Anticipated Decline in Profitability for Infosys as Global Macros Weigh
India’s second-largest IT services company, Infosys, is set to announce its financial results for the quarter ending March 2025 after market hours today, April 17. The company is widely expected to post a muted performance, with both revenues and margins under pressure. Market participants and analysts are also keenly watching the company’s forward guidance for FY26 amidst a volatile global economic backdrop, particularly from its largest market, the United States.
Brokerage projections, including those from Kotak Equities, anticipate a quarter-on-quarter revenue decline of around 2.3%, primarily due to seasonal weakness in the final quarter. The Earnings Before Interest and Taxes (EBIT) margin is forecast to contract by nearly 60 basis points, affected by wage hikes for junior employees and visa-related expenses, though partially offset by favorable rupee depreciation. Infosys’ US-listed ADRs closed 2.6% lower on Wednesday, reflecting subdued investor expectations.
Highlights:
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Kotak expects 2.3% QoQ revenue decline due to seasonal trends.
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EBIT margin expected to shrink 60 bps on wage and visa costs.
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Infosys ADRs dropped 2.6% ahead of earnings release.
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Market awaits clarity on FY26 guidance amid macro uncertainties.
Weakness Across the IT Sector: Broader Sentiment Weighs on Infosys
Following disappointing earnings from sector peers TCS and Wipro, Infosys faces heightened scrutiny from both domestic and global investors. Analysts have pointed to the lack of mega-deal announcements over the past 12–18 months, suggesting a rising dependency on the revival of discretionary tech spending. The slowdown in client demand from the US, which contributes nearly 60% of Indian IT revenues, has become a pivotal concern for the sector.
Brokerages have revised their expectations for the sector’s revenue growth, with Goldman Sachs cutting its FY26 forecast for Indian IT to 4%, a 230 basis point downgrade. Morgan Stanley recently downgraded Infosys to ‘equal weight’ from ‘overweight’—its first such revision in four years—and slashed its price target to ₹1,740 from ₹2,150.
Highlights:
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Goldman Sachs cuts FY26 Indian IT revenue forecast to 4% YoY.
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Morgan Stanley downgrades Infosys, lowers target to ₹1,740.
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Lack of large deal wins raises reliance on discretionary recovery.
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US macro slowdown remains top sector headwind.
Market Trigger: FY26 Outlook Holds More Weight
A major focal point of today’s announcement will be whether Infosys chooses to issue guidance for FY26. There are concerns that the company might suspend forward guidance, citing uncertainty in the business environment. Should Infosys refrain from giving FY26 projections, analysts suggest this would be viewed as a negative signal, likely weighing on the stock.
If guidance is provided, expectations range between 2%–5% growth in constant currency terms, with margin guidance largely unchanged at 20%–22%. Kotak forecasts FY26 growth at 4.3%, while JPMorgan projects a wider band of 2%–5%. During Q3 FY25, Infosys had raised its full-year revenue growth forecast to 4.5%–5%, with margins maintained at 20%–22%. Whether it manages to achieve this for FY25 remains an open question.
Highlights:
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Infosys Q4 guidance expected at 2%–5% revenue growth for FY26.
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Kotak projects 4.3% CC growth; JPMorgan sees 2%–5% range.
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Guidance suspension, if any, likely to be a bearish catalyst.
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FY25 target is 4.5%–5% CC revenue growth; all eyes on achievement.
Share Price Trends and Brokerage Opinions Ahead of Earnings
Infosys shares have experienced significant volatility in 2025, with the stock down approximately 25% year-to-date. However, investor sentiment has shown marginal improvement heading into the earnings release. As of this afternoon, Infosys shares were trading flat at ₹1,413.80 on the NSE.
Despite recent downgrades, some brokerages continue to retain Infosys as a top pick in the large-cap IT space. Bernstein and Jefferies reiterated their preference for the stock, even as both firms cut their price targets—Jefferies lowered it to ₹1,700 from ₹1,835, citing persistent macro risks. Meanwhile, the consensus across brokerages indicates that re-rating in the IT sector remains unlikely unless there is a visible pickup in US GDP growth.
Highlights:
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Infosys stock trades flat at ₹1,413.80; down 25% in 2025 YTD.
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Jefferies maintains ‘Buy’, trims target to ₹1,700.
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Bernstein names Infosys top large-cap pick amid near-term risks.
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IT sector re-rating seen contingent on US economic recovery.
