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Informist, Friday, Oct. 3, 2025

MUMBAI – Nomura Global Markets Research has cut its forecast for revenue growth in dollar terms for information technology companies under its coverage by 50–450 basis points for 2026-27 (Apr-Mar). This builds in higher deflation in renewals due to artificial intelligence-led productivity gains, the brokerage said.

Nomura has lowered its target multiples by 10% for large-cap companies as it expects macroeconomic uncertainty to persist. It has trimmed target prices by 1–10% for most large-cap IT firms. The brokerage firm expects large-cap companies to report modest revenue growth for a seasonally strong Jul-Sep quarter.

The brokerage expects Infosys to retain its guidance of 1-3% on-year growth in constant currency terms with a stable 20-22% EBIT margin band. It also projects HCL Tech to retain its guidance of 3-5% revenue growth on year in constant currency terms with an unchanged EBIT margin band of 17-18% for FY26 and expects Wipro's guidance at -1% to +1% sequential revenue growth in constant currency terms for the December quarter. 

"We estimate q-q (sequential) revenue growth in constant currency (or cc) terms of 0.2% for TCS (Tata Consultancy Services), 1.4% for Infosys, 1.2% for HCLT (HCL Technologies), 0.2% for Wipro, 0.7% for TechM (Tech Mahindra), and 2.2% for LTIM (LTIMindtree)," Nomura said. In comparison, mid-cap stocks are likely to perform better, according to the broking firm, and it expects Coforge's revenue to grow 6% on quarter for Jul-Sep in constant currency terms, Persistent Systems' by 4%, L&T Technology Services' by 1.7% and Mphasis' by 1% sequentially. "In small caps, we expect q-q cc revenue growth of 3.3% for eClerx, 2% for Firstsource, but expect Birlasoft to post a 0.3% q-q revenue decline due to ongoing client-specific issues," it said.

Nomura expects cross-currency tailwinds of 20-60 bps for companies across its coverage universe, except 30 bps of decline for Tech Mahindra, driven by the depreciation of the dollar against major global currencies such as the pound sterling, euro, and Japanese yen. On the earnings before interest and tax margins front, the broking firm expects a 60 bps sequential decline in Wipro's margins due to ramp-up cost of recently won deals.

For TCS, it sess flat EBIT margin on a sequential basis. It forecast a 20 bps on-month margin expansion for Infosys and HCL Tech, a 40 bps margin improvement for Tech Mahindra, and a 70 bps improvement for LTIMindtree. In mid-caps, Nomura expects the strongest sequential improvement in margin for Coforge (190 bps) and in L&T Tech and Persistent (10 bps). "In small caps, we expect a 200 bps q-q margin improvement in eClerx and a 20 bps q-q improvement in Firstsource," it said.

Nomura believes that demand remains healthy in the banking, financial services, and insurance vertical, aided by strong results from global banks and no significant impact from ongoing tariff issues, unlike core manufacturing sectors. "While there have been clarifications on H1B visa changes, its impact on onsite cost increase in the medium term is uncertain," it said.  End

Reported by Simran Rede

Edited by Vandana Hingorani

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