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Informist, Thursday, Jan. 8, 2026

 

By Shakshi Jain

 

NEW DELHI – Indian information technology companies are expected to report lower sequential revenue growth for the December quarter, which is holiday-heavy and marked by furloughs. However, on a year-on-year basis, they are likely to fare better on the back of stable demand, fewer deferrals, ramp-up of large deals, and depreciation of the rupee, according to analysts. The impact of furloughs is expected to be similar to the year-ago quarter, brokerages said. The bottom-line growth of these companies is expected to improve sequentially, partly due to the depreciation of the home currency, according to analysts.

 

"Overall demand is largely unchanged, with restrained discretionary spending, cautious client stance amid macro uncertainty, and ongoing AI-led tech shifts continuing to influence growth momentum," Emkay Global Financial Services Ltd. said in its earnings preview report.

 

Of the 13 IT companies part of the Nifty 200 index, 12 are expected to report an aggregate top-line growth of 2.3% on a sequential basis and 7.6% on year for the December quarter, as per the average of estimates from 12 brokerages. In the September quarter, these companies had registered a sequential revenue growth of 4.8%. This analysis excludes Oracle Financial Services Software Ltd. for which only one estimate was available.

 

The cumulative bottom line of these 12 companies is expected to rise 2.2% sequentially and 7.8% on year for the reporting quarter, as per the average of estimates. This is higher than the 1.3% net profit growth these companies had reported for the September quarter but is lower than the 5.1% growth in net profit excluding exceptional items registered in the same quarter.

 

While all the 12 companies are expected to individually report sequential growth in their revenue for the December quarter, four firms--Coforge Ltd., Persistent Systems Ltd., Tata Technologies Ltd., and Tata Consultancy Services Ltd.--are likely to report a 1.4-6.2% decline in their net profit for the reporting quarter, the estimates showed. Brokerages listed wage hikes as a common factor for the likely decline in the bottom line of all the four companies in the December quarter.

 

In constant currency terms, HDFC Securities Ltd. expects Tier-I IT players to deliver a 0.6-2.1% sequential revenue growth for the December quarter and mid-tier firms to report anywhere between a decline of 1.8% and a growth of 3.4%. The cross-currency impact for the reporting quarter will likely range between (-)10 basis points and (-)80 bps, the brokerage said.

 

In dollar terms, Emkay Global expects revenue of both Tier-I and Tier-II firms to decline sequentially by 10-40 bps due to the negative impact of currency fluctuations.

 

MID-CAPS TO SHINE

Brokerages are unanimous in their view that mid-cap IT players are likely to once again report better revenue growth compared with their larger peers, making it at least the fourth consecutive quarter for this trend. Among the large-cap companies, brokerages expect HCL Technologies Ltd., Wipro Ltd., and LTIMindtree Ltd. to lead revenue growth for the December quarter. In the mid-cap club, Persistent Systems Ltd., Coforge Ltd., and Mphasis Ltd. are expected to report a stronger top-line growth for the reporting quarter.

 

The six large-cap IT companies in the Nifty 200 index are TCS, Infosys Ltd., HCL Technologies, Wipro, LTIMindtree, and Tech Mahindra Ltd. The six mid-cap companies under the 200-stock index which have been considered for this analysis are–-Coforge, KPIT Technologies Ltd., Mphasis, Persistent Systems, Tata Elxsi, and Tata Technologies.

 

On operating margins, analysts expect the December quarter to be a mixed bag owing to wage hikes, depreciation in the rupee, changes in business mix, ramp up in large deals, and contribution from recently acquired companies. The median earnings before interest and tax, or EBIT, margin of the six large-cap IT companies is expected to decline sequentially by approximately 40 basis points for the December quarter while that of the mid-cap firms could see a higher fall of around 70 bps, brokerage Prabhudas Lilladher Pvt. Ltd. said.

 

Analysts do not anticipate a significant change in the net headcount of IT companies for the reporting quarter.

 

Among verticals, the banking, financial services, and insurance segment is expected to continue its recovery though it tends to see higher furloughs during the December quarter, according to analysts. Meanwhile, demand challenges likely persisted for the communications and retail segments, brokerages said. 

 

The hi-tech and engineering research and development segments were stable in the December quarter, Motilal Oswal Financial Services Ltd. said. It added that the travel and transportation segment is expected to have benefitted from ongoing deal ramp-ups in the reporting quarter while the manufacturing segment likely saw a mixed performance with the automotive sector under pressure but steady demand in core industries.

 

VALUATION, INVESTOR FOCUS

The Nifty IT index's one-year forward price-to-earnings valuation at 23.9 times is 6?low the five-year average of 25.3 times but 12?ove the 10-year average of 21.4 times, HDFC Securities said, adding that this reflects an upside potential for rerating as AI-driven revenue streams expand and growth gains momentum. Emkay Global believes the earnings downgrade cycle has largely bottomed out, supported by demand stability, expectations of further interest rate cuts by the US Federal Reserve, and the depreciation of the rupee.

 

A section of market players are now betting on large-cap firms over mid-cap companies. This is due to the relative underperformance of large-cap companies in the last two years combined with the stability offered by them, said Sugandha Sachdeva, founder of equity and commodity research firm SS WealthStreet, adding that after the correction in the last two years, these companies offer a far more attractive entry point for long-term investors.

 

The Nifty IT index fell 12.5% in 2025 while the benchmark Nifty 50 rose 10.5% in the year. However, in the last 90 days, the sectoral index has risen over 7.6%.

 

"Enterprises should gradually move from AI pilots toward scaled deployments as the year progresses, supporting deal pipeline stability, improving TCV (total contract value), and higher activity in application modernisation, data engineering, and AI integration-led work," Motilal Oswal Financial Services said. It expects demand for AI services to improve from mid-2026 as AI capex spending gradually shifts from hardware to software, platforms, and services.

 

This earnings season, investors will keenly eye management commentary on the IT budget of clients for the calendar 2026 and the possibility of recovery in discretionary spending. Among other areas, changes in revenue and margin guidance for FY26, impact from implementation of the new labour codes, dependence of smaller firms on the H-1B visa and steps planned to mitigate the potential impact from fee increase and change in the H-1B visa allocation process, deal pipeline, project deferment and/or cancellation, pricing change, and contribution from recent acquisitions will be in focus. Investors will also watch out for management comments on demand in different verticals, and hiring plans amid change in skill requirements due to the increasing focus on AI. 

 

"Structurally H2 (Oct-Mar) tends to be weaker for IT Services, and with no incremental signs of recovery, we expect revenue guidance for Infosys and HCL Tech to largely remain unchanged, at least at the top-end," brokerage Prabhudas Lilladher said. 

 

Following are the Oct-Dec earnings estimates for 12 IT companies which are part of the Nifty 200, from 12 brokerages:

 

Company name	Sales, INR million	PAT, INR million	Sales Y-o-Y Change %	PAT Y-o-Y Change %	Sales Q-o-Q Change %	PAT Q-o-Q Change %	EBITDA, INR million	Result date	Number of estimates available
Coforge +	42,212	3,570	29.56	65.65	5.91	(5.01)	7,316	Jan 22	9
HCL Tech +	332,549	47,960	11.26	4.47	4.11	13.25	72,047	Jan 12	10
Infosys +	451,149	73,729	8.02	8.33	1.40	0.12	109,620	Jan 14	10
KPIT Technologies +	16,263	1,991	10.03	6.46	2.43	17.72	N.A.	--	6
LTIMindtree +	107,407	14,224	11.18	31.05	3.33	1.52	19,841	--	11
Mphasis +	40,051	4,812	12.46	12.48	2.65	2.59	7,464	Jan 22	11
Persistent Systems +	37,430	4,506	22.23	20.81	4.53	(4.43)	6,864	Jan 20	11
Tata Elxsi	9,539	1,702	1.57	(14.45)	3.90	9.96	N.A.	--	5
Tata Technologies +	13,558	1,552	2.91	(7.95)	2.45	(6.20)	N.A.	Jan 16	5
TCS +	666,669	130,215	4.21	5.18	1.32	(1.43)	182,302	Jan 12	10
Tech Mahindra +	141,982	13,888	6.87	41.25	1.45	16.26	23,060	Jan 16	11
Wipro +	234,622	33,586	5.12	0.14	3.37	3.46	46,035	--	10
Total	2,093,431	331,734	7.63	7.81	2.31	2.21

 

Notes:
+ Consolidated Figure
Y-o-Y: Year-on-Year
Q-o-Q: Quarter-on-Quarter
N.A.: Not Available
 
Estimates from:
Dolat Capital Market Pvt. Ltd, Elara Securities (India) Pvt. Ltd., Emkay Global Financial Services Ltd., HDFC Securities Ltd., ICICI Securities Ltd., JM Financial Institutional Securities Pvt. Ltd., Kotak Securities Ltd., Motilal Oswal Financial Services Ltd., Nomura Equity Research, Nuvama Wealth Management Ltd., Prabhudas Lilladher Pvt. Ltd. and Systematix Shares and Stocks (India) Ltd.

End

 

US$1 = INR 90.01

 

Edited by Akul Nishant Akhoury

 

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