As the financial year draws to a close, the Indian IT sector is under intense scrutiny, with Infosys’ fourth-quarter (Q4) results for FY25 taking center stage. This announcement comes on the heels of TCS and Wipro, two of its major competitors, reporting figures that have fallen short of market expectations, casting a shadow over the industry’s performance in a challenging global economic climate. Investors and analysts alike are keenly awaiting Infosys’ results, scheduled to be released later today around 3:45 PM IST, to gauge the true extent of the headwinds and understand the strategies being employed by the country’s second-largest IT services provider.
The performance of TCS and Wipro has already indicated a slowdown in growth and increasing pressure on margins within the IT sector. TCS reported a marginal year-on-year (YoY) decline in net profit, while Wipro’s revenue growth was weaker than anticipated, accompanied by a muted outlook for the upcoming quarter. These results have heightened concerns about the overall health of the sector, which is facing a complex interplay of macroeconomic factors, including potential impacts from global trade tariffs, particularly those involving the US, and cautious spending by clients in key geographies like North America and Europe. Â
Against this backdrop, the market is bracing for Infosys’ Q4FY25 results. Several key aspects are expected to be under close observation:
Revenue Growth: Analysts predict a YoY revenue growth for Infosys in the range of 9-11%. However, sequential growth (QoQ) is expected to be muted, with some even anticipating a slight decline in constant currency terms. This slowdown is attributed to seasonal weakness in demand, lower billing days in the quarter, and a normalization of third-party sales, which contribute to the topline. The focus will be on whether Infosys can maintain its organic growth momentum amidst these challenges.
Net Profit and Margins: The bottom line is where the impact of wage hikes and other cost pressures is likely to be most visible. Estimates suggest a potential 15-18% YoY decline in net profit for Infosys. Sequentially, a drop of around 2-5% is anticipated. The Earnings Before Interest and Taxes (EBIT) margin is also expected to contract, possibly by 60-100 basis points QoQ, primarily due to wage revisions for junior employees and increased visa costs. Investors will be looking for any offsetting factors, such as cost optimization measures or favorable currency movements, that might have mitigated these pressures.
FY26 Guidance: Perhaps the most crucial element of Infosys’ Q4 results will be its revenue growth and margin guidance for the upcoming financial year 2026. Given the prevailing global uncertainties and the cautious outlook from its peers, the market expects a muted guidance from Infosys, potentially in the range of 1-5% in constant currency terms for revenue growth, with EBIT margins likely to be maintained within the 20-22% band. The management’s commentary on the demand environment, particularly in the BFSI (Banking, Financial Services and Insurance) vertical, and their assessment of discretionary spending trends will be critical.
Deal Wins and Pipeline: The Total Contract Value (TCV) of new deal wins during Q4 will be another key indicator of future growth. While the deal pipeline is reported to be healthy, the pace of closures has been a concern due to slower decision-making by clients. Investors will be keen to see if Infosys has managed to secure significant deals and if the ramp-up of previously won large deals is progressing as expected. The Annual Contract Value (ACV) will also be closely watched.
Impact of Global Factors: The return of Donald Trump to the US presidency and the potential for new import duties have introduced an element of uncertainty for IT firms that heavily rely on the US market. Analysts will be looking for any commentary from Infosys’ management on how these geopolitical and economic factors might impact their business and future outlook.
Dividend Announcement: Alongside the financial results, the Infosys board is also expected to consider and announce a final dividend for FY25, which will be of significant interest to investors.
Operational Efficiency: The market will also be tracking the company’s efforts in areas like cost takeout initiatives, employee utilization rates, and the impact of programs like ‘Project Maximus’ aimed at enhancing operational efficiencies.
In the lead-up to the results, Infosys’ share price has reflected the cautious sentiment, with the stock trading lower. This indicates that the market has already factored in some of the anticipated headwinds and is now waiting for concrete numbers and future guidance from the company.
The Q4 results of Infosys will not only provide a snapshot of the company’s performance in the final quarter of FY25 but will also offer crucial insights into the near-term prospects of the broader Indian IT services industry. In a landscape marked by global economic uncertainties and evolving client priorities, Infosys’ strategy and outlook will be closely analyzed for signals of resilience and future growth drivers.
