Infosys Shares Rise 4% Following Buyback Announcement

On Tuesday, the Infosys shares surged 3.9 percent, touching a day’s high price of Rs 1,489 on NSE after the exchange filing revealed that its Board will consider a share buyback proposal on September 11, 2025, marking the first repurchase action since 2022 and underscoring the company’s commitment to shareholder returns amid a period of industry uncertainty. The timing coincides during a stagnation in India’s IT sector, which has grappled with disruptive trends such as the rapid growth of Global Capability Centers (GCCs), the automation wave driven by artificial intelligence (AI), and emerging regulatory threats like the proposed US HIRE Act, which could levy new taxes on foreign technology workers, can raise costs substantially for offshore service providers.

Q1FY26 Financial Results Overview

Infosys delivered a resilient Q1FY26 performance, with revenue climbing 3.3 percent sequentially and 7.5 percent year-on-year to Rs 42,279 crore. USD revenue stood at $4.94 billion, with 2.6 percent sequential constant currency growth and 3.8 percent year-over-year growth. EBIT came in at Rs 9,740 crore, up 0.79 percent quarter-on-quarter and 7.97 percent year-on-year, while net profit was Rs 6,924 crore, improving 8.62 percent from the previous year. 

Management Guidance for FY26

Infosys management revised its revenue growth guidance to 1 percent to 3 percent in constant currency, up from 0 percent to 3 percent, signaling cautious optimism amid tight client budgets and a conservative global spending environment. Operating margins are expected to remain steady at 20 percent to 22 percent, with management highlighting disciplined execution, strong cash flows, and a robust pipeline in AI, data, and cloud transformation projects. 

Risks the IT Sector is facing

The Indian IT industry stands at a critical juncture, facing risks, especially from rapid GCC expansion, which is drawing net hiring away from traditional IT firms, and from automation, which is reshaping delivery models and pricing structures. In FY2024-25, GCCs added over 1,00,000 new positions, surpassing leading IT service providers, while export revenues from GCCs and Indian IT firms are now evenly split, as per NASSCOM report. AI-driven automation is compressing middle-tier roles, and pricing is shifting from effort-based contracts to outcome-driven models, forcing service providers to adapt through full-stack transformation and ramped enterprise AI offerings. Additionally, the US HIRE Act, if implemented, would increase the cost of offshore IT work, posing strategic uncertainty, given that the US remains the largest market for Indian IT services.

Industry Context and Strategic Positioning

The IT sector’s recent stagnation is reflected in flat hiring trends for the sixth to seventh consecutive quarter, with demand driven primarily by AI and cloud skills outside the core IT sector and within MNC-driven GCCs. Infosys’s management remains cautious, with guidance reflecting ongoing challenges, delayed client decision-making, discretionary spending cuts, and geopolitical uncertainty. Nevertheless, Infosys continues to demonstrate disciplined execution and sustained profitability, positioning itself as a steady compounder in volatile markets.