Infy vs Grasim Q2 FY26

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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.

Grasim's Q2 FY26 standalone revenue hit a record INR 9,610 crore, up 26% YoY, driven by strong performance in paints and B2B e-commerce. The paints business (Birla Opus) achieved double-digit market share and top-of-mind brand recall as #2, despite a weak monsoon impacting QoQ sales. The B2B platform Birla Pivot grew 15% sequentially and is on track to reach its INR 8,500 crore FY27 target. Core businesses faced headwinds: cellulosic fiber EBITDA fell 29% YoY due to high input costs, and chemicals profitability remains range-bound. Management reaffirmed guidance for paints to become #2 and profitable within three years. Key risk: sustained pressure from global caustic price volatility and cheap Chinese imports.

Guidance read

Paints: #2 revenue market share and profitability within 3 years of full-scale operations: Management reaffirmed commitment to achieve number two revenue market share and profitability within three years of full-scale operations, with no change in strategy post CEO resignation. Paints: double-digit QoQ growth in Q3 FY26: Management guided for continued double-digit sequential growth in Q3, citing strong September and October sales momentum. Birla Pivot: likely to achieve INR 8,500 crore revenue target sooner than FY27: CEO indicated a likely chance of reaching the billion-dollar (INR 8,500 crore) milestone earlier than the stated FY27 target, though no formal revision yet. Chemicals: ECH and CPVC plants to contribute meaningfully from Q1 FY27: Mechanical completion expected by Q3 FY26, with meaningful contribution from first quarter of next financial year.

Risk read

Key risks include Global caustic soda price volatility — Chemicals profitability remains heavily dependent on caustic soda prices and chlorine demand, which are difficult to predict and subject to global trade dynamics.; Cheap Chinese imports impacting cellulosic yarn realizations — Cellulosic fashion yarn realizations continue to be impacted by cheaper imports from China, pressuring margins.; Paints market share deceleration risk — Analyst noted sequential market share gains have moderated from 100-150bps to ~20bps QoQ; management disputed this but acknowledged the need to accelerate volume share to match capacity share.; CEO resignation impact on paints business execution — The sudden resignation of Birla Opus CEO Rakshit Hargave raises questions about leadership continuity; management downplayed impact but successor not yet announced..

Promise ledger

Of 2 tracked promises, management 2 met, 0 close, 0 missed.