Infy vs Grasim Q1 FY26

IN

Infy

Q1 FY26 · Diversified

Infosys delivered a strong Q1 FY26 with constant currency revenue growth of 3.8% YoY and 2.6% QoQ, driven by broad-based growth across industries and geographies. Large deal TCV was robust at $3.8 billion with 55% net new, including a mega deal with a global bank. Operating margin came in at 20.8%, down 30bps YoY due to compensation hikes and sales investments, partly offset by Project Maximus benefits. Management revised FY26 revenue guidance to 1%-3% CC (from 0%-3%), citing persistent macro uncertainty and no improvement in client discretionary spending. AI adoption is accelerating, with 300 agents built and strong pipeline in enterprise AI. Key risk: delayed decision-making and tariff uncertainty could further pressure H2 growth.

Guidance read

FY26 revenue growth guidance revised to 1%-3% CC: Revised from 0%-3% to 1%-3% in constant currency, reflecting strong Q1 but persistent macro uncertainty. Operating margin guidance maintained at 20%-22%: Margin guidance unchanged; aspiration to improve margin YoY despite headwinds from compensation and deal ramp-ups. FY26 free cash flow expected above 100% of net profit: Continued strong cash generation; 5th consecutive quarter of FCF >100% of net profit.

Risk read

Key risks include Macro uncertainty and tariff impact — Persistent tariff and geopolitical uncertainty are delaying client discretionary spending and elongating decision cycles.; H2 seasonality and demand weakness — Management expects H1 to be stronger than H2 due to normal seasonality, implying potential growth deceleration.; AI-driven productivity may cap pricing — Productivity gains from AI are shared with clients, potentially limiting margin expansion and revenue per employee.; Vendor consolidation may intensify competition — As clients consolidate vendors, competition with larger peers could pressure margins and win rates..

Promise ledger

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

Grasim delivered a strong Q1 FY26 with consolidated revenue of INR 40,118 crore (+16% YoY) and EBITDA of INR 6,430 crore (+36% YoY), driven by robust cement and chemicals performance. Standalone revenue hit a record INR 9,223 crore (+34% YoY), aided by new businesses. The paint division (Birla Opus) maintained 65% premium/luxury product mix and expanded to 8,000 towns, while B2B e-commerce (Birla Pivot) is on track for $1B revenue by FY27. Cement volumes grew 10% YoY with EBITDA per ton of INR 1,248 (+37% YoY). Risks include margin pressure in epoxy from raw material costs and duty-free imports, and potential slowdown in decorative paint demand if industry discounting persists.

Guidance read

Paint business: 6th plant commercial launch by Q2 FY26: Trial production at Kharagpur plant has begun; commercial launch expected by end of Q2 FY26, raising total capacity to 1,332 million liters per annum. B2B e-commerce: $1B revenue by FY27: Birla Pivot's annualized revenue run rate is on track to achieve INR 8,500 crore ($1 billion) by FY27. Chemicals: ECH and CPVC plants mechanical completion in Q3 FY26: The ECH and CPVC plants with Lubrizol will achieve mechanical completion in Q3 FY26. Lyocell project completion by late 2027: The Lyocell project in the Cellulosic Fiber business remains on track for completion by late 2027.

Risk read

Key risks include Epoxy margin compression from raw material costs and duty-free imports — Hardening feedstock prices (BPA, ECH) and duty-free imports from Korea via FTA are squeezing epoxy margins; management is balancing market share and margins.; Decorative paint industry growth slowdown — Excluding Birla Opus, the organized decorative paint industry was flat to slightly negative YoY in Q1, with increased discounting in the economy segment.; Dealer attrition and competitive intensity in paints — Analyst raised concerns about dealer attrition; management denied significant attrition but acknowledged competitive intensity in the economy segment.; Chlorine derivative project deferrals — Some chlorine derivative projects have been deferred due to uncertain market conditions, potentially impacting future chemical segment growth..

Promise ledger

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