Infosys vs TCS Q4 FY26

IN

Infosys

Q4 FY26 · Diversified

Infosys reported Q4 FY26 revenue growth of 4.1% YoY in constant currency, with full-year growth of 3.1%. Large deal TCV reached $15 billion for FY26, up 24% YoY, with Q4 at $3.2 billion. Operating margin was 20.9%, down 30bps sequentially due to acquisition amortization and compensation costs, partly offset by currency and Project Maximus benefits. Management guided FY27 revenue growth of 1.5%-3.5% CC and operating margin of 20%-22%, citing AI services momentum but also headwinds from a European manufacturing client ramp-down and onsite mix shift. Key risks include competitive intensity driving productivity pass-throughs and macro uncertainty delaying discretionary spending.

Guidance read

FY27 Revenue Growth 1.5%-3.5% CC: Constant currency revenue growth guidance for FY27, including contributions from recent acquisition Status but excluding others. FY27 Operating Margin 20%-22%: Operating margin guidance for FY27, with headwinds from wage hikes, productivity pass-throughs, and AI investments offset by Project Maximus. Fresher Hiring ~20,000 in FY27: Plan to onboard approximately 20,000 college graduates in FY27, similar to FY26, with flexibility based on demand. Effective Tax Rate 29%-32% for FY27: Expected effective tax rate range for FY27, reflecting normal operations.

Risk read

Key risks include Productivity Pass-Throughs from AI — Competitive intensity may force Infosys to pass AI-driven productivity gains to clients, compressing revenue growth.; European Manufacturing Client Ramp-Down — A large European manufacturing client is reducing spend due to macro challenges and Infosys' decision to walk away from a low-return deal, impacting FY27 growth by 75-100bps.; Onsite Mix Shift Impacting Revenue — Continued reduction in onsite mix (40-50bps exit trajectory) will lower reported revenue growth, partly offset by offshore benefits.; Macro Uncertainty and Tariff Risks — Geopolitical conflicts and trade policy shifts could delay client decision-making and discretionary spending, especially in manufacturing and retail..

Promise ledger

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

TC

TCS

Q4 FY26 · Information Technology

TCS exited Q4 with 1.2% sequential constant-currency growth after three quarters of sequential recovery, while rupee revenue rose 9.6% YoY to ₹70,698 crore. The quarter's signal is not just headline growth, but demand stabilization: $12 billion TCV, three mega deals, and client additions across every revenue band after roughly two years. AI is becoming a commercial wedge, with annualized AI revenue above $2.3 billion, but management also admitted traditional service lines may taper as AI productivity benefits are passed to clients. Operating margin held at 25.3% in Q4, helped by currency and operating levers, while wage hikes and build-partner-acquire investments will pressure FY27. Outlook is cautiously constructive: deal momentum and AI demand are improving, but macro/geopolitical risk, BFSI caution, elevated SG&A, and uncertain AI cannibalization timelines limit conviction.

Guidance read

FY27 growth: normal first-half seasonality, no quantified target for FY27: Management expects FY27 to start with a normal Q1/Q2 seasonal pattern and is positive on international growth, but refused to quantify growth. AI revenue expected to outrun traditional-services taper for multi-year: AI revenue is expected to grow faster and eventually overcompensate for tapering traditional services revenue, but management could not predict the timing. Wage hikes: 150-200 bps margin headwind expected for Q1 FY27: Wage hikes are expected to create a 150-200 bps margin headwind in the next quarter. Medium-term margin aspiration: 26-28% for multi-year: Longer term, management wants margins to move toward 26-28%, while continuing investment in build, partner, and acquire initiatives.

Risk read

Key risks include AI cannibalization may arrive before AI revenue offset — AI-led productivity may cannibalize traditional services revenue before AI revenue fully offsets the decline.; FY26 constant-currency decline keeps recovery burden high — FY26 constant-currency revenue declined 2.4%, and an analyst flagged a 5-6 percentage point growth gap versus the closest competitor.; SG&A investment may be structurally higher — SG&A may stay structurally elevated because partnership, recruitment, training, and new-business investments are now flowing through the cost base.; Geopolitical exposure could broaden through secondary effects — Management framed geopolitical impact as limited to Middle East and travel/transportation, but acknowledged secondary supply-chain disruption could broaden the hit..

Promise ledger

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