Infosys margin edges up as costs track revenue growth
Revenue growth outpaced expenses slightly, but higher tax and depreciation limited profit growth; the results were filed after market close.
Filed 23 Oct 2026, 16:08 IST · after market close · Infosys Ltd (INFY)
Key takeaways
- Consolidated revenue grew 10.69% year on year, while operating margin widened 0.06 percentage points to 23.74%.
- Net profit rose only 6.28% year on year as the tax rate increased 1.25 percentage points to 29.15%.
- Other income contributed 7.67% of pre-tax profit, making reported earnings partly dependent on non-operating income.
Price around the results
Revenue momentum stayed ahead of expenses
Infosys reported consolidated revenue growth of 10.69% year on year and 2.14% sequentially in Q2FY27. Expenses rose slightly slower, at 10.60% year on year and 2.05% sequentially, allowing operating profit to grow 10.95% and 2.45%, respectively. Net profit growth was weaker at 6.28% year on year, partly because the tax rate rose to 29.15% from 27.90%.
Small margin gain, with earnings quality worth tracking
Operating margin widened 0.06 percentage points year on year and 0.08 percentage points sequentially because revenue grew faster than expenses in both comparisons. Depreciation increased 14.97% year on year and interest expense rose 8.49%, which restrained the conversion of operating profit into pre-tax profit. Other income fell 13.65% year on year and 13.82% sequentially, but still represented 7.67% of pre-tax profit.
Margin is above peers but below the recent peak
Infosys' 23.74% operating margin was 4.09 percentage points above the 19.65% median for the 23 information-technology peers that had reported the quarter. The quarterly trend remains uneven: margin rose from 23.52% in Q1FY26 to 24.07% in Q4FY26, then slipped to 23.66% in Q1FY27 before recovering to 23.74%.
Initial stock move was mild versus its history
The stock opened 3.36% lower after the results but was up 1.06% on the first-session measure, with relative performance at 0.38%. That was smaller than the 4.50% median absolute move after the previous eight results; six of those eight reactions were declines and two were rises.
Q2FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹49,244 cr | ₹48,211 cr | +2.14% | +10.69% |
| Other income | ₹848 cr | ₹984 cr | -13.82% | -13.65% |
| Expenses | ₹37,555 cr | ₹36,802 cr | +2.05% | +10.60% |
| Operating profit | ₹11,689 cr | ₹11,409 cr | +2.45% | +10.95% |
| Operating margin (%) | 23.74% | 23.66% | — | — |
| Interest | ₹115 cr | ₹119 cr | -3.36% | +8.49% |
| Depreciation | ₹1,359 cr | ₹1,246 cr | +9.07% | +14.97% |
| Profit before tax | ₹11,063 cr | ₹11,028 cr | +0.32% | +8.15% |
| Tax | ₹3,225 cr | ₹3,253 cr | -0.86% | +13.00% |
| Net profit | ₹7,838 cr | ₹7,775 cr | +0.81% | +6.28% |
| EPS (₹) | ₹19.32 | ₹19.19 | +0.68% | +8.78% |
Operating margin of 23.74% compares with a Information Technology sector median of 19.65% across 23 peers that have reported Q2FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +1.06% | +0.38% |
Volume on the results session was 1.68× its 20-day average.
What to watch
- Whether operating margin holds above 23.74% after the recovery from 23.66% in Q1FY27.
- Whether expense growth remains below the 10.69% year-on-year revenue growth rate.
- Whether other income remains near or below its 7.67% share of pre-tax profit.