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Informist, Wednesday, Jan. 14, 2026

 

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--Oct-Dec consol net profit INR 66.54 bln
--Analysts saw Infosys Oct-Dec consol net profit at INR 73.75 bln
--Oct-Dec consol revenue INR 454.79 bln
--Analysts saw Infosys Oct-Dec consol revenue at INR 451.04 bln
--Ups FY26 sales growth guidance to 3-3.5% in constant currency
--Retains FY26 operating margin guidance at 20-22%
--Oct-Dec consol net profit INR 66.54 bln vs INR 73.64 bln qtr ago
--Oct-Dec consol revenue INR 454.79 bln vs INR 444.90 bln qtr ago
--Apr-Dec consol net profit INR 209.39 bln vs INR 196.80 bln yr ago
--Apr-Dec consol revenue INR 1.32 tln vs INR 1.22 tln year ago
--Oct-Dec revenue up 0.6% on qtr in constant currency, up 1.7% YoY
--Oct-Dec consol PAT includes one-time cost of INR 12.89 bln
--Reports one-time cost of INR 12.89 bln on impact of labour codes
--Q3 large deal total contract value $4.8 bln vs $3.1 bln qtr ago
--Oct-Dec operating margin 18.4% vs 21.0% qtr ago
--Oct-Dec free cash flow $915 mln
--Oct-Dec operating margin, adjusted for labour code impact, at 21.2%
--IT services 12-month attrition 12.3% vs 14.3% quarter ago
--Oct-Dec fincl svcs sales up 3.9% on year in constant currency
--Oct-Dec mfg sales up 6.6% on year in constant currency
--Employee headcount 337,034 as on Dec 31 vs 331,991 on Sept 30
--Oct-Dec retail revenue down 5.5% on year in constant currency
--Oct-Dec energy, utilities sales up 0.5% on yr in constant currency
--Oct-Dec communication sales up 9.9% on yr in constant currency
--Oct-Dec hi-tech revenue down 2.2% on year in constant currency
--Oct-Dec life science revenue down 5.4% on year in constant currency
--Oct-Dec N America sales down 1% on year in constant currency
--Oct-Dec Europe sales up 7.2% on year in constant currency
--Q3 employee utilisation including trainees 80.0% vs 82.2% qtr ago
--Q3 employee utilisation excluding trainees 84.1% vs 85.1% qtr ago

 

By Simran Rede and Arya S. Biju

 

MUMBAI – Information technology behemoth Infosys Ltd. reported the sharpest fall in its bottom line in six quarters after a one-time cost of INR 12.89 billion due to the new labour codes, which came into effect on Nov. 21. The top line growth was slowest in three quarters but was better than the corresponding quarter the previous year. Even though the company managed to beat analysts' expectations on revenue, it missed the Street's estimate on net profit by a wide margin.

 

Analysts had expected the company to report subdued earnings in the seasonally weak December quarter after a slight recovery in Jul-Sept. The IT major's consolidated net profit for the reporting quarter fell nearly 10% sequentially to INR 66.54 billion, missing analysts' estimate of INR 73.75 billion. Its consolidated revenue for the quarter rose a little over 2% sequentially to INR 454.79 billion, beating the Street's view of INR 451.04 billion.

 

In the trailing quarter, the company had reported an over 6% sequential growth in its bottom line, recovering from the near 2?ll in Apr-Jun. On a year-on-year basis, the bottom line fell over 2% in the December quarter while the top line grew nearly 9%, marking the highest growth in 10 quarters.

 

Except for the one-time cost, Infosys' net profit for the December quarter would have been INR 79.43 billion. "The company has assessed the financial implication of these changes (the new labour codes) which has resulted in increase in gratuity liability arising out of past service cost and increase in leave liability by INR 1,289 crore (INR 12.89 billion)," the company said.

 

Under the new labour code, basic pay must account for at least 50% of an employee's total cost to the company. As a result, payouts tied to statutory contributions such as gratuity and leave-related benefits are set to increase for companies.

 

The Bengaluru-based company has revised its revenue growth guidance for 2025–26 (Apr-Mar) to 3.0–3.5% from 2.0–3.0?rlier. Analysts expectations on the company's revenue growth guidance were mixed, with some expecting Infosys to retain the guidance of 2.0–3.0% and others expecting it to revise the guidance for FY26.

 

The IT giant retained its operating margin guidance of 20–22% for FY26. The company said the operating margin guidance excludes the one-time cost of INR 12.89 billion.

 

The company spent INR 241.22 billion on employee benefit expenses in the December quarter, up nearly 3% on quarter and around 13% on year. Its expense related to technical subcontractors rose over 5% on quarter and 24% on year to INR 40.92 billion. The cost for software packages and others fell slightly on quarter and almost 14% on year to INR 39.82 billion.

 

The company's other expenses rose over 4% on quarter and around 20% on year to INR 14.94 billion. The company's total expenditure for the December quarter rose nearly over 2% on quarter and around 10% on year to INR 361 billion. The rise in total expenses was at a faster pace than that of sales. 

 

In the reporting quarter, Infosys's revenue grew 0.6% sequentially and 1.7% on year in constant currency terms, lower than the 2.2% sequential and 2.9% on-year growth recorded in the previous quarter. The company got large deals totalling $4.8 billion in the quarter, with a net new of 57%, beating analysts' expectations. This was higher than the $3.1-billion worth of orders it had won in the trailing quarter and the $3.8-billion worth contracts won in the June quarter. Analysts had expected the company's large deal wins for the December quarter to be in the range of $3 billion-$4 billion.

 

The company generated free cash flow of $915 million. The adjusted free cash flow generation was $965 million, 112.8% of the adjusted net profit. For the nine months ended December, it reported a consolidated net profit of INR 209.39 billion, up more than 6% on year. The consolidated revenue for the period was INR 1.32 trillion, up over 8% on year.

 

Infosys added 5,043 employees in the December quarter, taking its employee count to 337,034 as of Dec. 31. The number of software engineers at the company increased to 319,364 as of Dec. 31 from 314,500 at the end of the September quarter. The utilisation of employees, including trainees, was 80.0% as of Dec. 31, compared with 82.2% at the end of the trailing quarter. Excluding trainees, utilisation was 84.1% compared to 85.1% in the previous quarter.

 

The company's last 12-month voluntary attrition rate in the information technology services segment was 12.3% as of Dec. 31, down from 14.3% as of Sept. 30 and 13.7% a year ago.

 

The company's operating margin for the reporting quarter contracted 260 basis points sequentially to 18.4%. Adjusted for the one-time cost due to the new labour code, the company's operating margin for the quarter was 21.2%.

 

Revenue from the company's biggest segment--financial services--grew 3.9% on year in constant currency terms. The sales contribution from the segment increased to 28.2% of total sales from 27.7% in the trailing quarter. Revenue from its second-biggest segment--the manufacturing vertical--grew 6.6% on year in constant currency terms. Sales from this segment accounted for 16.7% of the company's total sales compared to 16.5% in the trailing quarter.

 

Revenue from the energy, utilities, resources, and services segment, which accounted for over 13% of the company's total sales in the December quarter, grew 0.5% on year in constant currency terms while revenue from the retail segment, which also contributed around 13% to total sales, fell 5.5% on year.

 

Revenue from the company's hi-tech segment fell 2.2% on year in constant currency terms and that from the life sciences segment fell 5.4% on year during the quarter. The communications segment's revenue for the quarter grew 10% on year in constant currency terms.

 

Revenue from the company's operations in North America fell 1% on year in constant currency and accounted for 56% of the overall top line. Its revenue from the second-biggest region, Europe, rose 7.2% on year in constant currency and constituted 32.7% of the company's total sales. Revenue from India, which contributed 2.8% to the company's total sales for the reporting quarter, fell 1.8% on year in constant currency terms.

   

Infosys announced its December quarter earnings after market hours Wednesday. Ahead of the earnings, its shares closed marginally higher at INR 1,599.80 on the National Stock Exchange.  End

 

US$1 = INR 90.29

 

Edited by Ashish Shirke

 

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