Summary
Infosys Limited - Q3 FY 2026 Earnings Call Summary Wednesday, January 14, 2026, 6:00 PM IST
Event Participants
Executives 3 Jayesh Sanghrajka (CFO), Rishi Basu (AVP, Global Head - Corp Comm), Salil Parekh (CEO & MD)
Analysts 18 Abhishek Pathak, Ankur Rudra, Ashwin Mehta, Avik Das, Bryan Bergin, Chandra R. Srikanth, Dipesh Mehta, Gaurav Ratera, Haripriya Suresh, Jamie Friedman, Jas Bardia, Jonathan Lee, Keith Bachman, Mansee Dave, Poulomi Chatterjee, Ritu Singh, Sandeep Shah, Vibhor Singhal
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (CC) | ₹42,000+ crores ($5.1 bn) | +1.7% YoY, +0.6% QoQ in constant currency; driven by Financial Services and Europe. |
| Operating Margin (Adj) | 21.2% | +20 bps QoQ; excludes one-time labor code charge; reflects Maximus efficiency gains. |
| Operating Margin (Reported) | 18.4% | Includes ₹1,289 crore charge for Indian labor code changes. |
| Large Deal TCV | $4.8 billion | Includes 26 deals (2 mega deals); 57% net new; 9M FY26 TCV ($11.7 bn) exceeds full FY25. |
| Free Cash Flow (Adj) | $965 million | 113% of adjusted net profit; DSO decreased by 5 days to 82 days. |
| Headcount | 3,37,000 | +5,000 net addition QoQ; 18,000 freshers onboarded out of 20,000 annual target. |
| Utilization (Incl. Trainees) | 80.0% | -220 bps QoQ; lower due to massive fresher intake to build future capacity. |
| LTM Attrition | 12.9% | -200 bps QoQ; continues downward trend reflecting stable talent environment. |
Geographic & Segment Commentary
- Financial Services: Grew 3.9% YoY CC. Management noted a return of discretionary spending in North American retail banking, payments, and mortgages. Infosys is now the preferred AI partner for 15 of the top 25 global banking clients.
- Europe: Strongest geographic performer with 7.2% YoY growth in CC. Momentum is driven by large cost-optimization deals and expansion in Manufacturing and Life Sciences.
- Energy, Utilities, Resources & Services (EURS): Seeing acceleration due to AI infrastructure investments and decarbonization initiatives. Management expects FY27 growth in this segment to surpass FY26.
- Manufacturing: Remains mixed; while Industrial and Aerospace are resilient, the Automotive sector faces headwinds from EV transition uncertainties and tariff concerns.
- North America: Contracted 1.0% YoY CC. Performance was impacted by lower third-party revenue and persistent softness in discretionary retail and hi-tech spending.
Company-Specific & Strategic Commentary
- AI Value Pools: Identified six emerging value pools: AI Engineering, Data for AI, Agents for Operations, Software Dev/Modernization, AI in Physical Devices, and Trust/Risk Services.
- Topaz Fabric: Launched an agent services suite within the Topaz AI portfolio to help clients manage and orchestrate multiple AI agents across the enterprise.
- Strategic Partnerships: Collaborative partnership with Cognition to deploy “Devin” (AI software agent) for legacy modernization and software engineering projects.
- Project Maximus: Margin expansion program contributed 40-50 bps to margins through value-based selling and lean automation, offsetting investments in sales and marketing.
- In-house AI Adoption: Built over 500 internal agents and generated 28 million lines of code using AI to drive internal productivity and delivery efficiency.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth (FY26) | 3.0% - 3.5% (CC) | Revised upward from 2.0% - 3.0% based on strong 9M execution and large deal ramp-ups. |
| Operating Margin (FY26) | 20% - 22% | Maintained guidance; assumes continued efficiency gains from Project Maximus. |
| FY27 Vertical Outlook | Acceleration vs FY26 | Management specifically expects Financial Services and EURS to accelerate in FY27. |
Risks & Constraints
| Risk | Context |
|---|---|
| Labor Code Impact | The ₹1,289 crore charge for Indian labor code changes impacted reported margins by ~280 bps; ongoing impact estimated at 15 bps annually. |
| Macro/Geopolitical | Uncertainties regarding U.S. tariffs and global interest rate trajectories continue to delay long-term commitments in Manufacturing and Retail. |
| Third-Party Revenue | Revenue from third-party items (pass-through) has declined from 8.3% to 7.3% YoY, acting as a headwind to absolute top-line growth. |
Q&A Highlights
AI Monetization & Productivity
- Question: How is AI impacting deal pricing and potential revenue cannibalization? (Ankur Rudra)
- Answer: Pricing is currently accretive; management uses “value-based selling” within Project Maximus to capture AI gains. Productivity-led compression in legacy areas is being offset by new “AI-first” work that was previously unfeasible (Salil Parekh/Jayesh Sanghrajka).
Headcount & Growth Indicators
- Question: Why is Infosys hiring while peers are cutting staff? (Ritu Singh)
- Answer: Increasing headcount by 13,000+ over two quarters demonstrates confidence in future demand. The 20,000 fresher target remains on track with 18,000 already onboarded (Salil Parekh/Jayesh Sanghrajka).
Financial Services Recovery
- Question: Where is the specific traction in BFSI? (Avik Das)
- Answer: Seeing “good traction” in retail banking, payments, and mortgages. Clients are shifting from compliance-only spend to business-growth projects (Salil Parekh).
U.S. Visa & Employee Incident
- Question: What is the status of the H-1B row and reported deportations? (Chandra R. Srikanth)
- Answer: No employee has been “apprehended.” One employee was denied entry at the border months ago and sent back; majority of U.S. staff do not require visas (Salil Parekh).
Key Takeaway
Infosys delivered a resilient Q3 FY26, characterized by a significant upward revision of revenue guidance to 3.0%-3.5% CC. Despite a substantial ₹1,289 crore one-time hit from India’s labor code changes, adjusted margins expanded to 21.2%, supported by the Maximus efficiency program. The company is successfully pivoting to an “AI-first” model, evidenced by 4,600 active AI projects and a robust $4.8 billion large deal TCV. Strategically, the firm is aggressively building capacity, onboarding 18,000 freshers and expanding AI agent capabilities through the Topaz Fabric suite and the Cognition partnership. While Retail and Hi-Tech remain soft, the recovery in Financial Services and the strong outlook for Energy/Utilities provide visibility into growth acceleration for FY27. Management remains focused on capturing new AI-led value pools while maintaining a disciplined margin profile amidst a stabilizing macro environment.
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