Bengaluru: Infosys posted a modest 0.6 percent sequential revenue growth in constant currency for the quarter ended December 31, 2025 (Q3 FY26), with top-line rising to Rs 45,479 crore. However, net profit declined 2.2 percent year-on-year to Rs 6,654 crore as operating margins came under pressure.
Margins shrink despite revenue rise
Infosys’ revenue grew 8.9 percent YoY in rupee terms, but operating profit fell to Rs 8,355 crore-down 6.3 percent from the same quarter last year. Reported operating margin narrowed to 18.4 percent, compared to 21.3 percent a year ago. After adjusting for a one-time labour code impact, the margin stood at 21.2 percent.
Profit and EPS decline
Net profit came in at Rs 6,654 crore for Q3 FY26, compared to Rs 6,806 crore in Q3 FY25 and Rs 7,364 crore in Q2 FY26-a decline both YoY and QoQ. Basic earnings per share dropped to Rs 16.17 from Rs 17.76 in the previous quarter, reflecting a 9 percent fall.
Labour code costs hit results
The Q3 numbers include a Rs 1,289 crore provision related to India’s new labour codes, which increased gratuity and leave liabilities. Excluding this, adjusted profit was Rs 7,625 crore and adjusted EPS was Rs 18.53. The labour-related charge had a direct impact on margins and bottom line.
Strong deal momentum continues
Infosys reported large deal wins worth USD 4.8 billion during the quarter, with 57 percent comprising net new business. Free cash flow stood at Rs 8,176 crore, rising to Rs 8,626 crore on an adjusted basis-113 percent of adjusted net profit-demonstrating strong liquidity.
Management maintains FY26 outlook
The company retained its full-year FY26 guidance of 3.0–3.5 percent revenue growth in constant currency and an operating margin band of 20–22 percent, excluding labour code adjustments. Headcount rose by 5,043 in the quarter, reflecting selective hiring in growth areas.
Infosys’ Q3 performance reflected resilience in a seasonally soft quarter, though margin pressures and compliance costs moderated profitability.
