Why did Infosys report a 2.2% loss in Q3 while its revenue rises by 9%?
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Synopsis
Infosys reports a 2.2% decline in net profit for Q3 FY26, impacted by new Labour Code norms, but sees a 9% rise in revenue, showcasing resilience. CEO Salil Parekh emphasizes strong performance driven by enterprise AI initiatives. What does this mean for investors?
Key Takeaways
- Infosys reported a 2.2% drop in net profit for Q3 FY26.
- Revenue increased by 9% year-on-year to Rs 45,479 crore.
- One-time impact of Rs 1,289 crore due to Labour Code norms.
- Revised revenue growth guidance for FY26 set at 3–3.5%.
- CEO emphasizes strength in enterprise AI driving market share.
Mumbai, Jan 14 (NationPress) The prominent IT firm Infosys announced a 2.2% drop in its consolidated net profit for the October–December quarter (Q3 FY26), primarily influenced by the recent changes in the Labour Code regulations introduced by the Indian government.
In the third quarter, Infosys reported a consolidated net profit of Rs 6,666 crore, reflecting a year-on-year (YoY) decrease from Rs 6,822 crore recorded during the same period last fiscal year (Q3 FY25).
On a quarter-on-quarter (QoQ) basis, profits declined significantly by approximately 9.6%, down from Rs 7,375 crore in the previous quarter (Q2 FY26), as noted in the company's filing with the stock exchange.
The company disclosed a one-time impact of Rs 1,289 crore attributed to the rollout of the new Labour Code regulations in India.
Despite the profit pressures, Infosys maintained a robust revenue trajectory.
Revenue from operations surged by 9% year-on-year (YoY) to Rs 45,479 crore during this quarter.
Alongside these results, Infosys has also revised its revenue growth forecast for the entire financial year.
The company has upgraded its FY26 revenue guidance to a range of 3–3.5% in constant currency, while keeping its operating margin guidance steady between 20–22%.
“Infosys achieved a strong performance in Q3, illustrating how our distinctive value offerings in enterprise AI, particularly through Infosys Topaz, are continuously boosting our market share,” stated Salil Parekh, CEO and Managing Director of Infosys.
In the stock market, Infosys shares have yielded mixed results for investors. According to NSE data, the stock has produced returns of over 16% in the past five years and about 6% over the last three years.
Nevertheless, the shares have experienced a decline of 17.88% over the previous year and have slightly decreased by 0.31% in the recent one-year span.
Additionally, Infosys stock has fallen by 2.79% over the last five trading sessions. Prior to the quarterly results announcement, Infosys shares concluded Wednesday’s trading session at Rs 1,608.9, reflecting an increase of Rs 9.9 or 0.62% on the Indian stock market.
Point of View
It's essential to note that while Infosys navigates challenges such as the recent Labour Code changes, the company’s ability to maintain revenue growth and enhance its guidance reflects its strategic adaptability. Our standpoint is that Infosys remains a pivotal player in the IT landscape, demonstrating resilience amidst regulatory shifts.
NationPress
14/01/2026
Frequently Asked Questions
What caused the decline in Infosys' net profit?
The decline in Infosys' net profit was primarily due to the implementation of new Labour Code norms by the Indian government, which had a one-time financial impact of Rs 1,289 crore.
How much did Infosys' revenue increase in Q3 FY26?
Infosys' revenue from operations rose by 9% year-on-year to Rs 45,479 crore during the October–December quarter of FY26.
What is Infosys' revised revenue growth outlook for FY26?
Infosys has revised its FY26 revenue growth outlook upwards to a range of 3–3.5% in constant currency terms.
What has been the stock performance of Infosys in recent years?
Infosys shares have delivered over 16% returns over the last five years but have seen a decline of 17.88% over the past year.
What was the CEO's statement regarding Infosys' performance?
CEO Salil Parekh highlighted that Infosys' strong Q3 performance showcases how their enterprise AI initiatives are driving increased market share.
