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After Tata Consultancy Services Ltd (TCS) and Wipro Ltd, Infosys Ltd, too, fell short of revenue expectations, with a 3.5% sequential decline in constant currency (CC) terms for the March quarter (Q4FY25). The company's management attributed the decline to lower pass-through revenue, deal slippages, and seasonal volume weakness.
(Pass-through revenue refers to income from the resale of third-party items used in client service delivery.) Except for the communications and hi-tech segments, all other verticals posted a decline in Q4. Like its peers, has flagged soft discretionary spending by clients amid heightened trade tensions which have added to global economic uncertainty, leading to a continued focus on cost optimization and efficiency-driven deals.
Yet, some elements set apart from its peers in FY26. For instance, despite increased macro uncertainty in recent weeks, Infosys is yet to see a change in deal implementation timeline. The deals it secured recently began ramping up in Q4FY25, and it has not flagged any major ramp-downs or cancellations.
Another encouraging sign: Infosys reported positive volume growth in March. During the quarter under review, the company closed 24 large deals with a total contract value of $2.6 billion, 63% of which was net new.
In its earnings call, TCS management indicated that tariff policies and geopolitical tensions had adversely affected client decision-making towards the end of the quarter. Wipro said that client spends deteriorated towards the end of Q4FY25, and Q1FY26 could see further impact. Further, Wipro management added that the tariff-led macro uncertainty is weighing on the demand in verticals such as consumer and manufacturing, leading to a pause of some large transformation projects.
For FY26, Infosys has guided for a broad 0-3% CC revenue growth range, excluding any impact from acquisitions. The guidance assumes normal seasonality at the upper end, while the lower end factors in risks of a weak start and some further deterioration in the macro environment. According to Nuvama Research, while Infosys’ revenue growth guidance is slightly lower than expected, it is decent given the weak exit rate.
“The guidance (0.9–1.8% required CQGR) exudes management confidence in trying to mitigate the weak macro," said the Nuvama report dated 17 April.
Going by the estimates of , this guidance suggests that Infosys is likely to outperform peers, with an expected 2% sequential CC revenue growth in Q1FY26. Earnings before interest and tax (Ebit) margin declined sequentially to 21% due to wage hike and acquisition related cost. The company rolled out pay increases in January, with the remainder implemented in April.
Two recent strategic acquisitions—MRE Consulting (energy vertical) and Missing Link (cybersecurity)—also weighed on profitability. Infosys has guided for an Ebit margin band of 20- 22% for FY26, and aims to improve its margin trajectory driven by its cost optimization project Maximus and lower third-party revenue. “Passthrough revenues for FY26e could be materially lower, and this could provide a good lever for margin expansion in FY26e.
While there could be a wage hike impact in the coming quarter, we believe margins could expand ~30bp for the full year on the back of lower pass-through revenues," added the Motilal Oswal report dated 17 April. Still, Infosys hasn't escaped earnings downgrades. has cut its FY26–27 earnings per share estimates by 4.
3–5.6%. The Infosys stock has been largely flat over the past year, faring slightly better than the marginally negative return of the Nifty IT Index.
At FY26 price-to-earnings multiple of 20 times, a discount to TCS, showed Bloomberg data..
