Infosys shared mixed results for the December quarter. Profit fell, but revenue continued to grow. The company also sounded more confident about the year ahead.
Net profit dropped by 2% compared to last year. It came in at ₹6,654 crore. This was lower than what analysts were expecting.
The main reason for the fall was a one time cost linked to India’s new labour laws. Infosys took an exceptional charge of ₹1,289 crore because of this change.
Operating profit also declined. It fell 6% from last year and over 10% from the previous quarter. Profit margins shrank to 18.4%. A year ago, margins were above 21%.
Higher employee related costs played a big role. Sales expenses also increased. The company is spending more on future growth and new technologies.
Other IT majors are facing similar pressure. Tata Consultancy Services and HCL Tech have also flagged concerns. Some analysts believe the new labour rules could cut IT sector profits by up to 20%.
Despite this, revenue held up well. Infosys posted revenue of ₹45,479 crore. That was a 9% jump from last year.
In constant currency terms, growth was modest but positive. Revenue rose 1.7% compared to last year and 0.6% from the previous quarter.
Encouraged by demand stability, Infosys raised its growth outlook. It now expects revenue growth of 3% to 3.5% for FY26. Earlier, it had guided for 2% to 3%.
The company kept its margin guidance unchanged. It still expects margins to stay between 20% and 22%.
CEO Salil Parekh said enterprise demand for AI services is helping Infosys win more business. The company’s AI platform, Infosys Topaz, is playing a key role.
Deal activity was strong during the quarter. Infosys signed large contracts worth $4.8bn. New deals made up more than half of this value.
Growth was uneven across sectors. Financial services grew steadily and remained the biggest contributor. Manufacturing and communications performed well and posted strong growth.
Retail was the weak spot. Revenue from retail clients fell as global consumer demand stayed soft. Many retailers are still cautious about tech spending.
Cash generation remained healthy. Free cash flow stood at $915m. Adjusted free cash flow was even higher at $965m.
Infosys said there are early signs that the long slowdown in corporate tech spending may be easing. Demand in the US and Europe is still soft, but conditions are no longer worsening.
Like its peers, Infosys is betting heavily on AI and cloud services for future growth. At the same time, it is watching global risks closely, including possible changes to US work visa rules.
