Infosys Q1FY26 Results: Steady Profit, Cautious Guidance | PL Capital on What Investors Should Do Now
- 24th July 2025
- 12:00:00 PM
- 3 min read
Mumbai | July 24 – Infosys has delivered a steady Q1FY26, but the mood in India’s IT sector remains cautious. As the Nifty IT index slipped nearly 2% on Thursday, dragged down by Persistent Systems and Coforge, Infosys reported a clean set of numbers with robust deal wins, yet narrowed its full-year outlook amid global macro uncertainties.
“Strong execution and healthy deal wins define Infosys’ Q1, but the management’s caution on discretionary spends and macro challenges should guide investor expectations for the year ahead,” said Pritesh Thakkar, Senior Analyst at PL Capital.
Infosys reported an 8.7% year-on-year rise in consolidated net profit to ₹6,921 crore for the June quarter, while revenue grew 7.5% to ₹42,279 crore. Constant currency revenue increased 2.6% sequentially, ahead of Street estimates, reflecting resilient execution. Large deal wins stood at $3.8 billion, up 44% sequentially, driven by vendor consolidation and cost takeout initiatives as clients focus on operational efficiencies.
However, Infosys narrowed its FY26 revenue growth guidance to 1-3% in constant currency, compared to the earlier 0-3% range, signalling management’s cautious stance amid client budget constraints and a challenging global environment. Operating margins stood at 20.8%, down 30 basis points sequentially, impacted by wage hikes and continued investments in sales and marketing, even as gross margins improved.
The cautious commentary comes as Indian IT firms face delayed project decisions, tighter client budgets, and geopolitical uncertainties, impacting near-term growth visibility despite strong pipelines. On Thursday, the Nifty IT index closed 733 points lower at 36,218, with midcap IT underperforming. Persistent Systems and Coforge dropped nearly 9% each, despite reporting sequential revenue growth of 3.9% and 8% in constant currency, respectively, underscoring investor caution around margin sustainability and deal ramp-ups.
For Infosys, growth was broad-based across segments, with communications, manufacturing, and retail leading, while BFSI maintained stable momentum. Geographically, Europe grew 5.5%, and North America rose 3.4% sequentially. Infosys highlighted continued traction in enterprise AI and productivity-led initiatives while flagging slower discretionary IT spending by clients in the near term.
PL Capital on Infosys
PL Capital notes that Infosys’ robust deal wins and disciplined execution position it well to navigate macro challenges while capturing long-term opportunities in AI and vendor consolidation. However, investors should monitor management commentary on client budgets and project ramps, as these factors could influence near-term earnings momentum.
At around ₹1,575, Infosys trades at approximately 22.9 times FY26 estimated earnings, with PL Capital maintaining an ‘Accumulate’ rating and a revised target price of ₹1,750, reflecting Infosys’ balance between near-term caution and structural growth opportunities.
Bottom Line
For investors seeking quality exposure in Indian IT, Infosys remains a steady compounder despite the likelihood of near-term volatility as the company navigates global headwinds and cautious client sentiment. PL Capital recommends a gradual accumulation approach, using sector corrections to build long-term positions in Infosys while aligning with evolving trends in enterprise AI and digital transformation.
Read the full analysis on Infosys here
PL Capital
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
