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Infosys on Tuesday reported a marginal decline in net profit for the December quarter, hit by a one-time charge linked to labour law changes, even as revenue growth stayed resilient and deal momentum remained strong.
Infosys posted a consolidated net profit of Rs. 6,654 crore for Q3 FY26, down about 2.2% year-on-year. The company’s revenue from operations increased to Rs. 45,479 crore, representing 8.9% year-on-year growth, in line with market expectations. Compared with previous years, profit decreased, and revenue growth was not very high, indicating that clients are very careful with their spending.
The firm incurred a non-recurring extraordinary expense of approximately Rs. 1,289 crore to align with the new labour laws promulgated in India, which affect provisions regarding gratuity and leave encashment. However, if this cost is disregarded, the basic operational performance remains unaltered, with profit margins being maintained within the previously communicated range.
Large-deal momentum stayed healthy, with total contract value at about $4.8 billion during the quarter. Attrition dropped further to around 12.3%, marking one of the lowest levels in recent quarters and signaling improved employee retention. Infosys also added over 5,000 employees, pointing to confidence in medium-term demand.
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Certainly, Infosys revised its revenue growth forecast for FY26 to 3%–3.5% from the previously set 2%–3%, citing constant demand across major verticals and a strong pipeline as reasons. The firm reaffirmed its operating margin target of 20%–22% and pointed out cost control and effective execution as its main areas of focus.
Investor sentiment improved alongside the new forecast, as evidenced by the rise in Infosys ADRs, which were, in fact, the first US market actions after the results announcement. However, analysts continuously keep an eye on global macro trends and on spending on technology that is not needed immediately.
The Q3 figures indicate that the company might face regulatory cost pressure in the short term, but it will be supported by deal wins and improved guidance and will therefore have a smooth growth path.
