Infosys Q1 results preview: PAT, revenue may rise in single digits YoY; should you buy the stock ahead of Q1 earnings?

Mint

5 days ago

India's second-largest IT company Infosys is set to announce its Q1 results for the financial year 2025-26 on Wednesday, 23 July. After mixed set of numbers from other IT majors, such as TCS and HCL Tech, focus will be on deal TCVs and pipeline, management commentary on demand outlook, hiring trends, and GenAI deal wins.
According to experts, the IT major is likely to post single-digit year-on-year (YoY) growth in both revenue and profit, while its sequential performance may remain subdued.
According to the estimates of brokerage firm Phillip Capital, Infosys may report a 5.9 per cent YoY rise in revenue and an 8 per cent rise in profit after tax (PAT). EBITDA may increase 6.5 per cent and EBITDA margin may climb by 13bps YoY.
Phillip Capital expects Infosys to report revenue growth of 1.4 per cent QoQ in constant currency (CC) terms on a weaker base of Q4, higher billing days and $15 million contribution (nearly 30bps) from recent acquisitions.
Margins, according to Phillip Capital, may remain stable. Headwinds include part wage hike, normalisation of third-party costs offset by lower visa costs, said the brokerage firm.
"We expect Infosys to narrow FY26 growth guidance to 1-3 per cent YoY in CC (0-3 per cent earlier). Revised guidance will include nearly 40bps contribution from recent acquisitions. We expect EBIT margins guidance to stay intact at 20-22 per cent," said Phillip Capital.
Similarly, brokerage firm Motilal Oswal Financial Services expects a 5.9 per cent YoY rise in revenue and a 4.3 per cent rise in PAT. EBITDA may rise by 5.3 per cent, but EBITDA margin may decrease by 20 bps YoY.
"We expect Infosys to upgrade the lower end of its guidance by 100bp to account for inorganic impact (current guide:0-3 per cent CC for FY26, estimated inorganic contribution of 80bp)," said Motilal Oswal.
Experts believe Infosys remain a long-term buy due to the company's growth outlook.
"We advise investors to keenly watch for Q1FY26 result of Infosys and consider investing in Infosys for a long-term view as the future outlook is promising on account of its deal pipeline, GenAI-driven transformation deals and recent acquisitions," said Rajesh Sinha, Senior Research Analyst at Bonanza.
However, some technical experts indicate weakness on charts, which suggests the downtrend may continue. Infosys share price is down about 2 per cent for the current month.
Shitij Gandhi, Senior Research Analyst (Technicals) at SMC Global Securities pointed out that Infosys stock has been in a sustained downtrend, trading within a declining channel and consistently staying below its key moving averages. The bearish momentum remains dominant on both daily and weekly timeframes.
However, Gandhi highlighted that over the past few weeks, the stock has attempted to hold above its crucial 200-day exponential moving average (EMA), currently positioned at ₹ 1,530 on the weekly chart. Despite this, the broader trend remains negative, with strong resistance expected in the ₹ 1,600–1,700 range.
"Given the prevailing structure, we anticipate the downtrend to persist, with a potential acceleration in selling pressure if the stock breaks below the ₹ 1,530 support level," said Gandhi.
Similarly, Mandar Bhojane, Senior Technical & Derivative Analyst at Choice Broking, said investors should stay cautious ahead of the results and consider entering only on a breakout above key resistance levels or if the management commentary and guidance remain strong.
Technically, Bhojane underscored that Infosys is currently trading in a sideways trend near ₹ 1,574.
He said a decisive close above the ₹ 1,600 mark could trigger a potential rally towards ₹ 1,700. On the downside, ₹ 1,540 acts as immediate support, and any bullish reversal from that zone could offer a buy-on-dips opportunity.
According to Bhojane, the next major support lies at ₹ 1,500, below which further correction may unfold.
"The stock is trading below key EMAs, and the RSI is at 42.5, trending downward—indicating weakening momentum. Despite healthy volume activity, price remains range-bound, suggesting a wait-and-watch approach until a breakout occurs on either side," Bhojane said.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.