Infosys Limited (NSE, BSE, NYSE: INFY)

Infosys demonstrated strong financial performance in Q1 FY26, with revenue growing 3.8% year-over-year to $4.94 billion in constant currency terms. The reported revenue growth was even stronger at 4.8%, benefiting from favorable currency movements. Most notably, the company achieved industry-leading sequential growth of 2.6% in constant currency, highlighting the strength of its enterprise AI capabilities and successful client consolidation decisions.

Operating margin remained resilient at 20.8%, representing only a modest decline of 0.3% year-over-year and 0.2% quarter-over-quarter. This performance reflects the company’s disciplined approach to cost management while making strategic investments in growth areas, particularly in enterprise AI and digital transformation capabilities.

Net profit increased to $809 million, up 6.0% year-over-year, while basic earnings per share grew 5.8% to $0.20. The strong earnings performance was supported by effective operational execution and the company’s focus on high-value services.

Free cash flow generation remained exceptionally strong at $884 million, representing 109.3% of net profit. This marks the fifth consecutive quarter with cash flow conversion well above 100%, demonstrating the quality of Infosys’ earnings and its efficient capital management. The company’s proactive hedging strategy effectively managed the impact of currency volatility.

The strong financial metrics reflect Infosys’ successful execution of its strategic priorities under Project Maximus, which focuses on making investments in key areas to drive profitable growth and enhance shareholder value while maintaining operational discipline.

Infosys achieved remarkable success in large deal wins during Q1 FY26, securing $3.8 billion in Total Contract Value (TCV) with 55% representing net new business. This performance demonstrates the company’s distinct competitive positioning and deep client relationships, particularly in the consolidation play where clients are looking to streamline their vendor relationships.

The large deal wins reflect Infosys’ strength in enterprise AI capabilities and its ability to help clients navigate digital transformation challenges. The high percentage of net new business (55%) indicates the company’s success in expanding its client base and winning competitive deals in the market.

Infosys has positioned itself as a leader in enterprise AI, which has become a key differentiator in winning large deals and driving client consolidation decisions. The company’s AI capabilities are embedded across its service offerings and have contributed significantly to the strong Q1 performance.

Key AI and Innovation Initiatives

• Infosys Topaz: The company’s AI-first platform continues to drive adoption across business, technology, and enterprise functions for clients
• Generative AI Integration: Partnerships with Microsoft for AI integration and Adobe for generative AI capabilities in business solutions
• Agentic AI Solutions: Launch of AI agents for invoice processing within Infosys Accounts Payable on Cloud solution
• Industry-Specific AI: AI-powered innovations in sports analytics with Lawn Tennis Association and sustainability tracking solutions
• Digital Workplace Transformation: AI-enabled workplace solutions for enterprise clients across various industries

The company’s focus on AI and digital transformation has enabled it to win significant deals in client consolidation scenarios, where enterprises are looking to reduce vendor complexity while enhancing their technological capabilities. This strategic positioning has been particularly effective in the financial services, energy, and telecommunications sectors.

Infosys continues to invest in its innovation ecosystem, with over 320,000 employees working to amplify human potential and create next-generation opportunities for clients. The company’s commitment to being well-governed and environmentally sustainable while fostering diverse talent has strengthened its competitive position.

For fiscal year 2026, Infosys has provided the following guidance, reflecting a balanced approach to growth expectations in the current market environment:

• Revenue growth of 1%-3% in constant currency – a revision from previous guidance reflecting cautious market conditions
• Operating margin of 20%-22% – maintained from previous guidance, demonstrating confidence in operational efficiency

The revised revenue guidance reflects the company’s pragmatic approach to the current market environment while maintaining confidence in its operational capabilities. Management emphasized that the company will continue to leverage Project Maximus to make strategic investments in growth areas while maintaining discipline in cost management.

CEO Salil Parekh highlighted that the Q1 performance demonstrates the strength of Infosys’ enterprise AI capabilities, success in client consolidation decisions, and the dedication of over 300,000 employees. The large deal wins of $3.8 billion reflect the company’s distinct competitive positioning and deep client relationships.

CFO Jayesh Sanghrajka noted that the strong growth, resilient margins, and EPS increase reflect the company’s unwavering focus on multiple fronts. The cash flow conversion above 100% for the fifth consecutive quarter and effective currency hedging strategy provide confidence in the company’s financial management capabilities.

These recognitions validate Infosys’ strategic positioning in key growth areas including AI, cloud services, digital transformation, and industry-specific solutions. The awards span across brand recognition, technical capabilities, and industry expertise, reinforcing the company’s comprehensive value proposition to clients.