INFY - Infosys Ltd Share Price

Management's outlook for Infosys for the financial year 2026 is cautious, with revenue growth projected between 0% to 3% in constant currency terms. This guidance reflects the uncertain economic environment and includes a margin guidance of 20% to 22%. The company reported a solid performance in FY25, achieving a 4.2% revenue growth in constant currency, an operating margin of 21.1%, and generating $4.1 billion in free cash flow.

Key forward-looking points made by management include:

1. Shift in Client Demand: Clients are transitioning from a use-case-based approach to an AI-led transformation, with Infosys being well-positioned due to its development of over 200 AI agents aimed at enhancing customer service and operational efficiency.

2. Strategic Expansion: Management highlighted ongoing strategic acquisitions in the energy consulting space in the U.S. and cybersecurity in Australia, along with a joint venture partner in Japan, indicating a focus on expanding their capabilities in these key areas.

3. Cost Efficiency: Emphasis on automation, cost reduction, and efficiency will become more critical as clients seek consolidation and cost takeout opportunities amid economic uncertainty.

4. Market Segments: While Financial Services and Manufacturing showed strong growth, uncertainties in the consumer products and automotive sectors were noted, alongside expectations for a more cautious spending environment.

5. Large Deals: The company secured $11.6 billion in large deals, with 56% being net new, indicating a strong deal pipeline. However, any significant slowdown in the U.S. and European markets may impact future growth.

6. Hiring Plans: Infosys plans to hire over 20,000 freshers in FY26, despite previous reports of laying off underperforming recruits, highlighting a commitment to building a skilled workforce.

Overall, Infosys aims to navigate the current uncertainty with agility, leveraging its capabilities in AI and automation to support clients while focusing on margin improvement initiatives like Project Maximus.

Major Questions and Answers from the Transcript

1. Question by Ritu Singh (CNBC TV18): "Hi, Salil. Happy to be here. Jayesh, a quick word with your guidance of almost no growth in this year "“ 0% to 3%. If you could give us more in terms of commentary on what you are seeing? For instance, from TCS, we heard about delays in decision-making. From Wipro yesterday, we heard one of the large clients paused a transformational deal. So, what are you hearing? Are there ramp downs? Are there delays? Are there any sort of cancellations in large deals?"

Answer: "We see uncertainty in the environment, but our recent deals are moving into next phases without changes. We continue to have a pipeline of mega deals and observe clients focusing on cost takeout and automation. Our guidance assumes heightened uncertainty, but we believe in our capacity to navigate these changes and are currently not seeing delays or cancellations."

2. Question by Haripriya Sureban (NDTV Profit): "Do you see any kind of changes going forward in your conversations with the client? Any possibility of ramp downs or cancellations that you have visibility on right now?"

Answer: "We are observing a cautious stance from clients regarding spending, particularly in terms of consolidation and cost pressures. While we anticipate some discussions around cost takeout due to the economic outlook, we have yet to experience any tangible changes like cancellations or ramp downs in our recent deal wins."

3. Question by Chandra Srikanth (Moneycontrol): "Does the 0% to 3% guidance bake in impact of tariffs? Are there any verticals or niche platforms that you are building which has outcome-based pricing?"

Answer: "Our guidance reflects various scenarios; the lower end factors in possible deteriorations. Though the effects of tariffs and other macroeconomic factors are uncertain, we are enhancing our platforms focusing on automation and efficiency, positioning ourselves for opportunity in the current environment with a strategy for outcome-based pricing."

4. Question by Beena Parmar (The Economic Times): "Can you tell us what kind of percentage of revenue cannibalization are you seeing? Which sectors and spaces are these in? And what is your outlook on the different sectors?"

Answer: "Productivity benefits are ranging between 30% to 40%, and we still observe growth in Financial Services and Manufacturing. However, we note weakness in Consumer Products due to the economic shifts. While we remain optimistic in Energy and Utilities, we are closely monitoring sectors for future impacts."

5. Question by Shilpa Phadnis (The Times of India): "Can you share more light on the internal project focused on GCCs and the economic benefit of AI that has longer gestation cycles?"

Answer: "Our focus on GCCs has led to significant wins, and we are leveraging AI for improved productivity, seeing benefits of 20% to 25% in specific products. Clients are increasingly demanding measurable productivity gains, and we continue to position ourselves for those requests while supporting training for capabilities in AI."

6. Question by Jas Bardia (Mint): "Given the backdrop of uncertainties, how is your outlook on growth for FY26? Is there a plan B in place to ensure continued growth?"

Answer: "Our strong deal wins position us well, even in uncertain environments. While the guidance for FY26 is 0% to 3%, we are flexible and will adjust our strategies based on evolving market conditions and opportunities that arise, particularly around cost reduction initiatives."

7. Question by Uma Kannan (The New Indian Express): "Are you finding it challenging to retain your existing clients? What kind of opportunities are you seeing through AI?"

Answer: "We are maintaining strong relationships with our existing clients and are seeing opportunities through AI transformation. We remain focused on delivering high-quality services and monitor clients' evolving needs continuously, ensuring we adapt to their demands in this shifting landscape."

By summarizing the responses, we maintain the essence while highlighting critical insights from the earnings call without losing detail.