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Indian IT stocks have declined 1.9% since Tata Consultancy Services reported Q2 results, amid concerns over sluggish client spending, global uncertainties, and changes to H-1B visa rules. Infosys and Wipro's results were in line with estimates but offered little sign of a demand rebound in the second half of the fiscal year. Fresh concerns about US regional bank lending standards are also a worry for India's software exporters.

Infosys Limited (NSE: INFY) has reported robust financial results for the second quarter of the fiscal year 2025-26, demonstrating resilience despite market headwinds. The company reported a 2.2% sequential growth in revenues in constant currency, reaching $5,076 million, and a 3.3% year-over-year growth in the first half of the fiscal year, according to Infosys' quarterly report.

Key highlights of the quarter include strong deal wins, with a total contract value (TCV) of $3.1 billion and a net new of 67%. The company also generated free cash flow of $1.1 billion, which is 131.1% of net profit. The operating margin for the quarter stood at 21.0%, reflecting the company's strong financial health, as noted in the report.

Infosys' CEO and MD, Salil Parekh, attributed the strong performance to the company's focus on AI and its ability to deliver value from AI in the current environment. He highlighted the company's proactive investments in embracing an AI-first culture and the differentiated value proposition of Infosys Topaz, according to the same report.

The company's guidance for the fiscal year 2025-26 remains at a revenue growth of 2%-3% in constant currency and an operating margin of 20%-22%. Jayesh Sanghrajka, CFO, noted the company's strategic investments to futureproof the business and the share buyback of `18,000 crores and an interim dividend of `23 per share, details that were outlined in the report.

The company's performance comes amidst broader market concerns, including sluggish client spending, global uncertainties, and changes to H-1B visa rules. Infosys and Wipro's results were in line with estimates but offered little sign of a demand rebound in the second half of the fiscal year. Fresh concerns about US regional bank lending standards are also a worry for India's software exporters, the report added.

Infosys' strong performance in the second quarter underscores the company's ability to navigate challenging market conditions and maintain a strong financial position. The company's focus on AI and its strategic investments in future technologies position it well to capitalize on future growth opportunities.