Infosys Shares Fall 2% Despite 13% Rise in Q2FY26 Profit

On Friday, the Infosys share price down 2.07% touching a day’s low price of Rs 1,440.10 on NSE after it announced a steady financial performance for the second quarter of FY26, reflecting operational resilience and effective cost management in a challenging global IT environment. The company’s focus on AI-driven transformation, robust deal pipeline, and disciplined capital allocation reinforced investor confidence despite a cautious revenue outlook for the year.

Financial Performance

Infosys reported a consolidated net profit of Rs 7,375 crore in Q2FY26, registering a year-on-year growth of 13.2% compared to Rs 6,516 crore in Q2FY25 and a sequential rise from Rs 6,924 crore in Q1FY26. Revenue from operations increased 8.6% YoY to Rs 44,490 crore against Rs 40,986 crore a year ago. In constant currency terms, revenue grew 2.9% YoY and 2.2% QoQ, while operating margin stood at 21%, declining marginally by 0.1% year-on-year but improving sequentially by 0.2%. The company achieved basic earnings per share of Rs 17.76, up 13.1% YoY, driven by improved profitability and strong free cash flow of Rs 9,677 crore.?

Management Commentary

CEO and MD Salil Parekh stated that Infosys delivered its second consecutive quarter of strong growth by leveraging its deep client engagement and strategic focus on artificial intelligence. He highlighted that Infosys Topaz, the firm’s AI-led business platform, is unlocking large-scale transformation value across client operations. Parekh highlighted that 67% of the $3.1 billion total contract value (TCV) from large deals were net new, underlining customer trust in the firm’s digital-first capabilities. CFO Jayesh Sanghrajka added that operational discipline and high cash generation remained central to their performance, noting a 13.1% EPS growth and sustained margin resilience.?

Deals and Developments

During the quarter, Infosys pursued several strategic alliances to strengthen its AI, cloud, and data modernization portfolio. Notable deals included a collaboration with ABN AMRO to digitize its lending process through the nCino platform, an expansion of partnership with Mastercard to enhance cross-border payment systems via Mastercard Move, and an AI-focused data security engagement with Sunrise. In addition, Infosys acquired a 75% stake in Telstra’s Versent Group in Australia to co-develop AI-enabled digital solutions and partnered with AGCO to modernize IT and HR systems.?

Guidance and Outlook

Infosys revised its full-year FY26 revenue growth guidance to a 2% to 3% in constant currency, maintaining its operating margin band at 20% to 22%. The conservative guidance reflected persisting macroeconomic uncertainty and delayed discretionary tech spending among global clients, especially in BFSI and retail sectors. However, the management reiterated optimism about long-term demand for digital and AI-led services driven by generative AI adoption, cloud modernization, and cybersecurity transformation.?

Corporate Actions

In line with its capital allocation policy, Infosys declared an interim dividend of Rs 23 per share with October 27, 2025, set as the record date and November 7 as the payout date. The company also announced a Rs 18,000 crore share buyback program, underscoring its commitment to returning cash to shareholders while maintaining a strong balance sheet. 

Employee Costs and Attrition

Infosys continued to invest in talent upskilling and AI competency, adding 8,203 employees during the quarter to reach a total headcount of 3,31,991. Attrition stood at 14.3%, slightly higher than last year’s 12.9%, as competition for skilled talent remained intense. Employee costs increased 8.7% YoY to Rs 23,438 crore, aligning with revenue growth and the firm’s renewed focus on AI reskilling.