India’s second-largest IT services company, Infosys, kicked off the financial year 2025–26 with a promising performance.
The Infosys Q1 result revealed strong revenue growth, improved profit margins, and healthy large deal wins, all pointing to a confident and strategically focused approach amidst a still-challenging global environment.
With continued investment in generative AI, automation, and cloud, Infosys is staying on course to navigate economic uncertainty and client caution.
Also check Reliance Industries Q1 Result for the first quarter of the financial year 2025-26.
Table of Contents
Revenue and Profit Growth: A Steady Climb
The Infosys Q1 result showcased a revenue of ₹42,279 crore, marking a 7.5% increase on a year-on-year basis. In constant currency terms, this translated to a sequential growth of 3.3%, indicating steady progress despite macroeconomic headwinds. The company’s digital and AI-first transformation strategy is playing a pivotal role in driving client engagements and revenue streams.
Net profit stood at ₹6,921 crore, an increase of 8.7% compared to the same quarter last year. This reflects efficient cost management and a focus on high-margin service lines.
The operating margin for the quarter was 20.8%, slightly down from previous levels but within the guided range of 20–22%. The company attributed the slight dip in margins to seasonal wage hikes and currency fluctuations, though these were largely offset by productivity initiatives.
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Strong Deal Wins: $3.8 Billion in the Bag
One of the most encouraging highlights from the Infosys Q1 result was the robust total contract value (TCV) of $3.8 billion in large deals.
Out of this, 55% were net new contracts, indicating the company’s growing client base and increased wallet share among existing clients. This deal momentum continues to affirm Infosys’s ability to win transformation-led projects in key markets, including the US and Europe.
The strong performance in deal wins helped the company revise its full-year revenue growth guidance. Infosys now expects revenue to grow between 1% to 3% in constant currency for FY26, up from its earlier projection of 0–3%.
This slight but meaningful upward revision reflects increased visibility into client pipelines and demand for next-generation technology services.
AI and Digital at the Forefront
Infosys’s continued emphasis on artificial intelligence and automation is beginning to bear fruit. The company reported that many clients are adopting enterprise-scale AI programs, which are helping them improve operational efficiency and customer engagement.
Infosys’s proprietary AI framework and tools have helped deliver productivity gains of up to 15% for some of its major clients.
The Infosys Q1 result emphasized that generative AI is not just a buzzword—it is now a core part of client strategies and Infosys’s own delivery model.
From financial services to manufacturing and retail, AI is being deployed across industries for use cases like code generation, predictive maintenance, customer service chatbots, and intelligent data analytics.
Segment-Wise and Geographic Performance
Looking deeper into the performance by industry verticals, the financial services segment—Infosys’s largest business unit—saw a stable year-over-year growth of 5.6% in constant currency.
Manufacturing, another key vertical, grew by an impressive 12.2%, supported by increased digitization and automation initiatives. The energy and utilities segment also performed well, with 6.4% growth, while other segments like retail and hi-tech showed more subdued performance.
From a geographic perspective, Europe was the standout performer, registering double-digit growth and contributing 31.5% of overall revenue.
North America, which accounts for 56.5% of Infosys’s business, posted moderate growth, reflecting ongoing caution in discretionary tech spending by clients in that region. The Indian market remained flat, while Asia-Pacific and the rest of the world showed marginal improvements.
Operating Metrics and Cash Flow
Another strong point in the Infosys Q1 result was its healthy operating and financial metrics. Free cash flow for the quarter stood at $884 million (approximately ₹7,500 crore), which is equivalent to 109% of net profit. This underscores the company’s robust cash conversion and its ability to self-fund future growth initiatives.
The utilization rate (excluding trainees) stood at around 82%, reflecting efficient workforce management. Attrition was maintained at relatively stable levels at 14.4%, lower than the post-pandemic highs seen in 2022. Infosys continues to invest in employee reskilling, leadership development, and campus hiring to build a future-ready workforce.
Cost Management and Margin Stability
Infosys’s internal productivity program, Project Maximus, played a crucial role in margin protection during the quarter. Despite wage hikes, currency headwinds, and travel resumption, Infosys was able to maintain operating margins within the target range through automation, pyramid optimization, and better resource utilization.
The company remains confident in delivering 20–22% operating margins for FY26. Infosys has demonstrated that it can withstand inflationary pressures through operational discipline and continuous improvement in project delivery models.
Management Commentary and Market Outlook
In the earnings call following the Infosys Q1 result, company leadership expressed confidence in demand recovery across core markets. The management stated that clients are beginning to accelerate investments in cloud, AI, cybersecurity, and digital transformation after a period of cautious spending.
The company also expects the second half of the fiscal year to be stronger in terms of deal conversions and revenue recognition, given the strong pipeline of opportunities and the gradual easing of macroeconomic concerns.
Infosys’s emphasis on long-term digital transformation, combined with a deep bench of skilled professionals, places it in a strong position to grow faster than many of its peers.
Investor Reaction and Stock Movement
Despite the positive numbers, the stock market reaction to the Infosys Q1 result was mixed. While the results exceeded expectations in terms of profit and deal wins, the cautious guidance and continuing concerns over global IT spending kept investors watchful.
Infosys shares remained largely flat following the earnings announcement, reflecting a balanced market sentiment.
Analysts have varied views on the stock. Some brokerages retained their “Buy” ratings citing strong fundamentals and attractive valuations, while others maintained a more “Neutral” stance due to near-term uncertainty in client budgets.
Challenges Ahead
While the Infosys Q1 result was broadly positive, some challenges remain. Discretionary spending by clients, especially in sectors like retail and high tech, continues to be delayed or reprioritized.
Additionally, currency volatility, wage inflation, and increasing competitive intensity from both Indian and global IT players could pose risks to margins.
Furthermore, although Infosys has embraced generative AI effectively, competition in this space is heating up with rivals also accelerating their AI offerings. Continuous innovation and differentiated value propositions will be key to maintaining leadership.
Conclusion: Infosys Steadies the Ship
Overall, the Infosys Q1 result reflects a well-balanced performance—one that combines financial strength with strategic clarity.
The company’s proactive investment in AI, its ability to win large transformation deals, and disciplined cost management have all helped Infosys stay ahead in an evolving tech landscape.
With strong fundamentals, a growing pipeline of digital opportunities, and an enterprise-wide focus on AI and productivity, Infosys is well-positioned to achieve its FY26 goals.
While external headwinds remain, the company has proven yet again that it can deliver consistent results while preparing for long-term growth.