In Q1FY26, Infosys ‘may revise FY26 revenue guidance to 1-3% CC growth’

Infosys’ margins may dip by 10 bps due to April wage hikes for senior staff and the ramp-up of large deals. 
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After closing FY25 on a weak note with a downwardly revised revenue growth guidance of 0-3 per cent in constant currency (cc) terms, Infosys is likely to marginally adjust its outlook this quarter to 1-3 per cent year-on-year (y-o-y) cc growth in FY26, according to a poll of brokerages. Here are some key indicators of the company’s Q1 FY26 performance:

Revenue growth

In Q1 FY26, the company is projected to report revenue in the range of ₹41,837 crore-₹41,986 crore, reflecting a sequential growth of 2.2 per cent to 2.6 per cent and a y-o-y increase of 6.4 per cent to 6.8 per cent, according to select brokerages. Meanwhile, profit after tax (PAT) is expected to decline by 1.1 per cent, to 3.3 per cent, quarter-on-quarter (q-o-q), but register a y-o-y growth of 6.8 per cent to 9.2 per cent.

Margins and guidance

Brokerages also indicate that the company may tighten its revenue growth guidance by raising the lower end to 1-3 per cent y-o-y in constant currency (CC) terms, while maintaining its EBIT margin (EBITM) outlook at 20-22 per cent.

Commenting on the revenue growth guidance in Q4FY26, a Motilal Oswal Financial Services (MOFSL) report stated, “The company guided for 0-3 per cent FY26 cc revenue growth, supported by M&A contributions of 40-50 basis points (bps). The upper end assumes steady to marginal improvement, while the lower end assumes elevated macro challenges.”

The company’s margins may dip by 10 bps due to April wage hikes for senior staff and the ramp-up of large deals. Despite some relief from lower subcontractor costs and project efficiencies, wage hikes are likely to keep margins under pressure in early FY26.

Deals and conversions

According to an HDFC Securities Institutional Equities (HSIE) Research report, Infosys’ total contract value (TCV) is expected to remain stable, supported by its strategic focus on cost optimisation and AI initiatives. Large deal TCV stood at $2.6 billion in Q4 and is projected to rise to $3 billion in Q1 FY26. During the quarter, Infosys signed deals with AIB, DNB Bank, Bank of Sydney, and Yorkshire Building Society, among others.

Hiring and attrition

Infosys announced plans to onboard over 20,000 freshers in FY26. After an 11 per cent y-o-y decline in headcount in Q2 FY25, the company is showing signs of recovery with a 0.7 per cent and 6.3 per cent y-o-y increase in Q3 and Q4, respectively. According to an Emkay Research report, companies are treading cautiously, balancing long-term confidence in tech demand with ongoing concerns around global and client-level uncertainties.

Published on July 13, 2025