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Infosys — Q2 FY26
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%.
bullish
high
✓ Verified against BSE filing
2-Minute Summary
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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.
इन्फोसिस ने दूसरी तिमाही में अच्छा प्रदर्शन किया। पिछले साल की तुलना में कमाई 2.9% बढ़ी और मुनाफा बढ़कर 21% हो गया। कंपनी को 3.1 अरब डॉलर के बड़े ऑर्डर मिले, जिनमें से 67% नए ग्राहकों से थे। बाद में 1.6 अरब डॉलर का एक और बड़ा ऑर्डर आया। बैंकिंग और मैन्युफैक्चरिंग से अच्छी ग्रोथ मिली। एआई से जुड़े 2,500 से ज्यादा प्रोजेक्ट चल रहे हैं। कंपनी ने इस साल 2-3% ग्रोथ का अनुमान लगाया है और मुनाफा 20-22% रहने की उम्मीद है। मुश्किल यह है कि दुनिया भर में आर्थिक अनिश्चितता और टैरिफ के कारण ग्राहक फैसले लेने में देरी कर सकते हैं और खर्च कम कर सकते हैं।
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Macro uncertainty and tariff risks
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Large Deal TCV
$3.1B
+63% net new
Large deal total contract value for Q2, with 67% net new; H1 TCV at $6.9B.
Employee Headcount
332,000
+8,000 QoQ
Net addition of 8,000 employees in Q2; 12,000 freshers hired in H1.
Attrition Rate
14.3%
flat
Attrition remains low at 14.3%, indicating stable workforce retention.
Free Cash Flow
$1.1B
131% of net profit
Strong cash generation; FCF conversion above 100% for sixth consecutive quarter.
What Changed vs Last Quarter
NEW
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.
NEW
Versant JV expected to close this fiscal year
Pending regulatory approvals; last year revenue AUD 210M; not included in guidance.
UPDATED
FY26 revenue growth guidance raised to 2-3% CC
Revised from previous range; reflects strong H1 performance and includes seasonal H2 softness.
UPDATED
Operating margin guidance maintained at 20-22%
Margin guidance unchanged despite revenue guidance revision; Project Maximus and cost levers support.
DROPPED
FY26 free cash flow expected above 100% of net profit
Continued strong cash generation; 5th consecutive quarter of FCF >100% of net profit.
NEW RISK
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.
NEW RISK
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.
NEW RISK
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.
RISK GONE
H2 seasonality and demand weakness
Management expects H1 to be stronger than H2 due to normal seasonality, implying potential growth deceleration.
RISK GONE
AI-driven productivity may cap pricing
Productivity gains from AI are shared with clients, potentially limiting margin expansion and revenue per employee.
RISK GONE
Vendor consolidation may intensify competition
As clients consolidate vendors, competition with larger peers could pressure margins and win rates.
🤫 Topics management stopped discussing
Mentioned in Q1 FY25, Q2 FY25
Outside financial services, discretionary spending remains constrained, with retail, high-tech, and telecom still focused on cost takeouts, delaying broader demand recovery.
Mentioned in Q2 FY25, Q3 FY25
Infosys plans to hire over 15,000 freshers in FY25 and over 20,000 in FY26.
Mentioned in Q2 FY25, Q3 FY25
CFO Jayesh Sanghrajka confirmed that compensation increases will create margin headwinds in Q4 and Q1, though exact impact not quantified.
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Guidance and risk preview
Revised from previous range; reflects strong H1 performance and includes seasonal H2 softness.
Geopolitical tensions and tariff uncertainties are causing elongated decision cycles and pressure on discretionary spending, especially in retail a...
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