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Informist, Friday, Feb. 27, 2026

 

By Shakshi Jain and Arya S. Biju

 

NEW DELHI – The aggregate bottom line of the 13 information technology services companies that are part of the Nifty 200 index declined sequentially in double digits in the December quarter despite a low-single-digit rise in their cumulative top line. The combined total expenses of these companies rose over 3%, the same as the growth in their aggregate net revenue from operations, with one-time costs, largely on account of implementing the new labour codes, denting their aggregate bottom line. Excluding the one-time items, the cumulative December quarter net profit of these 13 companies rose sequentially by a high single digit.

 

The aggregate net profit for the December quarter of these IT companies fell over 10% sequentially while their cumulative top line rose over 3%. Their combined adjusted net profit, which excludes one-time costs and income, rose over 9% sequentially, which is nearly twice the rate of growth in this metric recorded in the September quarter.

 

The over 9% sequential growth in the cumulative adjusted bottom line of these companies was lower than the over 11% sequential growth in the combined bottom line reported by Nifty 200 companies and the nearly 13% sequential growth reported by Nifty 50 companies. The over 3% sequential rise in the combined top line for the sector was also below the 6% sequential growth of Nifty 200 companies and 5% growth of Nifty 50 companies.

 

All 13 IT companies saw a sequential rise in cumulative adjusted net profit and revenue for the quarter. Seven of them--HCL Technologies, Tech Mahindra, LTIMindtree, KPIT Technologies, Oracle Financial Services Software, Persistent Systems, and Tata Elxsi--reported a double-digit sequential rise in their adjusted bottom line for the quarter. However, if one were to include the one-time items, the bottom line of all companies, with the exception of Oracle Financial Services Software, declined on a sequential basis.

 

None of the 13 companies met analysts' consensus bottom line estimate for the December quarter. For 10 of these companies, one-time costs due to an increase in statutory obligations arising from the new labour codes was the primary reason. Had it not been for the one-time costs associated with the new wage regulations, these 10 companies would have surpassed analysts' bottom-line expectations for the quarter.

 

Under the new labour codes, which came into effect from November, basic pay, dearness allowance, and retaining allowance, if any, must together constitute at least 50% of an employee's cost to the company. While analysts had anticipated a one-time cost for companies in the December quarter on account of the codes, they could not factor in the impact for the bottom-line estimates as the quantum of impact could not be gauged.

 

Barring Wipro Ltd. and Oracle Financial Services Software Ltd., the other 11 companies reported the one-time costs associated with the new codes as exceptional items for the December quarter. While the mandates under the codes are expected to affect the financials of companies across sectors on a continuing basis, many firms have said the impact would be negligible.

 

In terms of the top line, 10 of the 13 companies surpassed analysts' consensus revenue estimates for the December quarter. Their aggregate sequential top-line growth for the reporting quarter was slightly slower than in the September quarter. Meanwhile, the cumulative net profit of these companies fell sequentially in the December quarter after recording marginal growth in the trailing quarter.

 

The net one-time costs, including those reported as part of expenses by Wipro and Oracle Financial Services, comprise 3.5% of these Nifty 200 companies' aggregate revenue for the December quarter and over 26% of their combined net profit for the quarter. Their collective total expenses grew 3.3% sequentially for Oct-Dec. Alongside the impact of the new labour codes, IT services firms saw a minor dent in their earnings due to seasonal furloughs, which are typical during the holiday-heavy December quarter.

 

The combined net profit margin of the 13 IT companies contracted to 13.4% from 15.4% in the trailing quarter and around 16% a year ago. This was, however, better than the 11.9% combined net profit margin of the Nifty 200 companies and largely in line with the 13.2% net profit margin reported by the top 50 companies.

 

MID-CAPS MAINTAIN STREAK

In line with the multi-quarter trend seen so far, the seven mid-cap IT companies in the Nifty 200 index–-Coforge Ltd., KPIT Technologies Ltd., Mphasis Ltd., Oracle Financial Services, Persistent Systems Ltd., Tata Elxsi Ltd., and Tata Technologies Ltd.--outpaced the sequential bottom-line and top-line growth of the six large-cap firms in the sector for the December quarter. The six large-cap IT services firms are Tata Consultancy Services Ltd., Infosys Ltd., HCL Technologies Ltd., Wipro, Tech Mahindra Ltd., and LTIMindtree Ltd.

 

The aggregate adjusted net profit of the seven mid-cap companies grew nearly 12% sequentially in the December quarter as opposed to the 9% sequential rise in the aggregate adjusted bottom line of the six large-cap players. The collective net revenue growth of the mid-cap group of companies rose 4.6% on quarter against the aggregate 3.1% growth registered by the large-cap companies.

 

The one-time items reported by the mid-cap companies were equivalent to 3.6% of their combined net revenue for the December quarter and over 32% of their aggregate net profit. In the large-cap space, the one-time items accounted for 3.5% of their combined top line for Oct-Dec and almost 26% of their aggregate bottom line.

 

Overall, Tata Elxsi reported the fastest adjusted net profit growth for the December quarter at over 32% on a sequential basis. Oracle Financial Services registered the highest net revenue growth for the three months at nearly 10%. On the flip side, Mphasis reported the lowest adjusted net profit growth of 1.8% on quarter for Oct-Dec and KPIT Technologies recorded the slowest net revenue growth of 1.9%.

 

Among the large-cap firms, HCL Technologies was the top performer in the quarter with a sequential net revenue growth of 6% and an adjusted net profit growth of almost 19%. Sector bellwether TCS registered the lowest sequential top-line growth of 2% while Wipro reported the slowest adjusted sequential net profit growth for the quarter at 5.4%.

 

Analysts believe FY27 will be another year of low- to mid-single-digit revenue growth for Indian IT services firms. "Our view remains FY27 will be better than FY26--a slow and gradual recovery," JM Financial Services Ltd. said in a report earlier this month. The brokerage expects about 4% growth in revenue in constant currency in the financial year starting Apr. 1 against about 2% in the year ending Mar. 31. It added that most companies have managed their margins in a tough environment. However, it believes it will be difficult for the companies to continue to manage margins against expectations amid investments in technology unless the rupee comes to their rescue.

 

The following table provides a snapshot of the performance of the information technology sector and the broader indices in the December quarter:

 

Index/Sector	Number of companies	Oct-Dec PAT excluding exceptional items (% change)		Oct-Dec net sales (% change)		Total expense growth in %
		YoY	QoQ	YoY	QoQ	YoY	QoQ
Nifty 500	500	17.93	10.44	10.25	5.39	11.89	5.80
Nifty 200	200	16.31	11.30	10.07	5.87	11.51	6.16
Nifty 50	50	9.25	12.65	9.33	5.04	13.26	6.61
IT	13	15.08	9.18	8.57	3.21	8.76	3.32

 

The following table shows the December 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 %	Adjusted PAT beat sector QoQ estimate	Adjusted PAT beat Nifty 200 estimate		Revenue beat analysts' estimate	Revenue QoQ growth %	Revenue QoQ growth estimate %	Revenue beat sector estimate QoQ	Revenue beat Nifty 200 estimate
Coforge Ltd.	YES	5.85	(-)3.94	YES	YES		NO	5.08	5.81	YES	YES
HCL Technologies Ltd.	YES	18.82	12.14	YES	YES		YES	6.04	3.89	YES	YES
Infosys Ltd.	YES	7.86	0.15	YES	YES		YES	2.22	1.38	NO	NO
LTIMindtree Ltd.	YES	11.41	1.42	YES	YES		YES	3.72	3.18	YES	YES
Mphasis Ltd.	NO	1.83	2.30	NO	NO		NO	2.58	2.65	YES	NO
Oracle Financial Services Software Ltd.	YES	20.75	19.76	YES	YES		YES	9.90	7.22	YES	YES
Persistent Systems Ltd.	YES	12.09	(-)4.51	YES	YES		YES	5.52	4.34	YES	YES
Tata Consultancy Services Ltd.	YES	6.34	(-)1.75	YES	YES		YES	1.96	1.52	NO	NO
Tech Mahindra Ltd.	YES	16.74	15.57	YES	YES		YES	2.85	1.24	YES	NO
Wipro Ltd.	YES	5.41	3.18	YES	YES		YES	3.78	3.04	YES	YES
Tata Technologies Ltd.	YES	3.02	(-)5.58	YES	NO		YES	3.20	2.73	YES	NO
Tata Elxsi Ltd.	YES	32.14	1.71	YES	YES		YES	3.85	3.37	YES	YES
KPIT Technologies Ltd.	NO	14.15	14.58	YES	YES		NO	1.87	2.07	NO	NO

 

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

 

Company	Adjusted PAT Margin for Dec 2025	Adjusted PAT Margin for Dec 2024	Adjusted PAT Margin for Sep 2025
Coforge	9.50%	6.53%	9.43%
HCL Technologies	14.86%	15.36%	13.26%
Infosys	17.47%	16.30%	16.55%
KPIT Technologies	11.93%	12.65%	10.65%
LTIMindtree	14.48%	11.23%	13.48%
Mphasis	11.93%	12.01%	12.02%
Oracle Financial Services Software	33.54%	31.56%	30.53%
Persistent Systems	13.99%	12.18%	13.17%
Tata Consultancy Services	20.94%	19.35%	20.08%
Tata Elxsi	21.46%	21.19%	16.86%
Tata Technologies	12.48%	12.80%	12.51%
Tech Mahindra	9.69%	7.40%	8.54%
Wipro	14.53%	15.03%	14.30%
IT Sector	16.91%	15.96%	15.99%

 

(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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