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Informist, Wednesday, Dec. 24, 2025

 

MUMBAI – Resilient performance in the banking, financial services, and insurance vertical and a ramp-up of large deal wins are expected to drive a 0.3-2.2% sequential growth in revenues of the country's top four information technology companies – Tata Consultancy Services, Infosys, HCL Technologies, and Wipro – in constant currency terms, ICICI Securities said in a report Wednesday. This is, however, expected to be partially offset by the impact of furloughs and lower working days, the brokerage said. Additionally, the demand environment remains status quo, with subdued discretionary spending, ICICI Securities said. 

 

The banking, financial services, and insurance vertical continues to be resilient for all the four companies, whereas for the rest of the verticals, the ramp-up of recent large deal wins is driving growth rather than secular improvement in technology spends in those verticals, the brokerage said. It expects deal wins to be healthy across the board, with more vendor consolidation and cost take-out deals. The earnings before interest and tax, or EBIT, margin of these companies are expected to be range-bound in the upcoming quarter, as the benefits from rupee depreciation against the dollar and artificial intelligence-led productivity are expected to be offset by the impact of wage hikes taken by some companies and a dip in utilisation due to furloughs.

 

The brokerage expects HCL Technologies to lead revenue growth among the four companies, with an over 2.2% sequential growth, driven by continued traction in the banking, financial services, and insurance and hi-tech verticals, and stability in the telecommunication segment on the ramp-up of recently won large deals. However, weakness in the auto sub-segment of its manufacturing business is expected to continue, ICICI Securities said. While the December quarter is traditionally strong for the company's products business, revenue growth from the segment in Oct-Dec is unlikely to be as strong as previous years because of the company's efforts to increase subscription-based revenue, the brokerage said. 

 

Further, the brokerage expects HCL Tech to report a total contract value of around $2 billion, in line with the quarterly average. The company's EBIT margin for the quarter is expected to expand 50 basis points sequentially. While positive seasonality in its products business is seen supporting the margins, the wage hikes taken by the company and workforce restructuring may partially offset these gains. 

 

For Wipro, the brokerage expects a 1.5% sequential growth in constant currency revenue, which includes organic revenue growth of 0.7% and one month contribution from its recent acquisition of the digital transformation solutions business unit of Harman. The company's revenue growth for the quarter is expected to be aided by the ramp-up of its Phoenix deal and vendor consolidation deals won with two large US banks, ICICI Securities said. The management expects some moderation in its healthcare vertical in the coming quarter, which is usually strong in Oct-Dec. Demand in the consumer, retail, and energy, manufacturing and resources verticals of the company are also expected to remain soft, the brokerage said. The brokerage, however, expects the company's EBIT margin to decline 10 bps sequentially in the December quarter. 

 

When it comes to Infosys and TCS, the revenue for the December quarter is expected to grow 0.3-0.8% sequentially in constant currency terms, led by growth in the banking, financial services, and insurance vertical. The EBIT margin of these companies are expected to expand 20 bps each on a sequential basis, ICICI Securities said. It expects TCS' total contract value to be in the usual range of $7 billion to $9 billion. 

While the overall headcount growth remains subdued for IT companies on account of slower revenue growth and artificial intelligence-led productivity benefits, they continue to hire freshers to optimise the employee pyramid and accelerate training timelines for freshers leveraging AI. TCS and Infosys plan to hire around 42,000 and 20,000 freshers in 2025-26 (Apr-Mar), compared to the 40,000 and 15,000 they hired in FY25. HCL Technologies and Wipro had also announced a directional plan to onboard around 10,000 to 12,000 freshers each in FY26 at the start of the year, the brokerage said.   

 

The brokerage, however, remains cautious on the sector and prefers TCS among large-caps based on its superior operating metrics and valuation comfort. The Nifty IT index is trading at a 20% premium compared to Nifty 50, despite a low earnings growth estimate of 6–8% as against the 14–15% for Nifty 50 companies over FY25–FY27, it said.  End

 

US$1 = INR 89.79

 

Reported by Arya S. Biju

Edited by Tanima Banerjee

 

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