Detailed Rationale

Crisil Ratings has reaffirmed its ‘Crisil AAA/Stable/Crisil A1+’ ratings on the long-term debt programme and commercial paper programme of Infosys Limited (Infosys).

 

The ratings continue to reflect the strong market position of the company, being the second-largest player in the Indian information technology (IT) services industry, its healthy operating efficiency and a strong financial risk profile. These strengths are partially offset by exposure to intense competition in the global IT industry.

 

Infosys registered growth of 6.1% (4.2% constant currency [CC] growth) in fiscal 2025 driven by 5.2% growth in the financial services segment, followed by 11.2% growth in the manufacturing segment and the balance in other segments. Overall growth was supported by the company’s acquisition strategy. In fiscal 2026, revenue growth is expected to be modest at 0-3% in CC terms owing to continued macroeconomic headwinds and emerging uncertainties in key markets of the US and Europe, which contribute ~58% and ~30%, respectively, to the revenue.

 

Basis Crisil Ratings adjusted figures, the operating margin improved by 50 basis points on-year in fiscal 2025 to 24.4%, as against 23.9% in fiscal 2024, driven by cost optimisation through Project Maximus (a margin expansion program of Infosys), positive impacts of favourable currency movements and reduced post-sale customer support cost. These tailwinds helped offset some headwinds, such as increased employee compensation and accounting costs from past acquisitions. Going forward, Crisil Ratings expects margins to remain steady at 23-25% in fiscal 2026 and over the medium term, driven by increased focus on managing employee costs and moderating attrition in the industry.

Analytical Approach

Crisil Ratings has combined the business and financial risk profiles of Infosys and its subsidiaries, held directly or indirectly, as all these entities have common management and are in the same business.

 

Goodwill on acquisitions has been amortised over five years.

 

With the adoption of Ind AS 116 with effect from April 1, 2019, long-term lease liabilities are included in debt along with related adjustments in Ebitda for depreciation and amortisation and interest cost.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers & Detailed Description

Strengths:

Leading position in the Indian IT services space: Infosys is the second-largest listed Indian IT services company in terms of revenue. It has diversified offerings across service segments and industry verticals. Majority of the revenue comes from digital services, driven by higher demand for cost optimisation programmes and other digital products and services. Infosys derived about 28% of revenue from the banking, financial services and insurance (BFSI) segment in fiscal 2025. The company has presence in other verticals, such as retail (13.5%), communication (11.7%), energy, utilities, resources and services (13.3%), manufacturing (15.5%), hi-tech (8.0%), life sciences (7.3%) and others (3.0%).

 

Large scale of operations and healthy operating efficiency: The business risk profile is supported by its leading market position, large scale of operations with a skilled resource base of 323,578 employees (as on March 31, 2025), proven project execution skills and strong offshore delivery capability. The company won large deals amounting to $11.6 billion in fiscal 2025, compared with $17.7 billion in the previous fiscal, which will fuel revenue growth. Revenue growth and profitability are supported by premium pricing power with increasing digital share and a wide spectrum of service offerings, which are critical components in large deals. The operating margin is expected to sustain with easing supply-side challenges, such as reducing attrition, sound mix of on/off-shore employee mix and healthy employee utilisation rates. The profitability remains among the best in the industry, supported by its superior revenue mix, cost optimisation measures and delivery efficacy.

 

Strong financial risk profile and robust liquidity: The financial risk profile was comfortable, supported by networth of Rs 93,369 crore and surplus cash of Rs 51,027 crore as on March 31, 2025. Net cash accrual stood at Rs 11,265 crore in fiscal 2025 after dividend payout of Rs 20,731 crore (Crisil Ratings-adjusted figures). Total debt of Rs 8,227 crore as on March 31, 2025, is completely attributed to lease financing. Despite the policy to return 85% of free operating cash flow to shareholders over the five years from fiscal 2025, liquidity will remain robust, supported by sufficient funds to cover working capital requirement and capital expenditure (capex) over the medium term. Infosys is also likely to invest in niche acquisitions to strengthen its domain expertise over the medium term. These will be largely funded through cash surplus and healthy accrual.

 

Weakness:

Exposure to intense competition in the global IT industry: The moderation in discretionary spending by large clients has impacted revenue growth in the IT industry in the past two fiscals, especially in traditional outsourcing services. Furthermore, being a leading player in the IT outsourcing space, Infosys competes with Indian IT majors such as Tata Consultancy Services Ltd (TCS), HCL Technologies Ltd and Wipro Ltd, as well as global IT giants, such as Atos SE, Capgemini SE, Cognizant and Accenture Plc. Slowdown in IT spends by global clients and decline in contract value have increased the competition. While Infosys remains exposed to challenging business conditions, its strategy of focusing on building capability in the higher margin digital and consulting segments and increasing automation to improve core technologies will mitigate the impact on profitability over the medium term.

Liquidity: Superior

Liquidity remains strong driven by cash surplus of Rs 51,027 crore as on March 31, 2025. The company has moderate capex plans, which include acquisitions of companies from diverse domains, and no long-term debt. Crisil Ratings believes Infosys will maintain strong liquidity over the medium term, as the existing funds and expected cash accrual will be more than sufficient to finance working capital, capex, investment in various subsidiaries, as well as capital return to investors.

 

ESG profile

Crisil Ratings believes the environment, social and governance (ESG) profile of Infosys supports its already strong credit risk profile, which benefits from support from the government of India (GoI).

 

The IT sector has a low impact on the environment because of the inherent nature of digital services, core operations as well as products. The sector has a social impact because of its large workforce. Infosys has continuously focused on mitigating its environmental and social impact.

 

Key ESG highlights:

• Infosys continues to be carbon-neutral for the sixth year in fiscal 2025 when factoring in all emission categories (scope 1, 2 and 3).
• In fiscal 2024, three Infosys campuses received TRUE certification for achieving zero waste to landfill. The company aims to secure this certification for its seven owned campuses by fiscal 2026.
• Attrition rate for IT services operations (excluding business process management services) fell to 14.1% in fiscal 2025 from 20.9% in fiscal 2023 and was lower than the peer average.
• In fiscal 2025, there were zero reported instances of material data breaches, compared with one incident in the previous fiscal.
• The company’s governance structure is characterised by 78% of the board comprising of independent directors, 22% being women directors and fully independent board committees (audit, nomination and remuneration, risk management, stakeholder relationship and corporate social responsibility) coupled with extensive financial disclosures.

 

There is growing importance of ESG among investors and lenders. The commitment of Infosys to ESG principles will play a key role in enhancing stakeholder confidence, given the high share of market borrowing in the company’s debt and its access to domestic and foreign capital markets.

Outlook: Stable

Crisil Ratings believes Infosys will maintain its strong position in the Indian IT services sector and will sustain its robust financial risk profile and liquidity over the medium term.

Rating sensitivity factors

Downward factors:

• Sustained slowdown in revenue growth or decline in operating profit before depreciation, interest, and tax (OPBDIT) margin below 20%, due to regulatory changes in operating regions, or reduction in client spending, weakening the business risk profile.
• Consistent reduction in cash surplus due to large acquisitions or capital return to investors, affecting financial flexibility

About the Company

Infosys is a large Indian IT services company offering a range of digital and traditional IT services. Digital services include revenue from emerging segments such as artificial intelligence-based analytics and big data, engineering digital products and Internet of Things (IoT), application programme interface and microservices, modernisation of legacy technology systems, migration to cloud applications and implementation of advanced cyber security systems. Traditional IT services include application development and management services, product engineering and management, infrastructure management services, enterprise application implementation, and support and integration services. Infosys caters to industry verticals such as financial services, retail, communication, manufacturing, hi-tech, life sciences, and energy utilities, resources and services.

 

As on March 31, 2025, Infosys had 1,869 active clients and presence in over 50 countries. The promoters held 13.05% stake in the company as on March 31, 2025.

Key Financial Indicators (Crisil Ratings-adjusted figures)

As on / for the period ended March 31	Unit	2025	2024
Operating income	Rs crore	163,125	153,877
Profit after tax (PAT)	Rs crore	25,954	26,248
PAT margin	%	15.9	17.1
Adjusted debt / adjusted networth	Times	0.00	0.00
Interest coverage	Times	NM	NM

NM – not meaningful

Any other information: Not Applicable