Infosys FY25 Q4: Mixed Performance Amidst Economic Headwinds

Infosys, a global leader in next-generation digital services and consulting, announced its financial results for the fourth quarter of fiscal year 2025 on Thursday, April 17, 2025. The report, released after market hours, revealed a mixed performance with a decline in net profit but an increase in revenue. This performance reflects the complex global economic landscape and evolving client spending patterns.  

For the quarter ended March 31, 2025, Infosys reported a consolidated net profit of ₹7,033 crore, which is an 11.75% decrease compared to the ₹7,969 crore reported in the same period of the previous fiscal year. However, the company’s operating revenue for the fourth quarter saw an 8% year-over-year increase, reaching ₹40,925 crore from ₹37,923 crore in the corresponding quarter of FY25. In constant currency terms, the revenue grew by 4.8% year-over-year but experienced a sequential decline of 3.5%. This sequential dip in revenue was a key factor that disappointed analysts, primarily attributed to a higher-than-expected reduction in pass-through revenues and typical seasonal factors. Notably, six out of the company’s eight verticals experienced a sequential revenue decline.  

Despite the revenue miss, Infosys managed to maintain a healthy operating margin. The EBIT margin for Q4FY25 stood at 21.0%, a slight decrease of 30 basis points sequentially. This margin performance was better than anticipated, as higher employee costs due to wage hikes were largely offset by lower pass-through costs and overheads. Looking ahead, Infosys has provided a margin guidance of 20-22% for the fiscal year 2026, aligning with analyst expectations. In a positive sign for investors, the company declared a final dividend of ₹22 per share for FY25, with a record date set for May 30, 2025, and the payment date on June 30, 2025. This brings the total dividend for FY25 to ₹43 per share.  

The outlook for the upcoming fiscal year 2026 appears cautious. Infosys has projected a revenue growth of 0-3% in constant currency terms. This guidance reflects the prevailing macroeconomic headwinds and potential deferrals in client spending. However, the management expressed confidence that FY26 would be better than FY25 for its international business, supported by strong deal bookings and anticipated tech transformations across organizations. Infosys also announced two strategic acquisitions: MRE Consulting in the US, which will bolster its capabilities in trading and risk management, particularly in the energy sector, and The Missing Link in Australia, a cybersecurity services specialist, which will enhance its cybersecurity offerings in the Australian market. These acquisitions are expected to contribute an additional 40-50 basis points to the FY26 revenue growth.  

Several brokerage firms have reacted to Infosys’ Q4 results and FY26 guidance with revised targets and ratings. While some have lowered their earnings per share (EPS) estimates to account for the revenue miss, many maintain a positive long-term outlook on the stock, citing attractive valuations and potential for recovery as macroeconomic conditions improve. Analysts are closely watching Infosys’ ability to leverage its strengths in AI, cloud, and digital transformation to capitalize on future opportunities. The company’s focus on cost efficiency, automation, and consolidation is also expected to play a crucial role in navigating the current market uncertainties.