Infosys margin recovers sequentially, but tax benefit lifts Q4 profit
Revenue grew 13.38% year on year, while expenses grew slightly faster and other income contributed 10.73% of pre-tax profit.
Filed 23 Apr 2026, 17:01 IST · after market close · Infosys Ltd (INFY)
Key takeaways
- Infosys’ consolidated operating margin recovered 0.69 percentage points sequentially to 24.07%, as revenue growth outpaced expense growth.
- Net profit rose 20.90% year on year, helped by a 5.98-percentage-point fall in the tax rate to 21.19%.
- The stock fell 6.93% after the results, well beyond its 2.22% median absolute move after the past eight results.
Price around the results
Q4 margin improved on sequential operating leverage
Infosys reported consolidated revenue growth of 2.03% sequentially, while expenses rose 1.12%, allowing operating margin to expand by 0.69 percentage points to 24.07%. Year on year, the picture was less favourable: expenses grew 13.47% against 13.38% revenue growth, narrowing margin by 0.06 percentage points. Its operating margin was 4.38 percentage points above the 19-peer sector median.
Tax reduction and other income lifted reported profit
Net profit grew 20.90% year on year, faster than the 11.74% increase in pre-tax profit, because the tax rate fell 5.98 percentage points to 21.19%. Other income accounted for 10.73% of pre-tax profit, so it was a meaningful contributor to reported earnings. Sequentially, the tax-rate decline of 6.58 percentage points and the swing in other income from -150 to 1159 supported the 27.65% increase in net profit.
Margin recovery interrupts a broader uneven trend
Operating margin improved from 23.38% in Q3FY26 to 24.07% in Q4FY26, but remains below the 24.13% reported in Q4FY25. The trend shows margin pressure through FY26, with 23.52% in Q1FY26, 23.68% in Q2FY26 and 23.38% in Q3FY26, before the latest sequential recovery.
Initial market reaction was unusually negative
The stock fell 6.93% on the first trading session after the results and was down 5.82% after five sessions. That reaction was substantially larger than the 2.22% median absolute move recorded after Infosys’ past eight results, during which the stock fell five times and rose three times.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹46,402 cr | ₹45,479 cr | +2.03% | +13.38% |
| Other income | ₹1,159 cr | ₹-150 cr | — | -2.61% |
| Expenses | ₹35,235 cr | ₹34,845 cr | +1.12% | +13.47% |
| Operating profit | ₹11,167 cr | ₹10,634 cr | +5.01% | +13.09% |
| Operating margin (%) | 24.07% | 23.38% | — | — |
| Interest | ₹105 cr | ₹100 cr | +5.00% | +2.94% |
| Depreciation | ₹1,424 cr | ₹1,155 cr | +23.29% | +9.62% |
| Profit before tax | ₹10,797 cr | ₹9,229 cr | +16.99% | +11.74% |
| Tax | ₹2,288 cr | ₹2,563 cr | -10.73% | -12.84% |
| Net profit | ₹8,509 cr | ₹6,666 cr | +27.65% | +20.90% |
| EPS (₹) | ₹21.01 | ₹16.17 | +29.93% | +23.73% |
Operating margin of 24.07% compares with a Information Technology sector median of 19.69% across 19 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -6.93% | -5.79% |
| Next session | -5.67% | — |
| 5 sessions | -5.82% | -5.60% |
| 15 sessions | -7.91% | — |
| 30 sessions | -4.86% | — |
Volume on the results session was 3.16× its 20-day average.
What to watch
- Whether operating margin holds above 24.07% after the Q4 sequential recovery.
- Whether revenue growth stays ahead of expense growth after the Q4 gap of 2.03% versus 1.12%.
- Whether the tax rate remains close to 21.19% after its year-on-year decline.