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Informist, Monday, Aug. 24, 2026

By Shakshi Jain

NEW DELHI – Apr-Jun was another quarter of moderate sequential top-line growth for the 12 information technology services companies that are part of the Nifty 200 index, but a faster rise in total expenses and tax outgo for the three months kept them from posting aggregate bottom-line improvement. Once again, mid-tier companies, which have been growing faster than their larger peers for several quarters now, limited the decline in aggregate bottom line for the quarter.

Both the cumulative revenues and the net profit, adjusted for exceptional items, of the 12 companies for the June quarter exceeded the Street's expectations. Overall, the IT services sector, which has been battling weak growth as artificial intelligence-led disruption and global uncertainties weigh on enterprise technology spending, outperformed the Nifty 200 index companies on sequential bottom-line movement but trailed the Nifty 50 firms. Their aggregate revenue grew faster than that of the top 50 companies but slightly slower than that of the pack of 200.

The aggregate net profit of the 12 IT services companies declined 1.7% sequentially for the June quarter despite the cumulative revenues growing 3.5%. Excluding exceptional items, the collective bottom line grew 0.3% on a sequential basis. This was against the expectation of a sequential bottom-line decline of 0.8% and a top-line rise of 3.2%. As many as seven companies exceeded analysts' consensus revenue estimates, including five beating the adjusted net profit expectations as well. The total expenses of the 12 companies rose almost 4% sequentially for the June quarter while the combined tax outgo grew a shade over 9%. Only two companies--Tata Consultancy Services Ltd. and Coforge Ltd.–-reported one-time costs for the quarter under review.

Only KPIT Technologies Ltd. posted a sequential decline in top line for the June quarter while as many as eight companies posted a drop in bottom line. The March quarter clearly saw a better performance with all the firms, barring Tata Elxsi Ltd., registering sequential sales growth and all 12 firms recording double- or even triple-digit net profit growth. In contrast, only Oracle Financial Services Software Ltd. managed to grow its net profit sequentially by double-digits in the June quarter.

The top-two players in the industry–-TCS and Infosys Ltd.--pulled the aggregate bottom line for the June quarter into declining territory after strong sequential growth in the March quarter. Excluding these two sectoral giants, the aggregate net profit of the remaining 10 companies grew 3.6% sequentially and their adjusted net profit rose a little over 4% for the quarter under review.

When compared with the average of Nifty 200 group companies, only five IT services companies outperformed in sequential sales growth while nine firms recorded better adjusted net profit performance. The aggregate revenues of the Nifty 200 index companies grew 3.8% sequentially for the June quarter while their net profit declined over 22%. Their cumulative adjusted net profit fell 8.7% sequentially.

Barring KPIT Technologies, all the IT services firms considered in this analysis individually outperformed the Nifty 50 group in terms of sequential sales growth but only three recorded better adjusted net profit growth. The Nifty 50 companies recorded a sequential net profit decline of 0.8% for the reporting quarter alongside a revenue growth of 0.5%. Their aggregate adjusted net profit rose 4.5% sequentially.

Mid-tier IT services companies again outperformed their Tier-1 peers in the June quarter. The aggregate top line of the six large-cap IT services firms--TCS, Infosys, HCL Technologies Ltd., Tech Mahindra Ltd., Wipro Ltd., and LTM Ltd.--grew 2.6% sequentially while their net profit declined 2.8%. Excluding exceptional items, the bottom line declined half a percent sequentially for the June quarter. The cumulative net profit margin moderated to 15.5% for the reporting quarter from 16.3% for the March quarter. So did the adjusted net profit margin–-to 15.8% from 16.3% for the trailing three months.

Meanwhile, the mid-tier players–-Coforge, KPIT Technologies, Mphasis Ltd., Oracle Financial Services Software, Persistent Systems Ltd., and Tata Elxsi–-recorded a combined sequential net-profit growth of over 11% and a collective revenue growth of 14.4% for the reporting quarter. Excluding exceptional items, the bottom line of these six companies rose almost 10% quarter-on-quarter. However, the margin profile of these companies also moderated sequentially in the June quarter, with the net profit margin declining by 50 basis points to 15.9% and the adjusted net profit margin contracting 70 bps to 16.2%.

It must be noted that Tata Technologies Ltd. slipped out of the Nifty 200 index in the June quarter. Calculations for sequential comparison include contribution from the Tata group company in the March quarter.

Apr-Jun was a weak quarter for mid-cap IT services companies with broad-based margin pressure, Anand Rathi Share and Stock Brokers Ltd. said in a report. Despite the rupee depreciating 3.3% sequentially against the dollar, margins weakened on the back of delayed deal ramp-ups, proactive hiring ahead of demand driving lower utilisation, and company-specific investments while deal wins were resilient, it added.

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

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Edited by Rajeev Pai

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