Infosys FY26 Growth Outlook: Positive Signs for AI, Data, and Cloud Deals
Infosys Ltd.'s management shared an optimistic near-term outlook despite the uncertain business environment. The company highlighted strong momentum in artificial intelligence (AI) services, alongside favorable conditions for data and cloud-related deals.
Infosys has reported five consecutive quarters of strong cash generation and free cash flow. For fiscal year 2026 (FY26), management expects free cash flow to remain above 100% of net profit, signaling efficient cash management and profitability.
Financial Performance and Guidance
Infosys raised its lower-end revenue guidance for the current fiscal year, projecting 1% to 3% revenue growth in constant currency. Operating margins are expected between 20% and 22% over FY26. The company’s Q1 revenue rose 3.3% quarter-on-quarter, reaching Rs 42,279 crore, surpassing analyst estimates.
CEO Salil Parekh emphasized the company’s AI capabilities and the commitment of its 300,000+ employees as key drivers behind this performance. The quarter also reflected successful client consolidation efforts.
Market Sentiment and Challenges
Despite this growth, some uncertainties remain. Tariffs and broader market conditions continue to impact sentiment. Anand Rathi Institutional Equities analyst Sushovon Nayak described the guidance as conservative, noting that future quarters will provide more clarity on growth trajectories.
Quarter-on-quarter revenue growth in constant currency was 2.6%, reversing a 3.5% decline in the previous quarter. Year-on-year, revenue grew 3.8% in constant currency terms.
Looking Ahead
- Infosys has not yet decided on the next wage hike, maintaining a wait-and-watch approach.
- The company anticipates no major change in the business environment for the second quarter.
- Favorable conditions for AI, data, and cloud projects are expected to continue driving growth.
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