Buoyed by a strong deal pipeline, positive customer sentiments from key markets, and significant traction for AI and consolidation deals in the BFSI and other sectors, Infosys, India’s second-largest tech firm, on Wednesday revised its FY26 revenue guidance upwards.
Infosys posted a net profit of ₹6,921 crore in the first quarter of FY26, a 8.7% growth over ₹6,368 crore in the corresponding quarter a year ago. Its revenue grew by 7.5% to ₹42,279 crore, compared to ₹39,315 crore in the same period in the previous year.
Encouraged by a strong deal pipeline, positive customer sentiments from key markets and significant traction for AI and consolidation deals, the company raised FY26 revenue growth guidance to 1-3% in constant currency terms, from a 0-3% range set in the March 2025 quarter. The company maintained its operating margin guidance at 20–22%.
During the quarter, Infosys reported large deal wins valued at $3.8 billion, with 55% of them coming from new clients. Operating profit rose 6.2% to ₹8,803 crore, operating margin stood at 20.8%, lower than 21.1% a year ago. The company also reported cash reserve for the quarter at ₹7,533 crore.
Addressing a media conference at the company’s campus in the outskirts of the city, Salil Parekh, CEO and MD, said, “This was incredible and large deals, mainly focused on consolidation and digital transformation, are working very well for us. We feel quite positive. In the current economic environment, we expect to see more traction in AI, digital transformation, cloud and enterprise applications.”
Jayesh Sanghrajka, CFO, said, “Q1 performance is a clear reflection of our unwavering focus on multiple fronts, resulting in strong growth at 2.6% QoQ, resilient margins at 20.8% and EPS increase of 8.6% YoY.”
Cash flow conversion was well above 100% for the fifth consecutive quarter. The impact of currency volatility was effectively managed through our proactive hedging strategy, he added.
“The company has raised lower end of revenue growth guidance for FY26 based on strong Q1 performance and strong deal pipeline, particularly in vendor consolidation and AI. The company with strong traction in financial services, leadership positioning in AI enterprise and growing AI adoption makes it well positioned to capture cost optimisation, AI-driven transformation opportunities and vendor consolidation opportunities,” said Shaji Nair, Research Analyst, Mirae Asset Sharekhan.
On the market outlook, Mr. Parekh said, “Although overall global market conditions have changed, our key markets, the U.S. and Europe, have remained strong. We have not seen any change in clients’ decisions or change in any specific projects.”
AI boosts productivity
In his commentary on Q1 performance, Mr. Parekh said, the company has over 300 Agentic AI solutions that accelerated decision making, improved efficiency and enhanced productivity. “AI has boosted efficiency. In terms of productivity, we are seeing a benefit of 5% to 15%. A part of the productivity is shared with the clients, while a part is for us. We also see the quality of the revenue improving,” he added.
Responding to a query on whether the company’s increased focus on Agentic AI would impact hiring, Mr. Parekh clarified that the company would continue to hire both freshers and lateral talent.
However, the tech firm refused to share any hiring numbers for FY26. “Our overall headcount has remained constant and utilisation is at 85%, a peak. So, we will continue hiring. We expect to continue hiring in line with what we announced at the beginning of the year, so there’s no change there,” said Mr. Sanghrajka.
According to him, wage hike and higher variable pay had a 100 basis point impact on the Q1 margin of the company. The company rolled out salary hikes twice in CY2025: in January and in April. “We have paid a higher variable pay component to employees in Q1. Having done the wage hike very recently, next one we’ll have to decide when,” the CFO added.
The quarter saw Infosys’s voluntary attrition at 14.4%, compared with 14.1% in the sequential quarter and 12.7% in the corresponding period a year ago.
Published – July 23, 2025 08:30 pm IST
