Infosys reports 4.2% growth and record free cash flow amid FY25 margin expansion and AI deal momentum

Infosys Limited, one of India’s largest technology services and consulting firms, closed fiscal year 2024–25 with a 4.2% year-on-year growth in constant currency and an all-time high free cash flow of $4.1 billion. Despite a cautious macroeconomic environment and client budget constraints, the company reported steady margin expansion, operational discipline, and multiple large digital transformation deal wins, including major AI collaborations with global enterprises.

For the year ended March 31, 2025, Infosys generated $19.28 billion in revenue, with operating margin expanding to 21.1%, up 50 basis points year-on-year. Its large deal total contract value (TCV) stood at $11.6 billion, with 56% classified as net new contracts. Free cash flow rose sharply by 41.8% compared to the previous year, reinforcing Infosys’ strong capital discipline.

While the company delivered operational milestones and long-term strategic wins, investor sentiment remained lukewarm. Infosys stock has declined 25% year-to-date, closing at ₹1,428.10 as of April 17, 2025. Despite a modest post-earnings uptick, broader concerns around conservative FY26 guidance, short-term revenue softness, and pressure on global IT budgets continue to weigh on the stock.

What Are the Key Highlights of Infosys’ FY25 Performance?

In FY25, Infosys focused on navigating shifting enterprise demand by doubling down on digital core offerings—particularly cloud migration, artificial intelligence (AI), cybersecurity, and enterprise automation. The company’s Project Maximus, an internal transformation programme aimed at driving efficiencies across delivery and operations, was a core contributor to its 0.5% improvement in operating margin.

Q4 FY25 revenues came in at $4.73 billion, marking a 4.8% year-on-year increase in constant currency, though declining 3.5% sequentially. Operating margin in the quarter stood at 21.0%, with basic earnings per share (EPS) falling to $0.20, a 15.2% drop from Q4 FY24. For the full year, EPS stood at $0.76, down 0.3% in dollar terms, although it increased by 8.3% in rupee terms after accounting for tax refund adjustments.

Chief Executive Officer Salil Parekh emphasised the resilience of Infosys’ delivery capabilities and the success of its AI, cloud, and automation offerings in driving client engagement. Chief Financial Officer Jayesh Sanghrajka added that the company’s ability to achieve record-level free cash flow and improve margins reflected a disciplined focus on execution despite macroeconomic headwinds.

The Board proposed a final dividend of ₹22 per share, resulting in a 13.2% increase in the total dividend payout compared to the previous fiscal year, underlining strong shareholder value creation.

How Are Infosys’ AI and Cloud Deals Shaping Its Strategic Growth?

Infosys continues to reposition itself as a leading enabler of enterprise AI transformation. In FY25, the company expanded multiple long-standing partnerships, underlining its focus on building large, AI-driven digital platforms.

Among the most prominent is the renewed engagement with Citizens Financial Group, which extended its collaboration with Infosys to accelerate its AI-led transformation. Over five years, Infosys helped modernise Citizens’ infrastructure using cloud-native platforms, enabling scalable digital banking without compromising on system stability or compliance.

A similar deepening of engagement occurred with Siemens AG, which is working with Infosys to enhance its digital learning platforms using generative AI. The initiative is designed to foster a culture of continuous learning, with Infosys providing the tech backbone for content recommendation, engagement, and performance analytics.

Another transformative partnership involved Lufthansa Group and Lufthansa Systems GmbH, who teamed up with Infosys to launch a dedicated Global Capability Center (GCC). This unit is expected to drive innovation in aviation through modular, scalable platforms that leverage Infosys Topaz—its AI-first suite of services.

Infosys also onboarded LKQ Europe to streamline HR operations across 18 countries using a unified, cloud-based digital platform enabled by Infosys Cobalt. In addition, Ontex Group tapped Infosys for a large-scale ERP modernisation using SAP S/4HANA and embedded AI.

In a separate initiative, Infosys launched its open-source Responsible AI Toolkit, designed to help enterprises navigate the ethical challenges of adopting AI. The move was welcomed by Meta, which highlighted the importance of open data and tools in promoting safe, equitable AI development.

Why Has Infosys Stock Declined Despite Operational Strength?

Infosys shares have dropped by approximately 25% year-to-date, reflecting market concerns over its subdued growth outlook and softness in discretionary IT spending. The company’s FY26 revenue guidance projects 0% to 3% constant currency growth, indicating persistent caution among global clients. While operating margin guidance remains stable between 20% and 22%, investors are looking for stronger signals of reacceleration before re-entering the stock.

Infosys reported a 12% drop in Q4 FY25 net profit, which missed analyst expectations. Although the company booked solid large deal TCVs, delays in ramp-ups and project deferrals in sectors like financial services and telecom contributed to earnings pressure.

Foreign Institutional Investors (FIIs) reduced their stake from 33.3% to 32.9% during Q4, while Domestic Institutional Investors (DIIs) increased their holdings from 38.4% to 38.5%. Mutual funds raised their exposure slightly from 20.05% to 20.45%, reflecting selective optimism among domestic players.

Of the 41 analysts tracking Infosys, 14 rated it a “Strong Buy”, 11 as “Buy”, 13 as “Hold”, and 3 as “Sell” or “Strong Sell”. The median 12-month price target stands at ₹1,811.61, with forecasts ranging between ₹1,450 and ₹2,160. This wide band reflects uncertainty about execution in a fragile macro environment.

Can AI-Led Transformation Reverse Infosys’ Stock Trajectory in FY26?

Infosys’ aggressive pivot toward artificial intelligence, automation, and cloud-based digital transformation provides long-term upside potential. With enterprise clients increasingly seeking ways to reduce costs and accelerate innovation, Infosys’ AI-powered platforms like Topaz, its expanded consulting-led model, and global delivery scale are positioned to drive client outcomes in FY26 and beyond.

The company’s strong cash flow profile, consistent dividend growth, and commitment to responsible innovation also make it attractive for long-term investors looking to track current stock market trends and business news today headlines. However, near-term earnings growth may remain constrained until the broader IT services demand cycle stabilises.

For those monitoring in-depth stock market trends and top business stories of the day, Infosys’ results underscore the dichotomy between operational strength and market sentiment in the IT sector. While challenges remain, Infosys’ investments in AI and global deal momentum make it a stock worth watching in the evolving digital economy.