Infosys FY26 Growth Outlook: Management Says Climate Favourable For AI, Data, Cloud Deals

Infosys Ltd.'s management said on Wednesday that the near-term outlook for the IT services major looked good amid an uncertain business environment, underlining robust growth in the artificial intelligence segment.

Climate remains favourable to data and cloud deals as well. The company has seen five consecutive quarters of strong cash generations and free cash flows. It expects the FY26 free cash flow to stay above 100% of the net profit, the management said during a post-earnings conference call.

It is yet to decide on the next wage hike and so far, sees no change in environment for the second quarter of the current fiscal.

Infosys Ltd. announced its quarterly performance results earlier in the day and raised its lower-end revenue guidance for the ongoing fiscal. The management expects revenue growth of 1% to 3% in constant currency along with an operating margin of 20% to 22% over fiscal 2026, according to the company's press release.

"Our performance in Q1 demonstrates the strength of our enterprise AI capabilities, the success in client consolidation decisions, and the dedication of our over 300,000 employees," Chief Executive Officer Salil Parekh said.

Revenue of Bengaluru-based largest IT services firm rose 3.3% over previous quarter to Rs 42,279 crore in the three months ended June, according to an exchange filing. That compares with the Rs 41,724-crore consensus estimate of analysts tracked by Bloomberg.

The uncertainties and potential tariffs continue to weigh on sentiment, Anand Rathi Institutional Equities' research analyst, Sushovon Nayak, told NDTV Profit in an interaction. "I think it's a conservative guidance and we'll have to see how it evolves over the next few quarters," Nayak said.

Quarter-on-quarter revenue growth in constant currency stood at 2.6%, reversing a 3.5% decline in the March quarter. Year-on-year, revenue grew 3.8% in constant currency terms.