Infosys Q1 earnings preview: Brokerages expect strong show with up to 10% profit growth, stable margins

IT major Infosys will announce its Q1 earnings on Wednesday, July 23. The company is expected to post a seasonally strong quarter, supported by deal momentum and inorganic contributions, although analysts remain cautious about near-term margin pressures.

Net profit is expected to grow around 7%–10% year-on-year (YoY), while revenue could rise 6%–7%, according to estimates from five brokerages.

Brokerage estimates across 5 key metrics:

1. PAT

Infosys is expected to report net profit between Rs 6,800 crore and Rs 7,023 crore for Q1FY26.

• JM Financial: Rs 7,023 crore, up 10.3% YoY and down 0.1% quarter-on-quarter (QoQ).
• Nuvama: Rs 6,908 crore, up 8.5% YoY and down 1.8% QoQ.
• Prabhudas Lilladher: Rs 6,800 crore, up 7.2% YoY and down 2.9% QoQ.

Elara Capital: Rs 6,843 crore, up 7.5% YoY and down 2.7% QoQ.

2. Revenue

Brokerages expect Infosys to post revenue between Rs 40,925 crore and Rs 42,102 crore.

• Nomura: Rs 42,102 crore, up 7.1% YoY and 2.9% QoQ. Dollar revenue is estimated at $4,896 million, up 3.9% YoY and 3.5% QoQ.

"We expect revenue to grow 1.8% QoQ in constant currency (CC), with organic growth at 1.5%. Discretionary demand in financial services should remain stable," Nomura noted.

• Prabhudas Lilladher: Rs 42,000 crore, up 6.7% YoY and 2.5% QoQ.
• Nuvama: Rs 41,990 crore, up 6.8% YoY and 2.6% QoQ.

"We forecast CC revenue growth of 2.0% QoQ and 3.7% QoQ in USD terms, including 0.4% inorganic," Nuvama stated.

• JM Financial: Rs 40,925 crore, up 6.7% YoY and 2.5% QoQ.
  Growth is supported by a favourable base, higher billing days, and contribution from MRE Consulting.
  
  
• Elara Capital: Rs 41,695 crore, up 6.1% YoY and 1.9% QoQ.

3. Operating Profit & Margins

Margins are expected to stay largely stable.

1. JM Financial: EBIT margin at 21.4%, up 50 bps QoQ and 40 bps YoY; EBIT estimated at Rs 8,995 crore, up 8.5% YoY and 4.9% QoQ.
   
   
2. Nuvama: EBIT at Rs 8,969 crore, up 8.2% YoY and 4.6% QoQ; EBIT margin flat YoY, up 10 bps QoQ at 21.1%.
3. Prabhudas Lilladher: Flat EBIT margin at 21.1%.

Nomura: EBIT margin expected to contract to 20.7%, citing senior-level wage hikes.

4. Guidance

• Nuvama: Expects Infosys to revise FY26 revenue guidance to 1–4% CC YoY (including 0.5% inorganic) while maintaining a 20–22% EBIT margin.
• JM Financial: Anticipates 1–3% organic revenue growth guidance, rising to 1.5–3.5% including acquisitions.
• Nomura: Expects Infosys to retain its 0–3% FY26 revenue guidance and 20–22% EBIT margin band.

5. Key Monitorables

• Commentary on client discretionary spending amid macroeconomic uncertainty.
• Outlook for BFSI demand and cost-optimization deals.
• Margin trajectory post-wage hikes and deal ramp-ups.
• Impact of acquisition synergies and contributions from recent buyouts.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)