Infosys hits record $4.1bn cash flow as AI, cloud deals power growth amid macro headwinds

Infosys posts record free cash flow in FY25 as large AI deals and digital platforms drive steady growth

Infosys Limited closed fiscal year 2025 with a record-breaking free cash flow of $4.1 billion and a modest revenue growth of 4.2% in constant currency, supported by resilient operating margins and several large digital transformation deals. For the year ended March 31, 2025, the Bengaluru-headquartered IT services giant posted annual revenues of $19.28 billion, with an operating margin of 21.1%, reflecting a 0.5 percentage point expansion year-on-year.

CEO and Managing Director Salil Parekh credited the company’s focus on AI, cloud, automation, and cost efficiency for helping Infosys navigate macroeconomic uncertainties and client budget tightening. The company secured $11.6 billion in large deal total contract value (TCV) during the year, with over half of the wins categorised as net new.

In the fourth quarter, Infosys reported revenue of $4.73 billion, marking a 4.8% increase year-on-year in constant currency terms, though sequential growth remained muted. Operating margin in Q4 held at 21.0%, up 0.9% compared to the year-ago period.

What drove Infosys’ record-breaking free cash flow in FY25?

Infosys posted the highest free cash flow in its history at $4.1 billion for FY25, representing a 41.8% year-on-year growth in dollar terms and ₹34,549 crore in rupee terms—a 44.8% jump. This translated to a free cash flow conversion rate of 129.2% of net profit for the full year. In Q4 alone, the company reported ₹7,737 crore in free cash flow, a 10% increase over the previous year’s quarter.

Chief Financial Officer Jayesh Sanghrajka attributed this performance to disciplined execution of cost optimisation strategies under the internal initiative known as Project Maximus. According to Sanghrajka, the project has enabled Infosys to expand margins despite client-specific challenges and lingering macroeconomic pressures, while enhancing operational efficiencies.

How did Infosys perform on revenue, margins, and earnings per share?

The company’s full-year reported revenue stood at ₹162,990 crore, up 6.1% in rupee terms. Basic earnings per share (EPS) grew 1.8% year-on-year to ₹64.50, benefiting from one-time tax reversals of ₹101 crore and pre-tax interest income of ₹327 crore. Without these adjustments, EPS would have been lower, as Q4 EPS dropped 11.8% to ₹16.98 year-on-year.

Quarterly revenue growth remained sluggish on a sequential basis, with a 3.5% decline in constant currency from the December quarter. Nonetheless, the year-on-year growth in Q4 at 4.8% reflected Infosys’ ability to maintain client traction despite delays in decision-making and extended sales cycles in key verticals.

What is Infosys’ FY26 guidance for revenue and margins?

Infosys issued a conservative revenue growth guidance for FY26, projecting between 0% and 3% growth in constant currency. The company also set a target operating margin range of 20% to 22%, maintaining the emphasis on operational discipline and efficiency amid continued economic volatility.

The muted forecast signals ongoing caution from clients in terms of discretionary technology spending. However, Infosys continues to focus on high-value digital and AI-driven engagements that align with its strategic vision.

Which AI and digital transformation deals helped Infosys sustain client momentum?

In FY25, Infosys signed multiple high-impact, long-term technology engagements across sectors. These included the expansion of a strategic collaboration with Citizens Financial Group to drive AI-led transformation in banking, continued partnership with Siemens AG to boost its generative AI-powered learning platforms, and a new deal with Lufthansa Systems to modernise aviation digital infrastructure.

The company also extended its Infosys Cobalt cloud capabilities to LKQ Europe for HR process standardisation across 18 countries, and began an enterprise resource planning (ERP) transformation project with Ontex Group using SAP S/4HANA and Infosys Topaz AI suite.

Additionally, Infosys launched its open-source Responsible AI Toolkit, which Meta described as a valuable contribution to safe and ethical AI innovation through open-source approaches.

How did Infosys’ brand and capabilities fare in global rankings and analyst reports?

Infosys continued to receive broad recognition across IT services, cloud, and AI categories in major analyst assessments. It was named one of the World’s Most Ethical Companies by Ethisphere and listed as a Global Top Employer by the Top Employers Institute for the fifth year running.

Brand Finance’s Global 500 2025 report ranked Infosys among the top three IT services brands worldwide and the fastest-growing brand in its category. The company also appeared in LinkedIn’s Top Companies lists in India, the US, and Canada.

Infosys was rated a leader in several Forrester Wave™, IDC MarketScape, and Everest Group PEAK Matrix® assessments across areas such as multicloud managed services, SAP implementation, advanced analytics, intelligent automation, core banking, insurance, healthcare, sustainability, and digital transformation. Notably, Infosys Finacle secured multiple awards alongside clients like Emirates NBD, Axis Bank, and Zand Bank for excellence in digital banking and customer experience.

What do Infosys’ financials and balance sheet reveal about its resilience?

Infosys ended FY25 with ₹24,455 crore in cash and cash equivalents, up from ₹14,786 crore a year ago. Trade receivables were steady at ₹31,158 crore, while unbilled revenue showed a slight increase to ₹12,851 crore. The company’s equity base expanded to ₹96,203 crore, supported by retained earnings and controlled liabilities.

Operating profit for the year stood at ₹34,424 crore, up from ₹31,747 crore in FY24. However, a sharp fall in other income, which dropped from ₹4,241 crore to ₹3,184 crore due to reduced interest income and fewer tax reversals, impacted profit before tax. Net profit after minority interest for the year came in at ₹26,713 crore, marginally higher than the ₹26,233 crore reported in FY24.

What is the latest Infosys stock sentiment and investment outlook?

Infosys shares closed at ₹1,428.10 on April 17, 2025, reflecting a modest daily increase of 0.76%. However, year-to-date, the stock has declined nearly 25%, significantly underperforming the broader market and IT sector indices. This sharp correction reflects investor concern over slowing revenue growth, conservative FY26 guidance, and sector-wide client hesitancy in tech spending.

Brokerages remain mixed in their outlook. Stifel Nicolaus has cut its price target from $22 to $18 while maintaining a “Hold” rating, citing macroeconomic drag on new deal flow. Susquehanna upgraded Infosys from “Negative” to “Neutral” with a target of $17, reflecting a more balanced risk-reward outlook amid stabilising margins and strong cash flow.

The stock currently trades at a Price-to-Earnings (P/E) ratio of around 21.2, below the sector average of 25.5, suggesting room for valuation re-rating should revenue growth accelerate. The company’s proposed dividend of ₹22 per share—up 13.2% from last year—adds further yield-based appeal for income-oriented investors.

Given the company’s strong fundamentals, operational efficiency, and depth in digital transformation and AI services, analysts are likely to maintain a “Hold” or “Moderate Buy” stance. Near-term headwinds remain, but Infosys’ investment in generative AI and its positioning in high-growth enterprise technology markets may offer long-term upside.

How is Infosys positioning for AI-first and hybrid work futures?

Infosys continues to refine its hybrid work model and invest in upskilling, ESG commitments, and responsible technology development. While the company acknowledged risks related to wage inflation, evolving regulations, and geopolitical disruptions, it emphasized its experience in navigating change through its AI-powered core and always-on learning ecosystem.

Its focus on generative AI solutions and open innovation platforms reflects a broader industry shift toward human-augmented enterprise capabilities. The introduction of the Responsible AI Toolkit and the deepening of client partnerships in this space suggest Infosys is actively preparing for an AI-first business environment.