Infosys might grow more than management’s expectations
Infosys has upgraded its FY26 guidance to 3–3.5%, but this figure excludes the impending closure of the Versent acquisition.
Infosys Ltd is likely to exceed its 3.5% growth target for the fiscal year, as its current projections exclude the expected revenue from a newly acquired Australian information technology firm.
On Wednesday, Infosys management clarified that its guidance to grow 3-3.5% in constant terms does not include the revenue from the Telstra acquisition. In August, Infosys spent $150 million to acquire a 75% stake in Versent, a Telstra-owned company, which generated $138 million in revenue for the year ended June 2025. Infosys had stated that it expects to close the acquisition in the second half of the current fiscal.
“Strong year-to-date performance and robust deal wins have enabled us to revise our revenue guidance for FY '26 upward to 3% to 3.5%. This does not include any revenues from the joint venture with Telstra, which still awaits the regulatory approvals," said Salil Parekh, chief executive of Infosys, during the company’s post-earnings call with analysts on Wednesday.
Promise less, deliver more
This implies that the company might grow faster than expected, with one analyst even expecting Infosys’s growth to keep pace with HCL Technologies Ltd.
“Infosys has always been conservative in its guidance and gone to exceed it. We expect incremental revenue of at least 0.2% in FY26 from the Telstra acquisition," said Amit Chandra, vice-president at HDFC Securities.
In nine of the last 15 years, the IT services company has grown more than the management's full-year guidance issued in the January-March period, according to Chandra.
A second analyst also underlined Infosys’s management conservative approach.
“The ask rate for Q4 for lower / higher end of FY26 revenue growth guidance is -1.7% to +0.2%, which should not be a tall task," Sameer Pardikar, analyst at Elara Capital, wrote in a note dated 15 January.
“Closure of the Versent acquisition is expected in the second half of FY26, subject to regulatory approvals. If the acquisition is closed in January, Infosys might get an incremental contribution of $20-30 million, or 0.1% to 0.2% incrementally from the acquisition upfront," said Karan Uppal, lead analyst for IT services at Phillip Capital.
However, growth might be a challenge for Infosys. According to a Mint analysis of company financials, Infosys has been reporting a sequential revenue decline upwards of 2% in the fourth quarter for the last three years. The company ended January-March 2025 with $4.73 billion, which is a sequential revenue decline of 4.23%.
Still, analysts expect the company to outperform.
HCL Technologies expects to grow between 4 and 4.5% in constant currency terms. Constant currency eliminates the effect of currency movements.
Like Infosys, HCL Technologies has also not considered the businesses from the three companies it bought: Telco Solutions Business from HPE, Jaspersoft, and Wobby. This is because HCL Technologies expects to close these acquisitions in the next fiscal or sometime after 1 April.
Varying approaches
“We don't expect HCL’s HPE acquisition (Telco Solutions) to close by March this year, as it was announced in December last year, and the company mentioned it will take 6 months to get all regulatory approvals done. Most likely it will be completed by June 2026," said Uppal, adding that the acquisitions would have significant contributions to revenue in FY27.
This week, Tata Consultancy Services Ltd, Infosys, and HCL Technologies reported better-than-expected growth, although the profitability of the Big Three took a hit due to the New Labour Code, which mandated that employees' basic pay be half of their total compensation. This led to a rise in statutory payouts, such as provident funds and gratuities, for companies.
TCS, Infosys, and HCLTech ended the last quarter with $7.51 billion, $5.1 billion, and $3.79 billion, respectively, reporting sequential dollar revenue growth of 0.6%, 0.5%, and 4.1%.
Significantly, the third-quarter earnings also marked a key element in the approach of HCL Technologies and TCS, which does not provide guidance and is expected to end the fiscal year with a full-year revenue decline, a first since the company went public in 2004.
“I believe there is little value in waiting for either historical or anticipated discretionary spending to resume. Instead, the focus should be on opportunity, identifying proactively where the spending is occurring and targeting those opportunities, like what I mentioned before," said C. Vijayakumar, chief executive of HCLTech, during the company’s post-earnings press conference on Monday.
Vijayakumar also said the company is looking to offer solutions to clients who spend more on data centres, robotics, physical AI, semiconductors, and silicon for edge inference.
In contrast, the management of the country’s largest information technology (IT) outsourcer was staid in its commentary.
- Infosys's 3–3.5% guidance is likely a floor, as it excludes the Versent acquisition, which could add 10–20 basis points.
- Analysts highlight that Infosys has exceeded its own guidance in 9 of the last 15 years.
- The New Labour Code is the primary threat to profitability, as it increases statutory payout burdens across the Big Three.
- HCLTech is aggressively targeting New Tech like AI and robotics, while TCS has turned cautious, admitting that growth is now an aspiration rather than a certainty.
- Both Infosys and HCLTech have significant revenue from acquisitions waiting in the wings for late FY26 or early FY27.
Growing demand
“In Q2 (July-September 2025), we had called out that the overall demand environment is improving compared to Q1, so in Q3 that trend continues," K. Krithivasan, chief executive of TCS, told analysts in its post-earnings conference call on Monday.
In April last year, TCS, which derives more than 94% of its business from outside India, stated that it remained ‘confident’ that its international business would grow faster in the current fiscal year than in 2024-25. On Monday, Krithivasan told analysts on a post-earnings call that it remains the company’s ‘aspiration’ for its international business to grow faster than in FY25.
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