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Informist, Thursday, Apr. 17, 2025

--Infosys: Wage hikes factored into co's growth guidance for FY26 

--Infosys: Confident about opportunities to improve margins 

--Infosys: FY26 growth guidance excludes US, Australia buys announced Thu 

--Infosys: Did not see any major change in discretionary spending in Jan-Mar 

--Infosys: Difficult to say how next quarters will be in current environment

By Anjana Therese Antony 

MUMBAI – Infosys Ltd. has factored in the impact of wage hikes and increasing uncertainty around the impact of US tariffs on the growth guidance it has given for 2025-26 (Apr-Mar). "At the lower end of the guidance we have baked in some further deterioration in the environment and at the top end of the guidance we have baked in steady-to-marginally improving environment," the information technology company's management said in a post-earnings conference call with analysts. 

The Bengaluru-based company had given wage hikes for most of its employees in January and the middle- and senior-level employees will get higher salaries in April. "The impact of that has been baked in the guidance range that we have given."

For FY26, India's second-largest IT player in terms of revenue has guided for 0-3% revenue growth in constant currency terms, narrower than 4.5-5.0% it had guided for FY25 during the December quarter results. The company retained its view of 20-22% margin growth for the ninth time in a row. For the quarter ended March, Infosys' operating margin shrunk by 30 basis points sequentially to 21%. However, the company said it is confident about the opportunities which can help improve margin.

However, the company added that it has excluded the impact of two acquisitions it announced Thursday from the growth guidance for the financial year. "We haven't closed them (acquisitions) yet... We still have to go through the closing formalities, that will take a few weeks to may be a month or so," the management said. "So depending on the closure, we will figure out (the impact) in the next cycle on the guidance." On Thursday, Infosys' board approved the acquisition of Texas-based MRE Consulting for up to $36 million and Australia-based cybersecurity services player The Missing Link for up to 98 million Australian dollar.

The company also said that it is difficult to predict how the coming quarters would be, given the current macroeconomic environment, particularly on the context of tariffs. "But overall, we don't see a significant change in seasonality beyond the uncertainty," the management said. However, Infosys is not expecting any major ramp downs or major deal closures, though there are some delays in decision making seen in certain pockets.

Infosys said that communications sector continued to remain soft. The revenue contribution of this vertical to the overall top line declined to 11.7% in the March quarter from 12.3% a year ago. This segment's growth was also flat on year in constant currency terms. Discretionary spending is under pressure, with clients focusing on cutting costs, restructuring, and consolidation. "Our growth will be led by recent deal wins and opportunities in areas like cost reduction, AI and database solution, and cybersecurity," the management said. 

For the three months ended March, Infosys posted a 3% sequential growth in its consolidated net profit to INR 70.33 billion, but revenue fell 2% to INR 409.25 billion. Ahead of the quarterly results, shares of Infosys closed 0.5% higher Thursday at INR 1,419.50 on the National Stock Exchange. At 2010 IST, American Depository Receipts of Infosys were down 2.9% at $16.10.  End

US$1 = INR 85.36

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Deepshikha Bhardwaj

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