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Informist, Tuesday, Aug. 26, 2025

 

By Anjana Therese Antony

 

MUMBAI – The ripple effect of the US tariff flip-flops was seen in the June quarter earnings performance of India's top listed information technology companies. US clients of Indian IT companies reported strong financial growth for the quarter but remain nervous about the uncertainty over tariffs and are keeping their budgets tight, broking firms said. However, the relief for IT companies is that demand has not deteriorated as sharply as was expected at the start of the June quarter. Also, as has become routine, mid-cap IT players outperformed their larger peers for the 17th quarter in a row.

 

The rise in IT companies' total expenses was faster than the growth in their aggregate revenue, which led to a slight sequential fall in their collective bottom line for the June quarter. The cumulative adjusted net profit of the 13 IT companies that are part of the Nifty 200 index fell 0.6% sequentially, less steep than the 2?cline estimated by the Street. The 0.3% growth in overall revenue was also lower than the near 1% rise the market had expected and the near 1% rise in total expenses.

 

The rise in the bottom line compared to the year-ago period, too, did not paint a rosy picture as the quantum of rise in total expenses was similar to the rise in revenue. The total net profit of these 13 IT companies for the June quarter rose 6.5% from a year ago. While revenue grew 5.2%, total expenses increased 5.6% from a year ago. 

 

Despite the worries about tariffs, IT companies' strong deal wins caught the eye of investors. "The highlight of the quarter was the strong deal bookings--highest YoY (year-on-year) growth in last five quarters," Nuvama Institutional Equities said in its post-earnings report. Client spending in the banking, financial services, and insurance segment remained strong, but that in the manufacturing and consumer verticals was soft on account of their high exposure to tariff-related risks, the broking firm said. Analysts expect tariff uncertainties to continue to cause demand challenges for the next quarter or two, but remain optimistic about the medium- to long-term outlook.

 

MID-CAPS SPARKLE

The trend of mid-cap IT companies outperforming their bigger peers continued in the June quarter. The aggregate revenue growth of the seven mid-cap companies that are part of the Nifty 200 index was more than 3% from the previous quarter while that of the six large-cap players was flat. The on-year growth in the metric was also way better for mid-cap entities, with these companies posting an almost 18% rise in aggregate top line while the bigger players reported just 4% growth.

 

Meanwhile, the quantum of the sequential fall in aggregate net profit was similar for mid-cap and large-cap companies, down around 0.6?ch. Compared to the year-ago period, mid-cap companies' 16% growth in cumulative bottom line was far better than the near 6% growth reported by their larger peers.

 

Four IT players--Coforge, Infosys, Oracle Financial Services, and Persistent Systems--beat the Street's expectations on revenue as well as net profit for the sector and for the Nifty 200 universe. Coforge reported the strongest sequential earnings growth among all its IT peers and the sector as a whole, buoyed by strong deal wins and executions. Its adjusted net profit growth of 31% on quarter was much better than the expectations for the sector and the Nifty 200 universe. Analysts had expected a 2?ll in cumulative net profit for the IT sector and a near 7?cline in the metric for the Nifty 200. Coforge also reported 8% growth in revenue, much faster than the 1% growth estimated for the sector. Analysts had projected a fall of 7% on quarter for the Nifty 200 set taken together.

 

Persistent Systems was another mid-cap company that posted better-than-expected results and beat the overall growth expectations for the sector and for the top 200 listed companies. The growth was supported by strong performance in its BFSI, software, hi-tech, and emerging industries verticals.

 

In the large-cap pack, LTIMindtree was the only company to report double-digit growth in net profit from the previous quarter, posting an 11% rise in the metric, higher than the near 6% rise the Street had expected for the company. This was also way better than the projections for the sector and the Nifty 200. However, its 0.7% growth in revenue was slower than what was expected of the sector.

 

Six companies--Tech Mahindra, HCL Technologies, Wipro, Tata Technologies, Tata Elxsi, and KPIT Technologies--failed to meet the net profit and revenue growth expectations for the sector as a whole. Tata Elxsi and KPIT Technologies posted the sharpest fall in net profit on quarter. HCL Technologies posted the third-biggest fall in the bottom line in the IT pack, which was also sharper than the fall anticipated for the company, for the sector, as well as for the Nifty 200 universe.

 

GUIDANCE

Amid the noise about tariffs, expectations are that the demand environment will not deteriorate further sharply. This was evident in the upward revision of revenue growth guidance of two large-cap players, Infosys and HCL Technologies, which raised the lower end of their respective guidance for the financial year 2025-26 (Apr-Mar), indicating that the worst may be over for the sector.

 

"Strong order backlog and a healthy deal pipeline likely limit downside (in earnings)," JM Financial Services said in its earnings review. That said, a recovery isn't imminent as elongated decision cycles, slower ramping up of deals, and limited discretionary spending weigh on enterprise technology spends, the broking firm said. The increasing probability of an interest rate cut in the US suggests clients are likely to absorb the impact of tariffs, which may lead to continued limitation of their IT spends.
 

India's second-largest IT company Infosys revised its FY26 revenue growth guidance in constant currency to 1-3% from 0-3?rlier, in line with most analysts' expectation. HCL Technologies expects its revenue to grow 3-5% in the current financial year compared with its projection of 2-5% in the previous quarter.

 

Wipro, which provides information technology services revenue guidance on a quarterly basis and not for the full year, revised its estimate for the September quarter to (-)1% to 1% in constant currency terms, better than the June quarter guidance of a fall of 1.5-3.5%. Accenture, the US peer of India's large-cap IT firms, too, revised its local currency revenue growth guidance to 6-7% from 5-7% indicated in March.

 

The following table is the snapshot of IT sector and broader index performance for the June quarter:

Index/Sector	Number of companies	Apr-Jun PAT excluding exceptional items (% change)		Apr-Jun net sales (% change)		Total expense growth in %
		YoY	QoQ	YoY	QoQ	YoY	QoQ
Nifty 500	500	7.8	(-)5.8	5.8	(-)4.6	5.8	(-)2.7
Nifty 200	200	9.4	(-)8.5	5.6	(-)4.7	5.6	(-)2.4
Nifty 50	50	8.0	(-)4.5	5.9	(-)4.9	6.6	(-)3.1
IT	13	6.5	(-)0.6	5.2	0.3	5.6	0.7

 

The following table shows the June quarter performance of the 13 IT companies 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 Ltd.	YES	31.0	29.8	YES	YES		NO	8.2	9.3	YES	YES
HCL Technologies Ltd.	NO	(-)10.8	(-)1.8	NO	NO		YES	0.3	0.2	NO	YES
Infosys Ltd.	YES	(-)1.6	(-)3.5	YES	YES		YES	3.3	2.2	YES	YES
LTIMindtree Ltd.	YES	11.1	5.5	YES	YES		NO	0.7	0.7	NO	YES
Mphasis Ltd.	NO	(-)1.1	2.9	YES	YES		NO	0.6	1.3	NO	YES
Oracle Financial Services Software Ltd.	YES	(-)0.3	(-)0.4	YES	YES		YES	7.9	6.7	YES	YES
Persistent Systems Ltd.	YES	7.4	6.0	YES	YES		NO	2.8	3.5	YES	YES
Tata Consultancy Services Ltd.	YES	4.4	(-)0.3	YES	YES		NO	(-)1.6	0.3	NO	YES
Tech Mahindra Ltd.	NO	(-)2.2	3.4	NO	YES		NO	(-)0.2	0.0	NO	YES
Wipro Ltd.	YES	(-)6.7	(-)8.6	NO	NO		YES	(-)1.6	(-)2.0	NO	YES
Tata Technologies Ltd.	YES	(-)9.8	(-)18.9	NO	NO		YES	(-)3.2	(-)5.7	NO	YES
Tata Elxsi Ltd.	NO	(-)16.3	(-)1.2	NO	NO		NO	(-)1.8	(-)0.4	NO	YES
KPIT Technologies Ltd.	NO	(-)29.8	(-)19.1	NO	NO		YES	0.7	0.1	NO	YES

 

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

Company	Adj PAT Margin for Jun 25	Adj PAT Margin for Jun 24	Adj PAT Margin for Mar 25
Coforge	9.28%	5.65%	7.66%
HCL Technologies	12.66%	15.17%	14.24%
Infosys	16.37%	16.20%	17.19%
KPIT Technologies	12.74%	12.40%	11.55%
LTIMindtree	11.83%	11.82%	12.03%
Mphasis	34.66%	35.41%	37.52%
Oracle Financial Services Software	12.75%	11.19%	12.21%
Persistent Systems	20.11%	19.23%	18.96%
Tata Consultancy Services	8.54%	6.55%	8.72%
Tata Elxsi	15.05%	13.67%	15.86%
Tata Technologies	13.68%	12.77%	14.69%
Tech Mahindra	16.18%	19.87%	18.98%
Wipro	11.17%	14.96%	16.01%
IT Sector	15.98%	15.79%	16.12%

 

(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

 

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