Infosys Q3: revenue growth outlook raised, labour code impact clouds margins

Infosys raised its FY26 constant currency revenue growth guidance to 3–3.5% after better-than-expected Q3 performance, even as profits took a hit from labour code costs. EBIT margin guidance for the year remains unchanged.

Technology services major Infosys Ltd. on Wednesday raised its constant currency revenue growth guidance for FY26 to 3–3.5%, up from its earlier forecast of 2–3%, after reporting better-than-expected revenue performance in the December quarter.

The company, however, kept its EBIT margin guidance unchanged at 20–22% for the full year, even as profitability during the quarter was impacted by costs linked to the implementation of new labour laws.

Infosys reported constant currency revenue growth of 0.6% quarter-on-quarter in Q3FY26, beating Street expectations that had anticipated flat growth. The company had posted stronger CC growth of 2.6% in Q1 and 2.2% in Q2.

The Bengaluru-based IT major disclosed that the new labour codes resulted in a one-time impact of ₹1,289 crore, weighing on earnings. As a result, net profit declined 9.6% sequentially to ₹6,654 crore, compared with ₹7,364 crore in the September quarter.

Revenue for the December quarter came in at ₹45,479 crore, exceeding the CNBC-TV18 poll estimate of ₹45,255 crore and rising from ₹44,490 crore in the previous quarter.

Earnings before interest and tax (EBIT) stood at ₹9,479 crore, marking a 1.3% sequential increase, though slightly below market expectations of ₹9,624 crore. The EBIT margin slipped to 20.8%, compared with 21% in Q2, and lower than the estimated 21.3%.

Deal momentum remained healthy, with Infosys reporting total contract wins of $4.8 billion during the quarter. Of this, 57% came from net new deals, reflecting steady demand despite a cautious global macro environment.

Ahead of the Q3 results, Infosys was tracked by 51 analysts, with 37 maintaining a ‘Buy’ rating, 11 recommending ‘Hold’, and three advising ‘Sell’.

Shares of Infosys ended 0.62% higher at ₹1,608.90 on Wednesday, ahead of the earnings announcement.