Bengaluru, July 23: Infosys Ltd., India’s second-largest IT services company, reported its Q1 FY26 earnings on Tuesday, meeting market expectations for net profit while signaling cautious optimism by raising the lower end of its FY26 revenue growth guidance.
The company posted a consolidated net profit of ₹6,921 crore, marking an 8.7% year-on-year (YoY) rise compared to ₹6,368 crore in the same quarter last year. However, on a sequential basis, net profit was down 1.6% from ₹7,033 crore in Q4 FY25. Revenue from operations came in at ₹42,279 crore, up 7.5% YoY and 3.3% quarter-on-quarter (QoQ).
🔑 Key Metrics for Q1 FY26
- Revenue: ₹42,279 crore (↑7.5% YoY, ↑3.3% QoQ)
- Net Profit: ₹6,921 crore (↑8.7% YoY, ↓1.6% QoQ)
- Operating Profit: ₹8,803 crore (↑6.2% YoY)
- Operating Margin: 20.8%, down from 21.1% YoY
- EPS (Basic): ₹16.70
- Free Cash Flow: ₹7,533 crore, representing 109% of net profit
📈 Guidance Update
Infosys revised the lower end of its FY26 revenue guidance from 0–3% to 1–3% in constant currency, suggesting improved visibility and deal momentum despite ongoing macroeconomic challenges. Operating margin guidance remains unchanged at 20–22%.
💼 Large Deal Wins and Segment Performance
The quarter saw $3.8 billion in large deal wins, with 55% being net new deals, reflecting healthy client demand and strategic consolidation in IT services.
Manufacturing led growth with a 14.8% YoY increase (constant currency), followed by energy, utilities, resources & services at 7.2%, and financial services at 6.3%. However, life sciences revenue declined by 6.6%, showing sector-specific headwinds.
🌍 Geography-wise Performance
Infosys reported strong growth in Europe, which rose 16.2% YoY in constant currency terms, while North America remained largely flat, posting just a 0.5% rise—reflecting cautious spending by clients in key markets.
💸 Strong Cash Conversion and Attrition Trends
Infosys maintained robust cash flows with a free cash flow conversion rate of 108.8%, marking the fifth consecutive quarter above the 100% threshold.
Voluntary attrition in IT services rose slightly to 14.4%, up from 14.1% in Q4 FY25, indicating relative stability in the workforce.
🗣️ Management Commentary
CEO Salil Parekh credited the performance to Infosys’ enterprise AI capabilities, successful client consolidation, and the consistent contributions of its employees. He emphasized confidence in the company’s strategic direction, especially in driving innovation through generative AI and cloud services.
CFO Jayesh Sanghrajka highlighted resilient margins, strong deal pipelines, and superior cash conversion as key positives, noting that the company remains focused on cost optimization and value delivery.
🧠 Analyst Outlook
Market watchers viewed Infosys’ results as in line with expectations, with the guidance revision reflecting increased confidence in demand stabilization. Analysts expect large deal wins and AI-led transformation to be crucial growth levers for Infosys over the next few quarters.
