Dhanteras 2025 – Infosys: Uncertainty is the challenge

Infosys’ September 2025 quarter result came out in the evening of 16^th October. The result was better than expectations. Consolidated net profit in the quarter increased year-on-year by 13.19% to Rs 7,364 crore. Revenue also grew year-on-year by 8.55% to Rs 44,990 crore.

Infosys shares continued their decline in spite of September quarter result exceeding expectations

In spite of results being better than expectations, Infosys shares fell on the next day. Infosys stock ended the day, 17^th October, 2025 down by 2.08% at Rs 1,440.90. Nifty 50 index ended the day, up by 0.49%. Nifty IT index, of which Infosys is a major component, ended the day down by 1.63%. So Infosys stock underperformed many of its peers in the IT industry a day after it posted its September quarter result.

Infosys stock price has declined by more than 20% in 2025

In the past 5 days, Infosys stock has lost more than 4%. So on the day after the result, the decline in stock price was not due to any profit booking. Infosys shares have underperformed this year. Year-to-date in 2025, the stock has lost 23.46%.  Nifty 50 index has gained 8.28% in this period.

Headwinds from the US market

The decline in Infosys shares seen this year indicate to negative sentiments that have built up in the market regarding the stock and IT sector. The sector is facing headwinds from US market since President Trump took over as President on 20^th January this year. The H1-B visa fee was increased sharply to $100,000. The HIRE Bill (Halting International Relocation of Employment) is presently tabled in the US Congress. It is a private member bill. If passed, it will impose 25% non-deductible tax on US companies that outsource their work to foreign service providers. The bill if passed will be a big blow to Infosys and other Indian IT companies.

Infosys is heavily dependent on US companies for its revenues.  If the economic environment in US deteriorates, then many US companies will cut down their spending in IT relates areas. This cut may come especially in areas such as Artificial Intelligence (AI). Indian IT companies, like Infosys and HCL Tech, are focusing big on providing AI related services. TCS is also focusing on creating AI infrastructure. The company has announced that it will build a 1 Giga Watt data center in India.

Uncertainty is the challenge

The challenge before Infosys is the prevailing uncertainty. It is not clear how things in the US market will turn out. Will President Trump soften his stand on trade and outsourcing? Will the economic situation in US deteriorate and US companies will cut down on IT spending? And most importantly, will AI actually turn out to be a big source of revenue for Indian IT companies. A recent report by MIT said that 99% of companies that have invested in AI till now are not seeing any gains in productivity. If the magic of AI does not translate into improved productivity for businesses, then it will not turn out to be a significant source of revenues for IT companies.

The company recently got a big contract of GBP 1.2 billion from NHS in UK. Infosys will build a new workforce management platform for NHS in England and Wales.

Infosys’ stock is currently trading at 12-month trailing P/E ratio of around 21. Average P/E ratio at which Nifty IT index is currently trading at is 25.58. So the stock is at a cheaper valuation than many of its peers in the IT industry. The company announced interim dividend of Rs 23 per share while declaring its September quarter result. Given its record of stable dividends it may prove to be a good stock for income seeking investors. At its current valuation, Infosys may not be that expensive. For those seeking growth, there may still be lot of uncertainty for this stock, before things clear fully.

Disclaimer : This content is only for informational purpose. It does not make any recommendation to act or invest.

Source: NSE, Infosys