infosys q2 results

 

Infosys Q2 FY26 Results: Strong Performance with Cautious Outlook

Indian IT giant Infosys Ltd. on October 16, 2025 announced its Q2 FY26 (July–September 2025) results, delivering a solid set of numbers that beat street estimates while laying out a cautious but pragmatic guidance for the remainder of the year.

Key Financial Highlights

• Net Profit (PAT): ₹7,364 crore, up ~13.2% year-on-year (YoY) versus ₹6,506 crore in Q2 FY25. Moneycontrol+3Moneycontrol+3mint+3

• Revenue from operations: ₹44,490 crore, representing ~8.5%–9% YoY growth. The Economic Times+3Moneycontrol+3mint+3

• Quarter-on-Quarter (QoQ) Growth: Revenue rose ~5.2% sequentially from ₹42,279 crore in Q1 FY26 to ₹44,490 crore. NDTV Profit+2The Financial Express+2

• Operating Margins & Costs: The operating margin was maintained around 21%, dipping slightly (~10 basis points) from the prior year in constant currency terms. ICICI Direct+4The Economic Times+4mint+4

• Expense Trends: Total expenses rose to ~₹35,243 crore in Q2, reflecting increases in staff, subcontracting, and infrastructure costs. Moneycontrol

These results show that Infosys navigated the quarter well despite a challenging macro environment, maintaining profitability and revenue growth.

Other Highlights & Corporate Actions

• Interim Dividend: Infosys declared an interim dividend of ₹23 per share, with a record date of October 27, 2025, and payout scheduled for November 7, 2025. TipRanks+2mint+2

• New Subsidiary Launch: The company approved the incorporation of a step-down wholly owned subsidiary in Egypt, under its Singapore arm, to expand its geographic footprint. The Economic Times+2TipRanks+2

• Deal Bookings & TCV: Infosys continues to secure large deals. During Q2, total contract value (TCV) bookings remained strong across verticals, with a good mix of renewals and new wins. mint+2The Financial Express+2

• Guidance Revision: Infosys raised the lower bound of its FY26 revenue growth guidance from 1–3% to 2–3% in constant currency (CC) terms, while maintaining margin guidance in the 20–22% band. Seeking Alpha+6The Economic Times+6The Financial Express+6

Business Drivers & Strategic Context

1. Vertical Strength
   The banking, financial services & insurance (BFSI) vertical, along with manufacturing, contributed significantly to revenue growth during the quarter. The Economic Times+2mint+2

2. Geographic Mix & Currency Tailwinds
   Revenue gains were aided by favorable foreign exchange movements, particularly from the U.S. dollar against the rupee. The North American market saw ~2% growth, underscoring Infosys’ heavy exposure to U.S. clients. The Financial Express+3Reuters+3mint+3

3. Margin Maintenance Under Pressure
   Despite rising costs (salaries, infrastructure, subcontracting), Infosys managed to contain margin erosion by optimizing utilization and cost discipline. The modest margin dip suggests resilience in operational efficiency. The Financial Express+3The Economic Times+3mint+3

4. Macro & Industry Outlook
   The Indian IT sector has faced headwinds due to cautious global tech spending and discretionary IT budget cuts. Analysts had projected a “flat to modest growth” scenario for Q2. The Economic Times+2Business Standard+2
   The company’s upward revision of guidance reflects its confidence in demand recovery, albeit with guarded optimism. Reuters+2The Economic Times+2

Risks & Watchpoints

• Global Tech Budget Cuts: Continued restraint in discretionary IT spending among global clients could dampen future deal momentum.

• Currency Volatility: Most of Infosys’ revenue comes from offshore geographies; adverse FX movements could erode margins.

• Margin Pressure: Cost inflation in wages, talent acquisition, and infrastructure will remain a challenge.

• Deal Execution & Renewals: The ability to convert wins and renew large contracts will be crucial.

Market Reaction & Analyst Take

The Q2 results were broadly welcomed by the market, with Infosys outperforming street estimates on profit and revenue fronts. The Economic Times+2mint+2

However, some caution emerged as investors digested the narrowed guidance and global demand uncertainties. Analysts also flagged that much of the positive sentiment is already priced into the stock, recommending a “hold” stance for fresh inflows. Seeking Alpha

Conclusion

Infosys’ Q2 FY26 results reflect resilient execution in a challenging global climate. A 13% net profit growth and 9% revenue expansion point to operational robustness. The interim dividend, strategic expansion (e.g. Egypt), and guidance adjustment further signal management’s intent to steer growth while remaining prudent.

But the road ahead isn’t free of obstacles. With macro uncertainty, margin pressure, and competitive dynamics in play, Infosys will need to lean on strong deal pipelines and execution discipline to sustain momentum.