Infosys Q3 Results FY26: Net Profit at ₹6,654 Crore; Revenue at ₹45,479 Crore

Infosys reported its Q3 FY26 results with steady revenue growth and stable operating margins, supported by strong large deal wins and consistent free cash flow generation. The company maintained its full-year guidance while highlighting continued demand for AI-led transformation, cloud migration, and cost-optimization projects across global enterprises.

Table of Contents

• Key Highlights
• Financial Performance
• Operating Margin Trends
• Large Deal Wins and Order Book
• Segment Performance
• Geographic Revenue Mix
• Client Metrics and Deal Momentum
• Operational Drivers
• AI, Cloud, and Digital Demand
• Capital Allocation and Cash Flow
• Valuation Context
• Risks to Outlook
• Capital-Flow Impact
• Industry and Demand Environment
• Global IT Spending Cycles
• Margin and Cost Dynamics
• Deal Pipeline and Enterprise Trends
• Institutional Positioning
• Outlook for FY26

Key Highlights

• Revenue at ₹45,479 crore in Q3 FY26
• Net profit at ₹6,654 crore
• Operating margin at 18.4%
• Constant-currency revenue growth of 1.7% YoY
• Large deal wins of $4.8 billion during the quarter
• Free cash flow of ₹8,176 crore

The company reported stable operating performance despite mixed global IT spending conditions. Large deal wins and steady enterprise demand supported revenue growth during the quarter.

Infosys Q3 Results FY26: Financial Performance

Revenue growth remained stable, supported by deal wins and steady enterprise demand. However, margins declined year-on-year due to cost pressures and adjustments related to labour code provisions.

Infosys Q3 Results FY26: Operating Margin Trends

Operating margin for the quarter stood at 18.4% on a reported basis. Adjusted operating margin, excluding labour code impact, stood at 21.2%.

The margin contraction was primarily due to increased employee benefit provisions following the implementation of new labour code rules, which impacted gratuity and leave liabilities.

Infosys Q3 Results FY26: Large Deal Wins and Order Book

Infosys reported large deal total contract value (TCV) of $4.8 billion during the quarter, with 57% of these deals classified as net new business.

These deal wins indicate sustained demand for digital transformation and enterprise technology modernization projects across global markets.

Segment Performance

Revenue contributions across major verticals were as follows:

Financial services remained the largest vertical, contributing over 28% of total revenue, reflecting stable demand from global banks and financial institutions.

Geographic Revenue Mix

The company’s revenue distribution across geographies shows continued dependence on developed markets:

• North America: 55.9%
• Europe: 32.7%
• Rest of the world: 8.6%
• India: 2.8%

North America remained the largest market, although growth was relatively modest compared to Europe.

Client Metrics and Deal Momentum

Client metrics during the quarter indicated stable enterprise demand:

• Total active clients: 1,949
• Clients added during the quarter: 121
• $100 million+ clients: 41
• $50 million+ clients: 84

The presence of large, multi-year enterprise clients continues to provide revenue visibility and stability.

Operational Drivers

Enterprise AI and Automation Demand

Infosys highlighted increasing enterprise demand for AI-driven transformation. Clients are investing in automation, cloud, and digital transformation to improve operational efficiency and reduce costs.

Vendor Consolidation Trends

Global enterprises are increasingly consolidating IT vendors, which benefits large-scale service providers like Infosys due to their broad capabilities and delivery scale.

AI, Cloud, and Digital Demand

The company emphasized its enterprise AI platform as a key growth driver, with clients adopting AI-led solutions across industries.

Management indicated that clients increasingly view Infosys as an AI transformation partner, helping unlock efficiency and business value.

Capital Allocation and Cash Flow

Free cash flow for the quarter stood at ₹8,176 crore, reflecting strong operating cash generation. Adjusted free cash flow was ₹8,626 crore.

Strong free cash flow allows the company to:

• Maintain regular dividend payouts
• Execute share buybacks
• Invest in digital and AI capabilities

Infosys Q3 Results FY26:  Valuation Context

Infosys is typically valued as a large-cap IT services stock with premium multiples compared to the broader market. Key valuation drivers include:

• Stable cash flows
• Global client base
• High return on capital
• Consistent dividends
• Large deal pipeline

Margin trends and revenue growth guidance are the primary drivers of valuation changes.

Infosys Q3 Results FY26: Risks to Outlook

• Global IT spending slowdown
• Currency volatility
• Wage inflation and hiring costs
• Client budget cuts in technology verticals
• Regulatory and visa policy changes

Capital-Flow Impact

Infosys remains a core institutional holding in the IT sector due to:

• Strong cash generation
• Large enterprise client base
• Consistent dividend payouts
• High return ratios

However, margin pressure and slower discretionary spending cycles may influence near-term institutional positioning.

Industry and Demand Environment

The global IT services industry is currently in a mixed demand phase. Enterprises are prioritizing cost optimization, automation, and cloud migration over aggressive discretionary technology spending.

Large companies like Infosys continue to benefit from long-term contracts, vendor consolidation trends, and large transformation deals.

Global IT Spending Cycles

IT services demand typically follows global economic cycles:

• Expansion phases: Higher discretionary spending
• Slowdown phases: Cost optimization and automation deals
• Recovery phases: Cloud and digital transformation acceleration

The current environment reflects a transition phase where enterprises are balancing cost controls with selective digital investments.

Margin and Cost Dynamics

Margins in IT services are influenced by:

• Wage inflation
• Employee utilization
• Currency movements
• Onsite-offshore delivery mix
• Hiring and reskilling costs

Labour code-related provisions impacted margins during the quarter, but adjusted margins remained above 21%.

Deal Pipeline and Enterprise Trends

Enterprises are focusing on productivity-led technology investments, including:

• AI-driven automation programs
• Cloud modernization projects
• Application rationalization initiatives
• Digital customer-experience upgrades

These trends support steady demand for large IT service providers.

Institutional Positioning

Institutional investors typically allocate capital to large IT services companies during:

• Global economic uncertainty
• Periods of stable cash flows
• Dividend yield cycles
• Technology-led productivity phases

Infosys remains a core allocation in global emerging-market portfolios due to its scale and consistent profitability.

Outlook for FY26

The company maintained its FY26 guidance:

• Revenue growth: 3.0%–3.5% in constant currency
• Operating margin: 20%–22%

The outlook reflects stable demand conditions, continued deal momentum, and enterprise investments in AI and digital transformation.

Internal Links

• IT Sector Outlook 2026
• TCS Q3 Results FY26
• Banking Sector Outlook 2026

External Source

• Infosys Investor Relations
• BSE Exchange Filing