Infosys Q3 Results: ADR Jumps Over 8% After Revenue Guidance Upgrade
New York-listed shares of Infosys Ltd. surged over 8% on Wednesday after the company announced its third quarter results and lifted its fiscal 2026 revenue guidance. The American Depository Receipt (ADR) of Infosys gained as much as 8.6% to $19.03 as of 8:18 p.m. India time.
The ADR is a tool for multinationals/foreign companies (primarily based outside the US) or organisations to trade on US stock markets, just like regular shares of US companies. In theory, an ADR is similar to a special certificate issued by a US bank. It is a negotiable certificate representing shares in a foreign company traded on US stock exchanges.
Revenue Guidance Upgrade
Infosys revised its guidance for FY26 revenue growth to 3.0%–3.5% in constant currency terms from 2%–3% earlier and operating margin to 20%-22%. This upgrade in revenue guidance is a significant positive for the company, indicating a strong demand for its services, particularly in the Artificial Intelligence and digital transformation space.
Executives said the company has scaled its artificial intelligence offerings to clients in foreign markets. ‘Infosys delivered a strong Q3 performance demonstrating how our differentiated value propositions in enterprise AI, through Infosys Topaz, are consistently driving higher market share,’ said CEO and MD Salil Parekh.
‘Clients increasingly view Infosys as their AI partner with demonstrated expertise, innovation capabilities and strong delivery credentials. This has helped them unlock business potential and enhanced value realization,’ he added.
Q3 Performance Highlights
Consolidated net profit fell nearly 10% to Rs 6,654 crore in the October-December quarter, compared to the preceding quarter, according to a stock exchange filing on Wednesday. Infosys had to provision Rs 1,289 crore as a one-time cost to comply with new labour codes notified by the government late last year.
Revenue was up 2.2% at Rs 45,479 crore versus Rs 44,490 crore (Bloomberg estimate: Rs 45,204 crore). EBIT was up 1.3% at Rs 9,479 crore versus Rs 9,353 crore (Bloomberg estimate: Rs 9,558 crore). EBIT margin was at 20.8% versus 21.02% (Bloomberg estimate: 21.14%). Profit was down 9.6% at Rs 6,654 crore versus Rs 7,364 crore (Bloomberg estimate: Rs 7,397 crore).
Large Deal Wins and Attrition
The total contract value (TCV) of large deal wins was $4.8 billion, with net new of 57%, a statement said. ‘Our 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’ said CFO Jayesh Sanghrajka.
Infosys also took 18,000 freshers so far in FY26, according to the CFO, amid a dip in attrition rates. This is a significant positive for the company, as it indicates a strong talent pipeline and a reduction in the costs associated with high attrition rates.
Stock Market Reaction
Shares of Infosys closed 0.75% higher at Rs 1,609.9 on the BSE, ahead of the results, compared to a 0.3% decline in the benchmark Sensex. The stock has fallen 17% in the last 12 months. However, with the strong Q3 performance and the upgrade in revenue guidance, the stock is likely to see a significant upside in the near term.
Investment Implications
For investors, the Q3 results of Infosys are a significant positive, indicating a strong demand for the company’s services, particularly in the Artificial Intelligence and digital transformation space. The upgrade in revenue guidance is also a significant positive, indicating a strong growth trajectory for the company in the near term.
However, investors should also be aware of the risks associated with the company, including the high attrition rates and the intense competition in the IT services space. Investors should do their own research and consult with a financial advisor before making any investment decisions.
Overall, the Q3 results of Infosys are a significant positive for the company, indicating a strong demand for its services and a strong growth trajectory in the near term. With the strong performance and the upgrade in revenue guidance, the stock is likely to see a significant upside in the near term.
