Infosys posted a small rise in revenue for the third quarter but its profit margin fell short of expectations.
Quarterly performance snapshot
Revenue grew 0.6% year‑on‑year (constant currency) from the previous quarter. However, the adjusted earnings before interest, tax and margin (EBITM) slipped 20 basis points to 20.8%, below analysts’ forecasts.
Big deals and new business
- Large‑deal total contract value (TCV) reached $4.8 billion, with 57% coming from brand‑new contracts.
- Management sees faster revenue growth in banking, financial services, insurance (BFSI) and European markets from FY27 onward, driven by strong deal wins and AI partnerships with many top clients.
Guidance update
Infosys raised its FY26 revenue growth outlook to 3‑3.5% (constant currency), up 75 basis points from the prior 2‑3% range. This suggests Q4 could see flat to a slight decline of about 1.7%.
The company kept its FY26 EBITM target at 20‑22%, not counting any impact from upcoming labour law changes.
The guidance does not yet include any revenue from the pending Telstra joint venture.
Analyst view
Based on the Q3 results, the earnings‑per‑share (EPS) forecast for FY26‑28 was trimmed by 2.1%, or about 0.5%. The analyst maintains a “Buy” rating with a target price of ₹1,750, which reflects a 22× multiple on the projected December‑2027 earnings.
Takeaway for investors
While the modest revenue increase and strong deal pipeline are positives, the margin miss and modest guidance mean investors should watch how the new deals convert into profit and whether the Telstra JV materialises.
Remember, this is just an analysis, not a prediction. Do your own research before making any investment decisions.