More Stories

Informist, Wednesday, Jul. 2, 2025

 

By Anjana Therese Antony

 

MUMBAI - India's top listed information technology players found little respite from slowing earnings growth or the flip-flops on US tariffs in the March quarter. Their aggregate on-year growth in net profit was the slowest in five quarters. The sequential growth in net profit was the worst in three quarters. Some mid-cap players fared better than their large-cap peers, but broking firms remain cautious on the sector even though some of these companies said no major impact is expected from US tariffs in the current financial year.

 

The sector’s exposure to the US, from where it gets more than half its revenue, and uncertainty around President Donald Trump's tariff policies have made some broking firms cautious about its growth in the near-to-medium term. The tariff tantrum just makes things worse for a sector that has already been struggling to cope with the lack of increase in client budgets, higher costs, and conservative sales growth guidance for the financial year 2025-26 (Apr-Mar), particularly from large-cap companies.

 

While the cumulative net profit of India’s top 13 IT companies grew nearly 3% on year to almost INR 318.00 billion, higher than the expected rise of 1.3%, it was still the slowest growth in the metric in five quarters, according to Informist’s analysis. Sequentially, the cumulative bottom line rose 1.5%, much better than the anticipated 0.2% rise, but still the worst growth in three quarters. Estimates for Oracle Financial Services Software were not available with Informist.

 

The rise in costs for the sector has been offsetting the impact of growth in revenue, with both parameters rising at a similar pace. The cumulative revenue of these 13 companies grew 6.5% on year, largely around the expected level. However, the sequential growth of 0.5% was lower than the expected rise of 1.3% for the sector.

 

The expenses of these companies rose over 6% on year to INR 1.59 trillion, negating the impact of the increase in revenue. Employee benefit expenses, which account for more than 70% of total spending in the IT sector, increased 2% sequentially and more than 5% on year as some of these companies had announced wage hikes. While the debate about muted salary increases in top IT companies continues, the managements of some large-cap companies had said current employee salaries are competitive.

 

Despite the efforts of some of these companies to increase headcount, attrition rates rose on a trailing 12-month basis. Wipro posted the highest attrition rate of 15% during the March quarter, while Coforge posted the lowest of 10.9%. Employee utilisation of almost all companies was above 80%.

 

Of the 13 IT companies that are part of the Nifty 200 index, 10 met the net profit growth expectation for the sector, and four beat the revenue growth projection. Seven players beat the net profit forecasts at the company level, but only three met company-level expectations on revenue.

 

Large-cap players took a back seat as the net profit of mid-cap players--such as Coforge and KPIT Technologies--grew more than 20% sequentially, though their revenues rose in the low single digit. The rise in net profit was driven by strong traction in artificial intelligence-related projects and data engineering, some broking firms said. The results reported by Tata Elxsi were the weakest among the IT companies in the Nifty 200 universe, and also failed to meet expectations on the sectoral front. 

 

KPIT Technologies reported the sharpest sequential growth in net profit at almost 31%, against the projection of 4%. Persistent Systems posted the sharpest growth in revenue of 6%, while its five large-cap peers posted a muted rise in the parameter.

 

Five companies--Coforge, Infosys, LTIMindtree, Tata Consultancy Services, and Tata Elxsi--reported on-year declines in adjusted profit margins. Oracle Financial had the highest net profit margin of 37.52%, while Coforge had the lowest at 7.66%.

 

OUTLOOK

Market participants now await the June quarter earnings, with sector giant Tata Consultancy Services scheduled to kick-start the season next week. It is widely expected that mid-cap IT players will continue to outperform their large-cap peers. While margins are expected to remain broadly stable, a meaningful recovery in discretionary spending, which could push the metric higher in the medium term, is still awaited, some broking firms said.

 

Though company managements have said no major cancellations are anticipated due to tariffs, some had pointed to a delay in decision-making by clients. While they do not expect earnings growth in FY26 to take a major hit, analysts remain cautious on the sector. Deal closures are yet to catch up as clients wait and watch to ascertain the impact of tariffs on their costs and supply chains, ICICI Securities said in its pre-earnings report for the June quarter. "We expect muted revenue growth for large cap peers, with the exception of Infosys," it added.

 

The lack of any other major change in the macroeconomic environment is likely to keep the earnings guidance of IT companies largely unchanged for FY26, with a few exceptions. This was indicated by the May quarter result of US-based giant Accenture, which raised its guidance for the financial year 2024-25 (Sept-Aug) to 6-7% from 5-7% expected in March. The imposition of reciprocal tariffs by the US will hit spending in segments such as manufacturing, logistics, and retail, Emkay Global Financial Services said in its sector preview report. "Given this backdrop, QoQ (quarter-on-quarter) growth is expected to remain muted in Q1 (Apr-Jun), while the weakening USD (dollar) would lead to 90-220 bps cross currency benefits on reported USD revenue growth," it said. 

 

The following table shows the performance of the 13 companies from the information technology sector in the Nifty 200 index vis-a-vis the consensus estimate for each company as well as the consensus estimate for the sector and the Nifty 200:

 

Company	PAT beat analysts' estimate	Adjusted QoQ PAT growth %	Adjusted QoQ PAT growth estimate %	PAT beat sector estimate	PAT beat Nifty 200 estimate		Revenue beat analysts' estimate	Revenue QoQ growth %	Revenue QoQ growth estimate %	Revenue beat sector estimate	Revenue beat Nifty 200 estimate
Coforge	NO	21.2	30.9	YES	YES		NO	4.7	7.8	YES	NO
HCL Technologies	NO	-6.2	-5.2	NO	NO		NO	1.2	1.3	NO	NO
Infosys	YES	3.3	-2.0	YES	YES		NO	-2.0	0.5	NO	NO
KPIT Technologies	YES	30.9	3.7	YES	YES		YES	3.4	-4.8	YES	NO
LTIMindtree	NO	4.0	6.4	YES	YES		NO	1.1	1.9	NO	NO
Mphasis	YES	4.4	2.4	YES	YES		YES	4.2	4.0	YES	NO
Oracle Financial Services Software	NA	19.0	NA	YES	YES		NO	0.1	NA	NO	NO
Persistent Systems	YES	6.1	5.9	YES	YES		YES	5.9	5.4	YES	NO
Tata Consultancy Services	NO	-1.3	1.7	NO	YES		NO	0.8	1.3	NO	NO
Tata Elxsi	NO	-13.4	-9.9	NO	NO		NO	-3.3	-2.1	NO	NO
Tata Technologies	YES	12.0	0.7	YES	YES		NO	-2.4	-1.0	NO	NO
Tech Mahindra	YES	18.7	8.2	YES	YES		NO	0.7	1.1	NO	NO
Wipro	YES	6.4	-0.5	YES	YES		NO	0.8	1.4	NO	NO

 

 

The following table shows the profit margins of the 13 IT companies that are part of the Nifty 200: 

 

	Adj PAT Margin for Mar 25	Adj PAT Margin for Mar 24	Adj PAT Margin for Dec 24
Nifty 200	12.92%	12.28%	11.86%
IT Sector	16.12%	16.74%	15.96%
Company	Adj PAT Margin for Mar 25	Adj PAT Margin for Mar 24	Adj PAT Margin for Dec 24
Coforge	7.66%	9.15%	6.61%
HCL Technologies	14.24%	13.99%	15.36%
Infosys	17.19%	21.01%	16.30%
KPIT Technologies	16.01%	12.47%	12.65%
LTIMindtree	11.55%	12.37%	11.23%
Mphasis	12.03%	11.52%	12.01%
Oracle Financial Services Software	37.52%	34.10%	31.56%
Persistent Systems	12.21%	12.17%	12.18%
Tata Consultancy Services	18.96%	20.30%	19.35%
Tata Elxsi	18.98%	21.74%	21.19%
Tata Technologies	14.69%	12.09%	12.80%
Tech Mahindra	8.72%	5.14%	7.40%
Wipro	15.86%	12.76%	15.03%

 

(Note: Analyst estimates for each index group are derived from estimates for companies that are part of the index.)

 

End

 

Data compiled by Vinod Bhovad

Edited by Rajeev Pai

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.