Infy vs Bajajfinsv Q2 FY26

IN

Infy

Q2 FY26 · Diversified

Infosys delivered a strong Q2 FY26 with constant currency revenue growth of 2.9% YoY and sequential operating margin expansion of 20 bps to 21%. Large deal TCV was robust at $3.1 billion with 67% net new, and a subsequent $1.6 billion mega deal was announced. Growth was driven by financial services and manufacturing, while AI-related projects (2,500+ generative AI, 200+ agentic) are scaling. Management raised FY26 revenue guidance to 2-3% CC, maintaining margin guidance of 20-22%. Key risk: persistent macro uncertainty and tariff-related headwinds could elongate decision cycles and pressure discretionary spending.

Guidance read

FY26 revenue growth guidance raised to 2-3% CC: Revised from previous range; reflects strong H1 performance and includes seasonal H2 softness. Operating margin guidance maintained at 20-22%: Margin guidance unchanged despite revenue guidance revision; Project Maximus and cost levers support. Mega deal with NHS worth $1.6B to ramp up this fiscal year: 100% net new deal announced post-Q2; expected to contribute to H2 revenue. Versant JV expected to close this fiscal year: Pending regulatory approvals; last year revenue AUD 210M; not included in guidance.

Risk read

Key risks include Macro uncertainty and tariff risks — Geopolitical tensions and tariff uncertainties are causing elongated decision cycles and pressure on discretionary spending, especially in retail and manufacturing.; H1B visa fee hike impact on delivery model — Analyst raised concern about visa cost increases; management acknowledged potential model shift but provided no specific quantification of margin impact.; AI deflationary pressure on revenue growth — Analyst questioned whether AI-driven productivity gains could compress revenue; management noted cost reduction focus but did not quantify net impact.; Seasonal H2 softness — Lower working days, furloughs, and calendar effects expected to impact H2 growth; guidance reflects this but could be worse if macro deteriorates..

Promise ledger

Of 1 tracked promise, management 0 met, 0 close, 1 missed.

Bajaj Finserv reported a solid Q2 FY26 with consolidated revenue up 11% to INR 37,400 crore and PAT up 8% to INR 2,244 crore (12% ex-MTM). The life insurance arm was the standout: VNB surged 50% to INR 367 crore and NBM expanded to 17.1% (from 10.8% last year), driven by product mix shift and cost optimization. General insurance GWP grew 9% (13.6% ex-one-off), though combined ratio remained above 100% at 102.3% due to upfront acquisition costs. Lending subsidiaries (BFL, BHFL) delivered strong AUM growth of 24% each with stable asset quality. Management guided for life insurance growth to re-accelerate in H2 and expects to mitigate GST ITC impact over two quarters. Key risk: elevated credit costs in unsecured MSME and two/three-wheeler segments at BFL.

Guidance read

Life insurance growth to re-accelerate in H2: After four quarters of flattish top line, management expects significant growth trajectory above industry from Q3 onwards, supported by GST tailwinds. GST ITC impact to be mitigated in two quarters: Management expects to manage the GST input tax credit burden through product restructuring and distributor negotiations within the next two quarters. Life insurance margin expansion of 4-6% for FY26 (pre-GST): Excluding GST impact, management expected NBM expansion of 4-6% for the full year, but GST noise may affect H2. BFL MSME AUM growth to be 10-12% for FY26: Bajaj Finance cut unsecured MSME volumes by 25%, leading to full-year AUM growth of only 10-12% in that segment.

Risk read

Key risks include Elevated credit costs in unsecured MSME and two/three-wheeler segments — BFL's net losses and provisions were up 19% YoY, with credit costs elevated in MSME and two/three-wheeler segments, though management is cutting volumes.; GST ITC impact on life insurance margins — The loss of input tax credit on GST is expected to impact NBM by ~450bps annualized if unmitigated. Management is working on mitigation but impact may persist for two quarters.; Motor OD loss ratio spike — Motor OD loss ratio increased to 71% in Q2, above historical trends. Management termed it a quarterly blip but it bears watching.; General insurance combined ratio above 100% — Combined ratio stood at 102.3% (101.4% ex-one-off), impacted by upfront acquisition costs for long-term motor policies. Management expects it to remain near 100%..

Promise ledger

Of 1 tracked promise, management 1 met, 0 close, 0 missed.