Infosys Q2 Preview: Profit likely up 10% YoY on margin tailwinds and steady deal momentum – News Air Insight

Infosys, India’s second-largest IT services company, is expected to post a 10% year-on-year rise in net profit for the July–September quarter (Q2FY26), with revenue likely growing 10% YoY, according to an average of estimates from eight brokerages. On a sequential basis, the company is likely to report a 1.8–2.4% quarter-on-quarter (QoQ) increase in revenue in constant currency terms, driven by higher billing days, stable demand from financial services, and a healthy pipeline of large deals.

The Bengaluru-headquartered firm will announce its results on October 16, and investors will be keenly watching whether the management revises its FY26 revenue growth guidance upward from the current 1–3% range.

Revenue growth steady amid mixed demand

Brokerages expect Infosys’ topline performance to remain steady, aided by a moderate pickup in large deals and incremental growth from recent acquisitions. Kotak Equities forecasts 1.8% QoQ revenue growth, supported by improved billing days and resilience in the financial services vertical, even as weakness persists in discretionary technology spending.

Nuvama expects revenues to rise 1.8% in constant currency and 2.1% in USD terms, with about 10–15 basis points contribution from acquisitions. Emkay Global is slightly more optimistic, projecting 2.4% QoQ USD revenue growth, factoring in a 30-bps cross-currency tailwind.

Brokerages largely agree that large-deal wins, particularly in digital transformation and cloud modernisation, will continue to drive momentum. Infosys is expected to report total contract value (TCV) of around $3 billion, up 22% year-on-year, though marginally lower than the previous quarter.

Margins supported by rupee depreciation and cost control

Operating margins are expected to hold steady or expand slightly, aided by cost optimisation and rupee depreciation. According to Kotak Equities, tailwinds from currency movements will likely offset one-time normalisation costs linked to post-sales support.

Nuvama expects EBIT margin to expand by 20 bps sequentially, while Emkay estimates a 40-bps improvement, driven by operational efficiency and absence of major wage revisions. Axis Securities sees a 30-bps QoQ margin expansion, citing cost control under “Project Maximus,” Infosys’ internal program aimed at improving productivity.Overall, EBIT margin for the quarter is expected to stay in the 20–22% range, aligning with management’s full-year guidance.

Guidance and key triggers to watch

Brokerages expect Infosys to revise its FY26 revenue growth guidance to 2–3% in constant currency (from 1–3%) while retaining its EBIT margin band of 20–22%. Analysts at Kotak and Emkay believe this implies a modest revenue decline in the second half of FY26, given the uncertain demand outlook across key geographies.

Among key metrics, investors will focus on the impact of US tariffs on client budgets in manufacturing, BFSI, and hi-tech verticals, progress on AI-led enterprise transformation deals and the pace of Gen AI adoption and commentary on pricing environment, deal closures, and ramp-ups for large contracts.

Axis Securities also expects management commentary on BFSI, Energy, and Utilities verticals, which have seen steady traction in recent quarters.

Outlook: Cautious optimism ahead

While the near-term outlook remains cautious, brokerages believe Infosys is well-positioned to benefit from a gradual recovery in discretionary IT spending in the second half of FY26. Nuvama expects continued stability in large-deal flows and margin support from operating leverage.

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Kotak Equities expects Infosys’ focus on AI, cloud, and cost transformation deals to help offset headwinds in traditional IT spending. Emkay, meanwhile, noted that the Versent Group acquisition (not yet reflected in guidance) could enhance Infosys’ capabilities in cloud modernisation and strengthen its position in Australia.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)