Infosys, India’s IT services provider, reported its financial results for the first quarter of fiscal year 2026 with mixed but largely positive outcomes.
The company experienced a slight dip in net profit on a quarter-on-quarter (QoQ) basis, with profits declining by 1.61 per cent to Rs6,924 crore from Rs7,038 crore in the previous quarter.
Despite this marginal decrease, the year-on-year (YoY) performance showed encouraging growth, with net profit rising by 8.7 per cent compared to the same quarter last year. This reflects the underlying strength and resilience of Infosys amid fluctuating market conditions.
Revenue growth also painted a favourable picture, with the company reporting a 7.5 per cent increase YoY to Rs42,279 crore. Sequentially, revenue was up by 3.3 per cent from Rs40,925 crore, illustrating consistent business expansion.
Expenses saw a slight uptick
The improvement in revenue was supported by a gross profit increase to Rs13,055 crore, compared to Rs12,138 crore in the year-ago quarter. However, total expenses saw a slight uptick to Rs33,581 crore from Rs32,452 crore in the previous quarter, putting some pressure on overall profitability.
In response to these results, Infosys revised its full-year FY26 revenue growth guidance to a range of 1-3 per cent in constant currency, notably raising the lower end of the forecast. This adjustment signals cautious optimism and confidence in sustaining growth momentum despite global economic uncertainties.
CEO and Managing Director Salil Parekh highlighted the company’s strengths, notably in enterprise artificial intelligence, client consolidation efforts, and the commitment of over 300,000 employees.
These factors have contributed to winning large deals worth $3.8 billion during the quarter, with over half of these wins coming from new clients, thereby reinforcing Infosys’ strong foothold in the competitive global IT services market.
Strong free cash flow
From an operational perspective, Infosys reported operating margins of 20.8 per cent, which showed a modest decline of 0.3 per cent YoY and 0.2 per cent QoQ. Despite this slight erosion, the company expressed confidence in maintaining operating margins within the target range of 20 to 22 per cent throughout FY26.
Sector-wise, financial services remained the fastest-growing vertical with a 5.6 per cent increase in constant currency terms. Manufacturing also delivered robust performance, growing by 12.2 per cent, while retail and hi-tech sectors showed modest gains.
Conversely, life sciences experienced a contraction of 7.9 per cent, and other segments faced a sharper decline of 15.3 per cent, indicating some challenges in diversification.
A noteworthy highlight was Infosys’ strong free cash flow of $884 million, with cash flow conversion exceeding 100 per cent for the fifth consecutive quarter.
This demonstrates the company’s effective cash management and operational efficiency. CFO Jayesh Sanghrajka attributed this success partly to a proactive hedging strategy that managed currency volatility well, a critical factor given the global exposure of the company.
On the human resources front, the company reported a slight increase in voluntary attrition to 14.4 per cent, up from 14.1 per cent in the previous quarter, and 12.7 per cent a year earlier.
Despite this, the workforce expanded by 8,456 employees year-on-year, reaching a total strength of 323,788 at the end of June 2025. This net addition of 210 employees during the quarter underscores Infosys’ continued focus on talent acquisition and retention.
The market’s response was muted, with shares closing 0.8 per cent lower at Rs1,558.9 on the National Stock Exchange ahead of the earnings announcement.
This reaction could be attributed to the slight QoQ dip in profitability and margin pressure, balanced against steady revenue growth and strong deal wins.
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