Infosys FY26 Growth Outlook: Climate Favourable for AI, Data, Cloud Deals Amid Uncertainty
In a recent post-earnings call, Infosys Ltd.’s management provided a promising outlook for the company’s FY26 growth, citing a favorable climate for artificial intelligence (AI), data, and cloud deals, despite the uncertain business environment.
The near-term outlook for the IT services major looks good, with the company witnessing five consecutive quarters of strong cash generations and free cash flows.
According to the management, the climate remains favorable for data and cloud deals as well. This bodes well for the company’s growth prospects in the coming fiscal year.
Key Highlights
- Infosys expects FY26 free cash flow to stay above 100% of the net profit.
- Revenue growth of 1% to 3% in constant currency along with an operating margin of 20% to 22% over fiscal 2026.
- Quarter-on-quarter revenue growth in constant currency stood at 2.6%, reversing a 3.5% decline in the March quarter.
- Year-on-year, revenue grew 3.8% in constant currency terms.
Infosys Ltd. announced its quarterly performance results earlier, raising its lower-end revenue guidance for the ongoing fiscal. The company’s Chief Executive Officer, Salil Parekh, highlighted the strength of the enterprise AI capabilities, the success in client consolidation decisions, and the dedication of the over 300,000 employees.
Revenue of the Bengaluru-based largest IT services firm rose 3.3% over the previous quarter to Rs 42,279 crore in the three months ended June, beating the Rs 41,724-crore consensus estimate of analysts tracked by Bloomberg.
Market Reaction
Despite the positive outlook, analysts remain cautious, citing uncertainties and potential tariffs that continue to weigh on sentiment. Anand Rathi Institutional Equities’ research analyst, Sushovon Nayak, told NDTV Profit in an interaction, ‘I think it’s a conservative guidance and we’ll have to see how it evolves over the next few quarters.’
The company has yet to decide on the next wage hike and sees no change in the environment for the second quarter of the current fiscal.
Conclusion
In conclusion, Infosys’ FY26 growth outlook appears promising, driven by the robust AI segment, data, and cloud deals. The company’s strong cash generation and free cash flows, along with its conservative guidance, suggest a positive trajectory for the coming fiscal year.
As investors and traders navigate the uncertain business environment, Infosys’ performance in Q1 demonstrates the strength of its enterprise AI capabilities, client consolidation decisions, and employee dedication.
It remains to be seen how the company’s guidance evolves over the next few quarters, but for now, the near-term outlook looks good for Infosys.
