Infosys Q3 Results: Net Profit Falls 10% On New Labour Code Impact, Guidance Revised Higher

Infosys Ltd. joined other Indian IT companies to report a fall in net profit in the third quarter of the current financial year due to higher costs on labour.

Consolidated net profit fell nearly 10% to Rs 6,654 crore in the October-December quarter, compared to the preceding quarter, according to a stock exchange filing on Wednesday. The company had to provision Rs 1,289 crore as a one-time cost to comply with new labour codes notified by the government late last year.

Infosys Q3 Result Highlights (Consolidated, QoQ)

• Revenue up 2.2% at Rs 45,479 crore versus Rs 44,490 crore (Bloomberg estimate: Rs 45,204 crore)

• EBIT up 1.3% at Rs 9,479 crore versus Rs 9,353 crore (Bloomberg estimate: Rs 9,558 crore)

• EBIT margin at 20.8 % versus 21.02% (Bloomberg estimate: 21.14%)

• Profit down 9.6% at Rs 6,654 crore versus Rs 7,364 crore (Bloomberg estimate: Rs 7,397 crore)

The total contract value (TCV) of large deal wins was $4.8 billion, with net new of 57%, a statement said.

The country's second largest IT company revised its guidance for fiscal 2026 revenue growth to 3.0%-3.5% in constant currency terms from 2%–3% earlier and operating margin of 20%-22%.

"Infosys delivered a strong Q3 performance demonstrating how our differentiated value propositions in enterprise AI, through Infosys Topaz, are consistently driving higher market shar," said CEO and MD Salil Parekh.

"Clients increasingly view Infosys as their AI partner with demonstrated expertise, innovation capabilities and strong delivery credentials. This has helped them unlock business potential and enhanced value realization," he added.

“Our performance was broad-based in Q3 with 0.6% sequential revenue growth, 0.2% adjusted operating margin expansion, stellar large deal wins at $4.8 billion and robust adjusted free cash generation at $965 million in a seasonally weak quarter” said CFO Jayesh Sanghrajka.

Segmental Performance

Revenue from communications and manufacturing rose over 10% on a year-on-year basis. Financial services jumped nearly 5% and energy, utilities, resources and services by 1%.

On the other hand, income from retail segment fell nearly 4%, Hi-Tech by 2.6% and life sciences by 3.1%

Attrition 

Infosys' voluntary attrition rate fell to 12.3% from 14.3% in the previous quarter and 13.7% in the same period last year.

The total employee count rose by 5,043 sequentially to 3,37,034 in the December quarter.

Shares of Infosys closed 0.75% higher at Rs 1,609.9 on the BSE, ahead of the results, compared to a 0.3% decline in the benchmark Sensex. The stock has fallen 17% in the last 12 months.