosys did not report weak numbers. The company delivered revenue of ₹46,402 crore in the March quarter, growing 13 percent year on year, while net profit came in at ₹8,501 crore, beating expectations.

However, the real issue lies in forward guidance.

Key Financial Snapshot

Metric	Value
Market Cap (Current)	~₹4.9 lakh crore
Market Value Lost	₹2 lakh crore+
Q4 Revenue	₹46,402 crore
Q4 Net Profit	₹8,501 crore
FY27 Growth Guidance	1.5% to 3.5%

The guidance for FY27 revenue growth at 1.5 percent to 3.5 percent significantly disappointed the market. This indicates that the slowdown is not temporary but could persist for multiple quarters.

Data suggests weaker future growth expectations This leads to valuation compression Which results in sharp stock price correction

Market Re-Rating: Changing Leadership in Indian Markets

The exit of Infosys from the top 10 list also reflects a broader shift in market leadership.

Companies like Life Insurance Corporation of India have moved up the rankings, while even Tata Consultancy Services has seen pressure, slipping in relative positioning.

Market Cap Comparison Shift

Company	Approx Market Cap
LIC	~₹5.1 lakh crore
Infosys	~₹4.9 lakh crore

This indicates that capital is rotating away from IT services into sectors with stronger visibility such as insurance, banking, and domestic consumption.

Structural Pressure: Why IT Demand Is Slowing

The slowdown in Infosys is not company-specific. It reflects a broader shift in global IT spending patterns.

Key Demand Trends

• Clients are prioritizing cost optimization over expansion

• Discretionary IT spending remains weak

• Vendor consolidation is increasing

• Large transformation deals are slowing

Financial services and energy sectors remain relatively stable, but manufacturing, retail, and telecom are still cautious due to global uncertainty.

AI Impact: Opportunity and Disruption at the Same Time

Artificial intelligence is one of the biggest factors influencing Infosys’s valuation.

The company has actively invested in AI platforms and deployed tools across its workforce. Over 30,000 developers are already using AI-driven productivity systems.

However, the impact is complex.

Dual Effect of AI

Positive Impact	Negative Impact
New deal opportunities	Pricing pressure
Higher productivity	Revenue compression
Automation-led services	Reduced billing hours

AI is increasing efficiency, but those gains are being passed on to clients. This means traditional billing models are under pressure, limiting revenue growth.

Hidden Driver: Productivity Is Replacing Revenue Growth

One under-discussed factor is that IT companies are no longer being valued purely on revenue growth.

Instead, the focus is shifting toward:

• Revenue per employee

• Profitability per project

• Efficiency metrics

This transition changes how companies like Infosys are evaluated, leading to lower valuation multiples.

What Most Investors Get Wrong

A common misconception is that strong deal wins guarantee growth.

Infosys signed deals worth $14.9 billion in FY26, a 24 percent increase year on year. However, execution timelines are stretching, and revenue realization is slower.

Another misunderstanding is that AI will automatically boost earnings. In reality, AI is reducing the need for traditional services, which offsets new revenue streams.

Contrarian Insight: This Could Be a Healthy Reset

While the market reaction appears negative, this phase may actually be a long-term positive.

Lower valuations and realistic growth expectations can create:

• More sustainable earnings cycles

• Better capital allocation

• Stronger long-term returns

Historically, IT stocks have gone through similar de-rating phases before entering new growth cycles.

Future Scenarios: What Will Decide Infosys’s Comeback

Several factors will determine whether Infosys regains its position:

• Recovery in global IT spending

• Monetization of AI-led services

• Improvement in deal execution timelines

• Stability in global macro conditions

If AI-led services start contributing meaningfully to revenue rather than just efficiency, growth could re-accelerate.

Actionable Strategy for Investors

For short-term traders:

• Expect volatility due to weak guidance

• Avoid chasing rebounds without confirmation

For long-term investors:

• Track execution of large deals

• Focus on margin stability and AI monetization

• Accumulate gradually during corrections

Final Take

The fall of Infosys from India’s top 10 companies is not just about one weak phase but about a structural shift in how the IT industry operates. Growth is slowing, business models are evolving, and valuation frameworks are changing. Investors who understand this transition rather than reacting to short-term declines are better positioned to benefit from the next phase of the sector.

Why did Infosys stock fall sharply

Infosys stock declined mainly due to weak growth guidance for FY27, which indicated slower future revenue expansion despite stable current earnings.

Is the IT sector facing a broader slowdown

Yes, global IT spending has slowed as companies focus on cost optimization, affecting demand across major IT service providers.

Can Infosys recover its market position

Recovery depends on AI monetization, global demand revival, and improved execution of large deals over the next few years.