Infosys shares down 1% even as IT major beats estimates in Q1; what experts say

The IT services major broke the trend of subdued and listless earnings of the IT sector; however, the stock was still in the red as the Street is looking for more cues for the IT sector outlook.

The company on Wednesday reported an 8.7% rise in its June quarter net profit and revised its full-year revenue forecast after stronger-than-expected earnings growth.

Consolidated net profit of ₹6,921 crore in April-June – the first quarter of the 2025-26 fiscal year – compared with ₹6,368 crore earnings in the same period a year back, according to a company statement.

The IT services company revised upwards its annual revenue growth forecast to the 1% to 3% band from a prior 0-3%.

Here, it must be noted that the company did not increase the upper band of the guidance. Hence, this could be attributed to the fall in shares.

Net profit, however, fell 1.5% sequentially when compared with the January-March quarter.

"Our performance in Q1 demonstrates the strength of our enterprise AI capabilities, the success in client consolidation decisions, and the dedication of our over 300,000 employees. Our large deal wins of USD 3.8 billion reflect our distinct competitive positioning and deep client relationships," Infosys CEO and MD Salil Parekh said.

Briefing media at the Q1 earnings call, Parekh noted that the start to the financial year had been strong.

"The main drivers of our growth were a leadership in enterprise AI and a continued success in clients selecting us for consolidations. We are seeing good demand for AI agents," he said.

Enthused by its performance in the June quarter, the company has raised the lower end of its full-year constant currency revenue growth guidance to 1–3% (it was earlier 0–3%), with margin guidance retained at 20–22%.

The total headcount rose marginally by 210 employees during the course of the quarter, bringing the workforce to the 323,788 level -- an increase of 2.6% year-on-year.

The company said it was on track to hire 20,000 freshers this fiscal year, as announced earlier.

Financial services remained the largest sector, contributing about 27.9% of total revenue in Q1 FY26, followed by manufacturing at 16.1% and retail at 13.4%.

Geographically, North America accounted for 56.5% of quarterly revenue, down from 58.9% in the corresponding period of the previous fiscal year.

Europe increased its share to 31.5%, up from 28.4% in Q1 FY25.

Infosys Q1 result: What analysts say

Analysts at Antique note that the June quarter was a strong quarter for Infosys, but organic growth guidance mostly remained unchanged. They added that the deal wins were strong, but discretionary spending remains weak and margin headwinds persist.

Hence, they said that the FY26/27 EPS (earnings per share) estimates remain unchanged.

On the other hand, CLSA said the company ticked all the right boxes in Q1. It added that Infosys' revenue growth was better than estimated.