Infosys Limited

Q2 performance (mixed): growth below expectations, AI strongest driver - Revenue grew +1.5% YoY and +1.2% QoQ in constant currency to $5.145bn. - AI revenue was the standout: +29% sequentially, now 10.5% of total revenue (vs 8.2% last quarter). Management views AI scaling as a key offset to legacy softness. - Large deals: $5.2bn TCV in Q2 with 62% net new (including two mega deals: >$2bn, 7-year net-new; and $1bn renewal). Management indicates these support FY next-year growth and pipeline visibility.

Guidance / forecasts (revised): growth constrained but margins supported - FY revenue growth guidance revised to 1%–2% YoY (constant currency) based on softer H1 and updated view for H2. - Operating margin guidance maintained at 20%–22%. - Key assumption framing: lower end = further macro deterioration, upper end = improvement; H2 still faces seasonality and compensation-related headwinds.

Profitability + cash (good): margin stable; strong cash generation - Operating margin in Q2 was 21%, down 0.1% QoQ; H1 margin ~21% (midpoint of guided range). - Margin pressure drivers called out: post-sales support headwind (~70 bps), acquisition impact (~20 bps), offset by rupee appreciation and Project Maximus tailwinds. - Free cash flow: $928m in Q2 (113% of net profit)—strong liquidity (ended quarter cash ~ $4.7bn and debt-free balance sheet). - Shareholder item: interim dividend INR 26 (+13% YoY).