Infosys Limited ($INFY) Stock: Q2 Earnings Beat Expectations With $5.08B Revenue and Strong Cash Flow as FY26 Guidance Reaffirmed

TLDR

• Q2 2025 revenue rose 3.7% YoY to $5.08B, surpassing estimates of $5.04B.
• Net income stood at $839M, with EPS rising 7.9% YoY to $0.20.
• Free cash flow hit $1.1B, up 31.2% YoY, marking 131% of net profit.
• FY26 guidance reaffirmed with 2%-3% revenue growth and 20%-22% margins.
• Infosys announced a ₹18,000 crore share buyback and ₹23 interim dividend, up 9.5% YoY.

Infosys Limited (NYSE: INFY) stock traded at $15.85, down 3.56% as of 10:10 AM EDT, after releasing its second-quarter results for the period ended September 30, 2025.

Infosys Limited (INFY)

The IT services giant reported revenue and profit growth that met market expectations, reaffirming its full-year guidance amid resilient performance across business segments.

Strong Q2 Performance and Earnings Growth

Infosys reported adjusted earnings of $0.20 per share, up from $0.19 a year earlier and in line with analyst expectations. Quarterly net income reached $839 million, up from $777 million last year. Total revenue rose 3.7% year-over-year to $5.08 billion, beating Wall Street’s estimate of $5.04 billion.

In constant currency, revenue grew 2.9% YoY and 2.2% sequentially, while operating margin came in at 21.0%, reflecting a 0.1% YoY decline but a 0.2% QoQ improvement. CFO Jayesh Sanghrajka noted the company’s “robust all-round performance,” highlighting resilient margins, high cash generation, and a 13.1% EPS increase in rupee terms.

Strong Cash Flow and Capital Returns

Free cash flow was a major highlight, reaching $1.1 billion, up 31.2% YoY, and representing 131% of net profit. For the first half of FY26, free cash flow stood at $1.98 billion, up 2.7% YoY with a 120% conversion rate.

Infosys’ board approved a share buyback worth ₹18,000 crores and declared an interim dividend of ₹23 per share, marking a 9.5% increase over the previous fiscal year. The company’s strong balance sheet and disciplined capital allocation reflect its continued shareholder focus.

Segment Growth and Deal Momentum

Large deal total contract value (TCV) reached $3.1 billion, with 67% net new business, underscoring the company’s expanding enterprise footprint. The firm added 8,203 employees during the quarter, signaling investment in capacity to meet growing client demand.

For the six months ended September 30, 2025, Infosys reported $10.02 billion in revenue, up 4.3% YoY, with an operating margin of 20.9% and EPS of $0.40, up 6.9% YoY.

FY26 Guidance and Analyst Outlook

Infosys reaffirmed its FY26 revenue growth guidance of 2%-3% in constant currency, while maintaining its operating margin target at 20%-22%. Sanghrajka emphasized continued investment in digital transformation, AI, and automation to futureproof the business amid ongoing global uncertainty.

Analysts remain optimistic, with an average “Buy” rating. Of 14 analysts, 6 rate the stock as “Buy/Strong Buy”, 7 as “Hold”, and 1 as “Sell.” The median 12-month price target stands at $19.51, implying 15.7% upside from the last close.

Infosys shares have gained 1% this quarter but are down 25% year-to-date, reflecting sector-wide volatility. Still, with its stable margins, growing deal pipeline, and shareholder returns, Infosys remains well-positioned for long-term growth in FY26 and beyond.

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