Infosys Q1 net profit jumps driven by strong AI deal wins

Infosys, India’s second-largest IT services exporter, announced strong Q1FY26 results driven by significant digital transformation deal wins, particularly in Artificial Intelligence (AI), with $3.8 billion in deals, 55% of which were net new. 

The company reported revenue from operations of ₹42,279 crore, a 7.54% increase YoY. Infosys raised the lower end of its FY26 revenue guidance to 1-3% from 0-3% while maintaining a margin guidance of 20-22%.

Consolidated net profit for the quarter rose 9% YoY to ₹6,921 crore, with revenue from operations growing 8% YoY. CEO Salil Parekh attributed the performance to the company's AI capabilities, client consolidation success, and employee dedication.

Indian IT majors including TCS, Infosys, HCLTech, Wipro, and Tech Mahindra (all of whom have declared their Q1 results this month) are focusing on AI integration, with Infosys promoting its "AI Your Enterprise" strategy. 

TCS reports over 100,000 employees with advanced AI skills, while Infosys claims over 270,000 "AI-aware" employees. These IT giants are prioritising workforce upskilling.

The total contract value of large deal wins was $3.8 billion, with 55% being net new deals. The number of active clients decreased slightly to 1,861. Key deal wins included extensions of collaborations with Select Portfolio Servicing, AIB, E.ON, DNB Bank ASA, and Yorkshire Building Society.

Infosys continues to leverage Project Maximus to drive profitable growth and enhance shareholder value through operational efficiency improvements. The company reported strong free cash flow generation at $884 million, with cash flow conversion above 100% for the fifth consecutive quarter. CFO Jayesh Sanghrajka highlighted the effective management of currency volatility through hedging.

Segment-wise, financial services grew 5.6% YoY, and manufacturing rose by 12.2%. Retail growth was flat, and hi-tech increased marginally. Life Sciences and other divisions experienced declines. Voluntary attrition increased slightly to 14.4%, and the total headcount was 323,788, remaining relatively stable.

Gartner's Principal Analyst Shubham Rathore noted that Infosys's Q1 FY26 results demonstrate growing momentum in digital and AI-led transformation, supported by $3.8 billion in large deal wins and margin resilience. This aligns with Gartner's view that enterprises are rapidly integrating AI, with GenAI application services projected to grow at a 132.5% CAGR. 

Rathore also said that despite IT market challenges, Infosys maintained guidance that reflects confidence, driven by its focus on scalable, commercially viable AI solutions that resonate with CIOs seeking predictable outcomes. This strategy strengthens Infosys's growth and ability to deliver consistent value.