IT major Infosys is set to announce its Q1FY26 earnings, and investor focus is high as the IT major is expected to outperform its Tier-1 peers this quarter. Backed by strong deal momentum and steady cost management, the company could deliver solid revenue and profit growth. Here are the five key things to watch out for:
1. Profit and Revenue Growth
Brokerages are anticipating a healthy performance in the June quarter. Profit after tax is expected to grow 7–10 percent year-on-year, landing between ₹6,800 crore and ₹7,020 crore. Revenue is likely to climb 6–7 percent year-on-year, reaching approximately ₹40,900 crore to ₹42,100 crore. This optimism is being driven by a combination of factors including improved deal conversions, recent acquisitions, and a favorable billing calendar.
Analysts at IDBI Capital, among others, believe the June quarter will reflect the beginning of an earnings recovery for the company, especially with traction in areas like cloud, AI, and digital transformation.
2. Operating Margins
Infosys is expected to maintain operating margins around the 21 percent mark — broadly stable compared to the previous quarter. Margin resilience will likely be supported by effective cost control measures, currency tailwinds, and operational efficiencies.
However, some pressure points exist. Wage hikes at the senior level and transitional costs from large deal ramp-ups could slightly weigh on margin expansion. Still, most brokerages believe the company has enough levers to hold the line on profitability.
3. Large Deal Wins and Pipeline Visibility
Deal momentum will be a critical factor. Investors will keep a close eye on the company’s commentary regarding large deals — particularly in segments like AI, BFSI (banking, financial services, and insurance), and cloud services.
Strong demand across North America and Europe has supported the company’s performance in recent quarters. Any signs of continued momentum in these geographies or further wins in cost-efficient digital and AI-led transformation contracts could boost sentiment.
The company’s ability to maintain a healthy order book will serve as a key forward-looking indicator.
4. FY26 Revenue Guidance
The Street is also looking for an update to the company’s full-year FY26 revenue guidance. Infosys had previously guided for a year-on-year revenue growth range of 0–3 percent in constant currency terms.
Several brokerages expect the lower end of this range to be raised slightly, reflecting improved confidence stemming from recent deal wins and early signs of client spending stabilization. Any upgrade, even marginal, will likely be read as a positive signal by the market.
5. Commentary on Demand Environment
Given the mixed performance of global IT peers, Infosys’ management commentary on demand trends will be crucial. Discretionary spending in key verticals like financial services, manufacturing, and retail has shown signs of strain due to macroeconomic headwinds.
Investors will look for insights on how client budgets are shaping up for the second half of FY26. Factors such as U.S. tariff policies, global inflation, and geopolitical instability are influencing IT spending cycles. Infosys’ read on these trends could provide valuable cues for the broader sector.
Why This Quarter Matters
Infosys is widely expected to deliver one of the strongest quarterly performances among Tier-1 IT companies. With TCS and HCL Technologies offering mixed results, Infosys has an opportunity to reaffirm its leadership by delivering on both growth and margins.
Brokerages such as Kotak Institutional Equities, IDBI Capital, and Nomura expect Infosys to lead in terms of revenue growth while maintaining profitability. If the company follows through with a modest guidance upgrade and confirms strong deal traction, it could offer the Street much-needed confidence in the IT sector’s near-term outlook.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
