Infosys , India's second-largest IT services company, reported robust financial results for the second quarter of fiscal year 2026 and raised its full-year revenue growth guidance.

Key Highlights

• Q2 revenue grew 2.2% sequentially and 2.9% year-on-year in constant currency terms
• Operating margin expanded by 20 basis points sequentially to 21.00%
• Large deal total contract value (TCV) was $3.10 billion, with 67% being net new
• Announced an additional $1.60 billion mega deal after quarter end
• Added 8,000 employees during the quarter
• Raised FY26 revenue growth guidance to 2-3% in constant currency (from 1-3% earlier)
• Maintained operating margin guidance at 20-22% for FY26

Management Commentary

CEO Salil Parekh stated that client interactions are showing a strong focus on deploying AI across enterprises for both growth and cost efficiency. The company is seeing good traction in Financial Services and Manufacturing verticals, while Retail continues to face constraints.

Regarding visa rule changes, Infosys mentioned it has been working on localization in key markets like the US for years. The company plans to leverage more local hiring, nearshore centers, and offshore delivery to ensure continuity of client services.

CFO Jayesh Sanghrajka noted that deal pipelines remain strong, with a focus on cost optimization, vendor consolidation and AI-driven efficiencies. However, the overall demand environment remains uncertain.

AI Initiatives

Infosys highlighted its leadership in enterprise AI, with over 2,500 generative AI projects and 200+ agentic AI projects for clients. The company is also leveraging AI to improve its own operations.

Outlook

Looking ahead, Infosys expects some seasonal softness in the second half due to fewer working days and furloughs. However, the raised guidance reflects confidence from the strong H1 performance.

While macroeconomic uncertainties persist, Infosys remains well-positioned to capture opportunities in enterprise AI transformation and cost optimization initiatives for clients.

Three major Indian IT companies have reported sequential revenue growth in their second quarter results, with Infosys emerging as the frontrunner. Here's a breakdown of their performance:

Q2 Performance Overview

Key Highlights

Infosys

• Led the pack with 2.20% quarterly revenue growth
• Reported 8.00% year-on-year earnings increase
• Raised full-year growth guidance to 2-3%
• Expanded workforce by 2.50%

LTIMindtree

• Achieved 2.40% quarterly revenue growth
• Posted strong margin expansion
• Targeting 10.00% USD revenue growth for the fiscal year

Wipro

• Showed modest 0.30% quarterly revenue growth
• Reported flat EBIT performance
• Provided guidance below market expectations

Market Insights

Goldman Sachs has noted early signs of demand stabilization and deal momentum, suggesting a soft recovery in the IT sector. However, the report also highlights potential challenges:

• AI-driven productivity gains and reduced discretionary spending may pressure sector valuations
• Retail IT spending remains weak
• Other industry segments show resilience

Factors Supporting Performance

• Currency movements
• Operational efficiencies

These factors have contributed to margin improvements across all three companies.

Outlook

While the IT sector shows signs of recovery, companies and investors should remain cautious. The impact of AI on productivity and potential reductions in discretionary spending could affect sector valuations in the future. Companies may need to focus on operational efficiency and diversification of their client base to maintain growth momentum.