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Informist, Friday, Jul. 18, 2025

MUMBAI – Direction of information technology stocks next week will mainly depend on post-earnings commentary by companies on the recovery in discretionary demand, deal wins, and guidance for the rest of 2025-26 (Apr-Mar). Next week, mid-cap technology companies Persistent Systems, Coforge, Mphasis, Oracle Financial Services, and industry behemoth Infosys will announce their earnings for the June quarter.

Analysts do not expect any significant stock movement solely on account of the earnings announcement, as the market is expected to have factored in results for the quarter. However, "Street will like companies that report a good deal of wins for the latest quarter," Rishabh Vasa, a research analyst covering the sector at Indsec Securities, said. 

Mid-cap technology companies are widely expected to report better earnings for the latest quarter compared to their large-cap peers. Barring Oracle Financial Services, all three mid-cap companies are expected to report sequential growth in both top line and bottom line for the quarter, while Oracle Financial Services is expected to report a marginal sequential fall in net profit despite a near 7% rise in sales.  

Within the large-cap IT companies, Infosys is expected to lead with around 2.2% sequential growth in revenue. Its net profit, on the other hand, is seen declining 3.5% sequentially, according to the average of estimates from 17 brokerages. The company's earnings before interest and tax margin for the quarter is expected to remain flat on quarter, despite robust revenue growth due to the impact of wage hikes for a few senior employees and large deal transition costs, Elara Securities said in its earnings preview. The IT giant is widely expected to revise the lower end of its sales growth guidance for FY26 to 1-3% from the current 0.3%. However, some brokerages expect it to maintain the previous guidance. 

So far this week, sectoral giants Wipro, HCL Technologies, Tech Mahindra, LTIMindtree and mid-cap technology company Tata Technologies have announced their quarterly earnings for the quarter ended June. Commentary from the management of these companies indicated that there has been some delay in discretionary spending by clients during the quarter, dampened by uncertainties over US tariffs. Most of these companies expect a recovery in growth starting from the December quarter. 

Barring LTIMindtree and Wipro, all other large-cap companies that reported earnings this week failed to meet analysts' expectations for either top line or bottom line or both. LTIMindtree led the pack, with its bottom line for the quarter rising 11% sequentially, boosted by a jump in other income and a decline in employee benefit costs. This was despite the company's revenue rising at its slowest pace in five quarters.  

Although Wipro managed to beat analysts' estimates for both top line and bottom line, the company's consolidated net profit fell nearly 7% on quarter, after rising for six consecutive quarters. Its consolidated revenue also fell nearly 2% sequentially after three quarters of rise. In the case of HCL Technologies, its consolidated net profit for the quarter came below expectations, while the top line barely met the Street estimate. Its net profit and revenue for the quarter fell 11% and nearly 1% on quarter. The company also reduced its earnings before interest and tax margin guidance for FY26 to 17-18% from 18-19% due to "certain headwinds." The management, however, intends to improve margins back to 18–19% by the end of the year. Tech Mahindra failed to meet the Street's view for both top line and bottom line. Its net profit and revenue fell over 2% and 0.3%, respectively, in the June quarter.      

This week, the Nifty IT index fell 1.5% compared to a 0.7-0.9% fall in the benchmark indices, Nifty 50 and Sensex. Next week, the IT index is expected to find support at 36703.40 and resistance at 37638.90. 

TOP HEADLINES

* Analyst Concall: Wipro to switch focus on deal conversions in coming qtrs
* Wipro sees strong order book, deal pipeline helping co's recovery in Oct-Mar
* Analyst Concall: No major margin impact from recent large deal - LTIMindtree
* Earnings Review: Higher other income, lower staff cost aid LTIMindtree PAT
* Earnings Review: Wipro Apr-Jun consol net profit down 7% QoQ to INR 33.3 bln
* Wipro expects Jul-Sept IT services revenue to fall 1% QoQ in worst case
* Newgen Software Apr-Jun consol PAT falls 54.1% QoQ as sales fall 25.4%
* Analyst Concall: Macro weak but Tech Mahindra says retaining FY27 margin aim
* HC asks Wipro to cut defamatory content in former staff's termination letter
* Earnings Review: Tech Mahindra consol PAT down 2.2% QoQ, below street view
* Tech Mahindra says deal wins to start contributing to revenue growth in H2
* L&T Tech Apr-Jun consol sales fall almost 4% QoQ, PAT up 1.5%
* Earnings Outlook: Weak demand, project ramp downs to hit Wipro Q1 sales, PAT
* TCS collaborates with MIT Sloan Management Review on AI research series
* Earnings Outlook: LTIMindtree sales growth seen subdued QoQ, margin seen up
* Analyst Concall: Headwinds lead HCL Tech's FY26 EBIT margin guidance cut
* HCL Tech says impact on EBIT margin will continue into Jul-Sept
* Earnings Review: HCL Tech Q1 net profit dn 11%, lags estimates; sales muted
* Analyst Concall: Tata Tech hopeful of sales bouncing back in Oct-Mar
* Earnings Review: Tata Tech Apr-Jun sales dn 3% QoQ on weak services revenue
* HCL Tech cuts FY26 EBIT margin guidance, ups lower end of revenue guidance
* Earnings Outlook: Tech Mahindra Q1 sales seen flat QoQ, margin, PAT seen up
* Earnings Outlook: Weakness in svcs, tech solutions ops to weigh on Tata Tech

Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:

End

US$1 = INR 86.14

Reported by Arya S. Biju

Edited by Saji George Titus

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