Infosys Q3 Earnings: Labour Costs, Deals, and FY26 Guidance in Focus
Overview
Infosys (NSE: INFY, BSE: 500209) reports Q3 earnings today. Investors scrutinize the impact of new labor codes, potentially reducing Q3FY26 profits by 10-20%. All eyes are on the FY26 revenue guidance and margin outlook, especially after Q2's revised growth forecast. The company's $1.6 billion deal pipeline and AI-driven digital transformation efforts are also key factors analysts will assess. A dividend announcement is anticipated.
Stocks Mentioned
Infosys (NSE: INFY, BSE: 500209) is set to release its third-quarter earnings for fiscal year 2026 today, with investors keenly watching how the IT services giant navigates potential impacts from new labor codes and assesses its future growth trajectory.
Labour Code Headwinds
Analysts at Jefferies forecast that India's recently implemented labor codes could impose a one-time profit reduction of 10% to 20% on Infosys's Q3 FY26 results. This potential hit to profitability is a significant point of focus for market participants.
FY26 Outlook in Question
The company's guidance for fiscal year 2026 will be a critical determinant of investor sentiment. In the prior quarter, Infosys management revised its constant currency revenue growth outlook upwards to a range of 2% to 3%, while maintaining its operating margin expectations between 20% and 22%. Any adjustments to these figures will be closely scrutinized.
Deal Pipeline Strength
The IT major's ability to secure and ramp up large deals remains a key performance indicator. Analyst Deven Choksey estimates Infosys's Q3 FY26 revenue at ₹44,965.9 crore, attributing this projection to AI-led digital transformation projects and significant deal wins, including a substantial $1.6 billion contract. Axis Securities Equity Research expects a 2.7% quarter-on-quarter revenue growth, bolstered by these deal ramp-ups.
Investor Returns
Following an interim dividend of ₹23 per share declared in Q2 FY26, investors will also be looking for further announcements regarding shareholder returns. The company's overall financial health and cash flow generation will dictate its capacity for future dividends or buybacks.
