{"id":3023,"date":"2026-01-14T15:16:27","date_gmt":"2026-01-14T15:16:27","guid":{"rendered":"https:\/\/tradertideinsights.com\/?p=3023"},"modified":"2026-01-14T15:16:27","modified_gmt":"2026-01-14T15:16:27","slug":"infosys-q3-profit-falls-2-as-labour-codes-hit-margins-fy26-outlook-raised","status":"publish","type":"post","link":"https:\/\/tradertideinsights.com\/?p=3023","title":{"rendered":"Infosys Q3 profit falls 2% as labour codes hit margins, FY26 outlook raised"},"content":{"rendered":"
<\/div>\n

Infosys Ltd., India\u2019s second-largest IT services company, reported a mixed performance for the third quarter, marked by a decline in profit but steady revenue growth and an improved outlook for the coming fiscal year. <\/p>\n

The results highlight both the near-term pressures facing the sector and early signs of stabilisation in client spending.<\/p>\n

Profit declines amid labour code impact<\/h2>\n

Infosys reported a 2% year-on-year decline in consolidated net profit to \u20b96,654 crore for the quarter ended December, compared with \u20b96,806 crore a year earlier. <\/p>\n

The figure was below analyst estimates of \u20b97,390 crore. <\/p>\n

The profit decline was largely attributed to an exceptional item of \u20b91,289 crore related to the impact of India\u2019s new labour codes. <\/p>\n

Operating profit for the quarter fell 6% year-on-year and 10.7% sequentially to \u20b98,355 crore, while the operating margin narrowed sharply to 18.4%, down from 21.3% in the year-ago quarter and 21% in the September quarter.<\/p>\n

The margin contraction reflected the combined effect of labour code-related costs, higher sales-related expenses, and continued investments in new developments. <\/p>\n

Similar pressures have been reported by peers Tata Consultancy Services and HCL Tech, with global brokerage Jefferies warning that labour code implementation could erode IT company profits by 10\u201320%.<\/p>\n

Revenue growth and guidance upgrade<\/h2>\n

Despite margin pressures, Infosys posted resilient top-line growth. <\/p>\n

Revenue from operations rose 9% year-on-year to \u20b945,479 crore. <\/p>\n

In constant currency terms, revenue increased 1.7% year-on-year and 0.6% quarter-on-quarter.<\/p>\n

Reflecting improving demand conditions, the company raised its revenue growth guidance for FY26 to 3\u20133.5% in constant currency terms, up from the earlier range of 2\u20133%. <\/p>\n

Analysts on average expect a 3.13% increase. <\/p>\n

The company retained its margin guidance of 20\u201322%.<\/p>\n

\u201cInfosys delivered a strong Q3 performance demonstrating how our differentiated value propositions in enterprise AI, through Infosys Topaz, are consistently driving higher market share,\u201d said Salil Parekh, CEO and MD.<\/p>\n

Infosys also reported strong deal momentum, with large deal wins totalling $4.8 billion during the quarter and net new deals accounting for 57% of the total contract value.<\/p>\n

Sector trends, AI focus and market reaction<\/h2>\n

Performance varied across industry segments. <\/p>\n

Financial services, the company\u2019s largest revenue contributor, grew 4.8% in reported terms and 3.9% in constant currency. <\/p>\n

Manufacturing revenues rose 10.8% reported and 6.6% in constant currency, while the communications segment delivered strong growth of 11.6% reported and 9.9% constant currency. <\/p>\n

In contrast, retail revenues declined 3.8% reported and 5.5% in constant currency, reflecting cautious technology spending by global retailers amid weak consumer demand.<\/p>\n

\u201cOur performance was broad-based in Q3 with 0.6% sequential revenue growth, 0.2% adjusted operating margin expansion, stellar large deal wins at $4.8 billion, and robust adjusted free cash generation at $965 million in a seasonally weak quarter,\u201d said Jayesh Sanghrajka, CFO.<\/p>\n

Free cash flow generation stood at $915 million, while adjusted free cash flow reached $965 million, representing 112.8% of adjusted net profit.<\/p>\n

Infosys raised its annual sales forecast as signs emerged that a prolonged slowdown in corporate IT spending may be easing, even as demand remains muted in the US and Europe. <\/p>\n

The company and its peers continue to pivot toward artificial intelligence and cloud services to drive growth, while also bracing for potential disruption from changes to the US H-1B visa regime.<\/p>\n<\/p>\n

The post Infosys Q3 profit falls 2% as labour codes hit margins, FY26 outlook raised<\/a> appeared first on Invezz<\/a><\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Infosys Ltd., India\u2019s second-largest IT services company, reported a mixed performance for the third quarter, marked by a decline in profit but steady revenue growth and an improved outlook for the coming fiscal year. The results highlight both the near-term pressures facing the sector and early signs of stabilisation in client spending.Profit declines amid labour…<\/p>\n","protected":false},"author":1,"featured_media":3024,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-3023","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock"],"_links":{"self":[{"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=\/wp\/v2\/posts\/3023","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3023"}],"version-history":[{"count":0,"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=\/wp\/v2\/posts\/3023\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=\/wp\/v2\/media\/3024"}],"wp:attachment":[{"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3023"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3023"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tradertideinsights.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3023"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}