Infosys Q4 Preview: Profit likely to dip 1.5% as margins set to contract

The information technology bellwether will report its earnings for the quarter ended March on April 17, Thursday

Infosys is likely to report a dip in its bottom line in the fourth quarter of the financial year 2025 (FY25), with analysts referring to the March quarter as the company's 'Achilles’ heel.'

 

The information technology bellwether will report its earnings for the fourth quarter ended March on April 17, Thursday.

 

Infosys’ revenue is expected to come in at ₹41,965.95 crore, marking a 0.48 per cent increase quarter-on-quarter (Q-o-Q), according to analysts tracked by Business Standard. On a year-on-year (Y-o-Y) basis, the company’s top line is projected to grow by an average of 10.66 per cent.

 

Lower revenues from the sale of third-party items for service delivery and seasonal weakness in demand are likely to weigh on Infosys' top line in the March quarter, analysts said. 

 

 

Analysts expect earnings before interest and tax (Ebit) margin to decline by 50 basis points (bps), impacted due to wage hike for junior employees. The IT major is expected to post a 1.54 per cent decline in net profit for the fourth quarter sequentially to ₹6,701.42 crore. On a Y-o-Y basis, the net profit is expected to grow at an average of 11.73 per cent. 

 

The company reported a 11.4 per cent Y-o-Y increase in its net profit, amounting to ₹6,806 crore for the third quarter. Sequentially, net profits were up 4.6 per cent. Revenue was up 1.9 per cent sequentially to ₹41,353 crore. 

 

A slowdown in spending due to tariff wars, program cancellations, the strength of deal pipelines and pricing pressures will be the key factors to watch out for, analysts added. 

 

Here's how analysts of various brokerages expect Infosys to fare in Q4:

 

Kotak Securities: The brokerage expects a 60 bps sequential decline in Ebit margin due to wage revision for junior employees, which will be offset by rupee depreciation. They expect a large deal total contract value (TCV) of $3 billion, a decline compared to the same period last year. 

 

Kotak believe Infosys will guide for 1 to 4 per cent constant currency (CC) revenue growth for FY26. "The muted guidance is on account of two factors— deteriorating macro courtesy of tariff wars and unlike FY25, Infosys does not have mega-deals contributing to FY26." Analysts expect Ebit margin guidance band of 20-22 per cent with bias of expansion.

 

The net profit is likely to fall by 3.3 per cent Q-o-Q to ₹6,580.1 crore, while the Ebit are expected to fall by 60 basis points sequentially, according to Kotak. 

 

Nuvama: The brokerage expects Infosys’ revenue to decline by 1 per cent Q-o-Q in constant currency and 1.5 per cent in US dollar terms, in line with the company’s guidance. For FY26, Infosys is expected to guide for 2–5 per cent revenue growth in constant currency and maintain its margin outlook at 20–22 per cent.

 

The tech firm will post a 1.3 per cent Q-o-Q net profit decline to ₹6,720.2 crore and will see a 15.7 per cent Y-o-Y growth in the March quarter, according to Nuvama.  

 

HSBC: After a slowdown in FY24, Infosys saw growth rebound during the first nine months of FY25, supported by the ramp-up of deals won in the previous year. While a seasonal dip is expected in the fourth quarter, growth is likely to resume from there, with a projected compound annual growth rate (CAGR) of around 6 per cent for FY25–27, due to a strong FY25 exit rate, HSBC said. 

 

Over the past two years, Infosys has faced several challenges, including senior management attrition and deal losses. However, HSBC believes these headwinds are largely behind the company and already priced in. The brokerage expects a constant currency impact of 40–50 bps headwind in the fourth quarter.