Key Points:
- Infosys Q3 results saw revenue rise 8.9% to ₹45,479 crore despite a 2.2% profit dip from labor code charges.
- Strong AI-led deals worth $4.8B boosted market confidence.
- Revenue guidance raised to 3–3.5% and ₹18,000 crore buyback signals long-term growth.
Infosys shares surged more than five percent on Friday in early trade after the IT major reported higher third-quarter revenue, raised its full-year growth outlook and highlighted strong deal wins, despite a year-on-year profit decline linked to new labor codes, according to the Infosys Q3 results.
Shares of Infosys Ltd. rose as much as 5.1% to ₹1,682.10 on the National Stock Exchange after the company released its October-December earnings late Wednesday. Trading resumed on Friday after markets were closed on Thursday for municipal elections in Maharashtra.
The Bengaluru-based firm reported consolidated net profit of ₹6,654 crore for the third quarter of fiscal year 2026, down 2.2% from ₹6,806 crore a year earlier. Revenue from operations rose 8.89% to ₹45,479 crore, compared with ₹41,764 crore in the same quarter last year, as shown in the Infosys Q3 results.
On a sequential basis, profit fell 9.6% from the previous quarter, while revenue increased 2.2%, the company said.
Revenue Growth, AI Push Lifts Investor Sentiment
The stock rally came as investors focused on revenue momentum and management’s emphasis on artificial intelligence-led growth. Infosys said its differentiated enterprise AI offerings are helping it gain market share across key client segments.
“Infosys delivered a strong Q3 performance, demonstrating how our differentiated value propositions in enterprise AI, through Infosys Topaz, are consistently driving higher market share,” the company said in a statement.
The company added that clients increasingly view Infosys as a strategic AI partner, citing its expertise, innovation capabilities and delivery track record. Management said these strengths are helping customers unlock business value and improve returns on digital investments.
Chief Executive Officer and Managing Director Salil Parekh said workforce transformation remains central to the company’s strategy. “Central to this journey is our commitment to reskill, transform and empower our dedicated human resource pool to drive success in an AI-augmented world,” Parekh said.
Infosys also raised its revenue growth guidance for fiscal year 2026 to 3% to 3.5% in constant currency terms, up from its earlier forecast of 2% to 3%.
Labor Code Impact Weighs on Quarterly Profit
The profit decline was largely driven by a one-time exceptional charge linked to the implementation of India’s new labor codes. Infosys recorded a hit of ₹1,289 crore during the quarter related to higher employee-related liabilities.
The labor codes, notified by the Indian government on Nov. 21, 2025, consolidate twenty-nine existing labor laws into a single framework. They introduce a uniform definition of wages and enhanced benefits related to leave, gratuity and post-employment obligations.
“The adjustments for labor codes represent an increase in gratuity liability arising out of past service cost and an increase in leave liability,” Infosys said in a regulatory filing, adding that the combined impact totaled $143 million.
Peers across the IT sector reported similar impacts. Tata Consultancy Services said the labor codes resulted in a statutory impact of ₹2,128 crore during the quarter, while HCLTech made a one-time provision of $82 million, or about ₹719 crore.
Deal Wins, Buyback Signal Long-Term Confidence
Despite near-term margin pressure, Infosys reported strong business momentum in its Infosys Q3 results. The company posted large deal wins with a total contract value of $4.8 billion during the quarter, with 57% coming from net new deals.
Infosys also completed its largest-ever share buyback of ₹18,000 crore and paid an interim dividend during the period, moves that analysts said signaled confidence in long-term cash flows.
Employee strength rose by 5,043 during the quarter, taking total headcount to 337,034, reflecting continued hiring to support large client programs.
Market participants said the combination of steady revenue growth, improved guidance and strong deal activity outweighed concerns around the one-time labor code impact, supporting the sharp rise in the stock, as confirmed in the Infosys Q3 results.
Visit Business Viewpoint Magazine For The Most Recent Information.
