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    Infosys

    INFY
    Information Technology·14 Jan 2026
    Management Summary

    Infosys reported a strong Q3 FY26 performance, marked by sequential and year-on-year revenue growth in constant currency and robust large deal wins. The company demonstrated strong momentum in AI adoption, securing a major $1.6 billion deal with the NHS and actively working on thousands of AI projects. Adjusted operating margins expanded, and Infosys revised its full-year revenue growth guidance upwards, reflecting confidence in its strategic initiatives and market demand.

    Highlights

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    • Revenue grew 0.6% sequentially and 1.7% year-on-year in constant currency terms.

    • Large deal Total Contract Value (TCV) was $4.8 billion in Q3, with 57% net new across 26 deals.

    • Adjusted operating margin stood at 21.2%, an increase of 20 basis points sequentially.

    • Free cash flow generated was $915 million, with adjusted free cash flow conversion at 118% for 9 months FY26.

    • Secured a significant $1.6 billion deal with the National Health Service (NHS) in the U.K.

    • Currently working on 4,600 AI projects and generated over 28 million lines of code using AI.

    • Net headcount increased by 5,000 to 337,000 employees.

    • Adjusted EPS in rupee terms for 9 months FY'26 grew at 11.5%.

    Guidance & targets

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    CategoryTargetPriority
    Revenue Growth
    FY26 Revenue Growth (Constant Currency)
    3% to 3.5%
    High
    Operating Margin
    FY26 Operating Margin
    20% to 22%
    High
    Headcount
    FY26 Fresher Hires
    20,000
    High
    Labor Code Impact
    Annual Recurring Margin Impact from Labor Code Changes
    Approximately 15 basis points
    High
    Segment Growth
    Financial Services Growth
    Acceleration
    Medium
    Segment Growth
    Energy, Utilities, Resources and Services (EURS) Growth
    Acceleration
    Medium
    2 min read

    Detailed Narrative

    Infosys delivered a strong performance in the third quarter of fiscal year 2026, with revenues growing 0.6% sequentially and 1.7% year-on-year in constant currency terms. The company's adjusted operating margin expanded by 20 basis points sequentially to 21.2%, despite absorbing a 50 basis point increase in sales and marketing investments and lower utilization, which management views as capacity building for future growth. Free cash flow generation was robust at $915 million, contributing to an adjusted free cash flow conversion of 118% for the first nine months of FY26. Adjusted EPS in rupee terms for the same period grew by 11.5%.

    The quarter was highlighted by significant large deal wins, totaling $4.8 billion, with 57% being net new deals across 26 contracts. A key achievement was securing a $1.6 billion deal with the National Health Service (NHS) in the U.K., expanding Infosys' presence in the healthcare sector and leveraging AI for operational efficiencies. The company reported strong momentum in AI adoption, with 90% of its largest 200 clients engaged in AI work, and 4,600 AI projects currently in progress. Infosys has generated over 28 million lines of code using AI and built more than 500 AI agents, underscoring its commitment to AI-led value creation.

    Looking forward, Infosys revised its revenue growth guidance for FY26 upwards to 3% to 3.5% in constant currency, while maintaining its operating margin guidance at 20% to 22%. This upward revision reflects management's confidence in the healthy deal pipeline and strong execution. The company anticipates accelerated growth in Financial Services and Energy, Utilities, Resources, and Services verticals for FY27, driven by recent deal wins and its status as a preferred AI partner. Infosys is also on track to meet its target of hiring 20,000 freshers for FY26, investing in its talent pipeline.

    During the Q&A session, management addressed the impact of new labor codes in India, noting a one-time📎 charge in Q3 and an expected ongoing annual impact of approximately 15 basis points on margins. They clarified that the reported margin dip was due to this one-time📎 impact, with adjusted margins showing expansion. While some sectors like Retail and CPG continue to experience softness in discretionary spending, Financial Services and EURS are showing an uptick. Infosys emphasized its flexible hybrid work model and stated no changes to its appraisal approach. The company remains focused on strategic acquisitions and partnerships in AI, with a clear strategy for productizing AI initiatives, particularly around agentification, to drive future growth.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.