BENGALURU, January 14, 2026, 17:04 IST
Infosys on Wednesday boosted its FY26 revenue growth forecast to 3%-3.5%, following Q3 results that saw October-December revenue climb 8.9% to 454.79 billion rupees, slightly above expectations. Profit dipped 2.2% to 66.54 billion rupees, dragged down by a one-time 12.89 billion rupee charge related to India’s new labour codes. 1
The guidance shift is crucial as investors seek clearer signals on demand in India’s IT services sector, where spending remains uneven and deal closures can suddenly falter. Ahead of the earnings, brokerages flagged furloughs and fewer working days in the December quarter as typical headwinds, focusing instead on deal ramp-ups and any tweaks to the yearly outlook. 2
Costs remain a key concern. Changes to the labour code have pushed companies to rethink how they calculate certain employee benefits, potentially skewing profits in a quarter that’s already expected to be seasonally weak.
Infosys reported revenue rising 1.7% year on year in constant currency, removing the impact of exchange rates, and up 0.6% versus the previous quarter. Operating margin came in at 18.4%, while the adjusted margin—excluding a labour code provision—stood at 21.2%. Free cash flow, the cash generated after capital expenditures, hit 8,176 crore rupees. The company also announced $4.8 billion in large-deal wins measured by total contract value (TCV), with 57% classified as net new business.
Infosys shares climbed 0.6% to close at 1,608.9 rupees on the NSE ahead of the earnings release. The stock has tumbled over 17% in the last year, while India’s Nifty 50 index gained roughly 11%. CFO Jayesh Sanghrajka called the quarter “seasonally weak.” 3
Infosys’ American depositary receipts were up 2.17% in pre-market trading, hitting $17.90 compared to the previous close of $17.52 in the U.S., according to Business Today. 4
The labour code bill isn’t just hitting Infosys. Tata Consultancy Services recorded a one-time charge of 2,128 crore rupees, while HCL Technologies took a 956 crore rupee hit, according to a Business Today report on sector provisions. 5
But the cost story might stretch beyond just one quarter. Jefferies, cited by Financial Express, warned recurring employee expenses could jump by up to 5%, adding to one-time charges that hit profits. That paints a downside where revenue guidance stays steady, but margins suffer slow, nagging erosion.
Investors are focused on whether the higher guidance leads to steadier billings in the March quarter, as staffing and project activity usually even out after months marked by heavy furloughs. The profit margin could well depend on just how “one-time” this new cost category turns out to be.
