The country’s second largest IT services firm, Infosys, on Wednesday revised the lower end of its revenue growth guidance for FY26 to 1% from an earlier 0%, citing improved visibility and strong deal wins, even as cautious client spending continues to cloud the IT services outlook. The company maintained its upper bound at 3% and left its operating margin guidance unchanged at 20–22%.
Performance
The revised forecast comes on the back of a better-than-expected performance for the April–June quarter, with both revenue and net profit beating Bloomberg estimates. Consolidated revenue for the quarter rose 3.3% sequentially to Rs 42,279 crore, exceeding the estimated Rs 41,724 crore. Net profit declined 1.6% quarter-on-quarter to Rs 6,921 crore but remained ahead of the street’s estimates of Rs 6,778 crore.
“We have a strong deal pipeline. That is the reason why we have increased the lower end from 0 to 1%,” CFO Jayesh Sanghrajka said, adding that the company had delivered a strong first quarter despite an uncertain macroeconomic backdrop.
Infosys signed $3.8 billion in large deals during the quarter, 55% of which were net new. The number of million-dollar clients rose by 29, reaching 1,454.
Sanghrajka added that margins were resilient despite cost pressures. Operating margin narrowed by 20 basis points sequentially to 20.8%, driven by a 100 basis point impact from compensation-related increases, including variable pay. Currency fluctuations and other costs further dented margins by 50 basis points, though these were partly offset by a 70 basis point pricing benefit and productivity gains.
CEO and MD Salil Parekh said the quarter’s performance underscored client confidence in the company’s AI offerings and capabilities in executing consolidation-led transformation programms. “Clients are selecting us more and more when they are looking at consolidation. Large deals have come from the North American market,” he said, adding that enterprise AI was driving strong momentum across sectors.
Modest Growth
Infosys reported modest growth of 0.5% year-on-year in constant currency from the North American market, which contributes over half its revenue. Europe, in contrast, grew 16.2% year-on-year and remained a bright spot. Among verticals, manufacturing posted the highest growth at 14.8% year-on-year, followed by energy, utilities and services at 7.2%. Financial services, its largest vertical, grew 6.3%, while life sciences saw a decline of 6.6%.
“Among our top 20 clients in financial services, we are the AI partner of choice for half,” Parekh said. He noted that Infosys was gaining broader traction within the vertical, spanning both capabilities and geographies.
On Wednesday, Infosys shares closed 0.8% lower at Rs 1,558.9 on the NSE ahead of the earnings announcement.