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Informist, Tuesday, Oct. 6, 2026

 

Shakshi Jain

 

NEW DELHI – Indian information technology services companies are likely to once again post lacklustre earnings growth in Jul-Sept as challenges from the war in West Asia continue to weigh on client spending and decision-making. Artificial intelligence-driven pricing pressure is also among factors hurting the sector, which is battling a prolonged slowdown.

 

"AI traction remains healthy, but smaller-sized and shorter-tenure AI projects are yet to offset leakage in traditional services, limiting the pace of revenue growth," Prabhudas Lilladher Pvt. Ltd. said in an earnings preview report. Global IT services bellwether Accenture Plc last week said the August quarter saw no significant change in demand and discretionary spending.

 

The 14 IT services companies that are part of the Nifty LargeMidcap 250 are expected to report an aggregate sequential net profit growth of half a percent for the September quarter, according to the average of estimates from 11 brokerages. On year, their cumulative net profit is seen to rise nearly 10%. The estimates were compared to the adjusted net profit of these companies for the trailing quarter, which excludes the impact of exceptional and one-time items.

 

The aggregate top line of these 14 companies is expected to grow 1.8% on a sequential basis and 12.5% on year, as per the average of 11 estimates. Barring KPIT Technologies Ltd. and Oracle Financial Services Software Ltd., the others considered in this analysis are likely to individually post sequential growth in their revenues for the reporting quarter. In terms of the bottom line, Oracle Financial Services and Tata Consultancy Services Ltd. are expected to report a decline.

 

Prabhudas Lilladher said the cross-currency impact is likely to be limited for the September quarter, with the euro and Australian dollar appreciating 0.3% and 1% sequentially against the greenback, respectively. This would be partially offset by a 0.9?preciation in the pound sterling. "The ~1.0% QoQ depreciation in INR against USD should provide some margin support, albeit lower than in Q1 (Apr-Jun)," the brokerage added.

 

Analysts are unanimous in their view that mid-cap IT players are likely to once again report better revenue growth than their larger peers. "Large caps are a story of muted volumes and margin repair," IDBI Capital Markets & Securities Ltd. said in a report, adding that mid-cap firms keep outgrowing larger companies, but the picture is uneven and flattered by acquisitions.

 

HCL Technologies Ltd. and Tech Mahindra Ltd. are likely to lead among the large companies while TCS and Infosys Ltd. are likely to be the laggards, according to the estimates. Prabhudas Lilladher expects the median earnings before interest and tax margin of tier one companies to improve marginally quarter-on-quarter due to improved performance while tier two companies could stay flat.

 

Motilal Oswal Financial Services Ltd. expects HCL Technologies to maintain its 2026-27 (Apr-Mar) guidance due to better deal visibility and Infosys to lower the upper end of its (-)0.2%-1.3% organic revenue growth guidance by 25 basis points if the September quarter was below expectations.

 

As per established practice, TCS will kick off the earnings season Thursday. Infosys, Wipro, HCL Technologies, and Tech Mahindra will announce their results in the following days. Market participants will watch out for commentary on demand, outlook on margins and battling pricing pressure, timeline for deal ramp-ups, and measures taken to offset AI-related deflation. They also await updates on progress tied to data centre investments and integration of recent acquisitions from select players.

 

Prabhudas Lilladher said the US Federal Reserve's recent 25-basis-point interest rate hike and the possibility of another hike later this calendar year are likely to keep IT spending in the US lukewarm. The Nifty IT has fallen 26% this year against the 13% drop in the benchmark Nifty 50.

 

Following are the Jul-Sept earnings estimates for 14 IT companies which are part of the Nifty LargeMidcap 250, from 11 brokerages:

 

Company name	Sales (INR billion)	Net Profit (INR billion)	Sales Y-o-Y % change	Net Profit Y-o-Y % change	Sales Q-o-Q % change	Net Profit Q-o-Q % change	EBITDA (INR billion)	Earnings date	Number of brokerages polled
Coforge	63.35	6.52	58.94	73.37	14.60	13.59	12.87	Oct. 23	8
HCL Tech	356.60	48.62	11.64	14.79	3.13	5.14	74.12	Oct. 12	11
Hexaware Technologies	39.77	3.81	14.15	2.80	3.41	15.35	6.49	N.A.	4
Infosys	491.43	79.64	10.46	8.15	1.93	2.51	119.20	Oct. 23	11
KPIT Technologies	16.73	1.45	5.36	(14.48)	(0.13)	23.40	3.03	N.A.	7
L&T Technology Services	30.17	4.33	1.26	31.84	2.62	23.18	5.70	Oct. 19	9
LTM	118.43	15.02	13.94	7.22	2.02	2.45	21.10	N.A.	10
Mphasis	45.96	5.34	17.78	13.91	4.82	9.15	8.88	Nov. 5	10
Oracle Financial Services Software	20.59	6.58	15.11	20.49	(34.11)	(53.51)	N.A.	N.A.	1
Persistent Systems	45.93	5.61	28.26	18.97	6.72	16.12	8.56	N.A.	10
Tata Elxsi	10.37	1.84	12.91	18.50	1.52	7.54	N.A.	N.A.	5
TCS	730.82	137.58	11.07	4.15	1.12	(1.85)	188.52	Oct. 8	11
Tech Mahindra	160.45	17.01	14.65	42.39	2.12	16.09	27.76	Oct. 15	11
Wipro	248.34	34.81	9.42	7.24	1.45	3.86	47.75	Oct. 15	11
Total	2,378.92	368.15	12.46	9.78	1.80	0.52

 

End

 

US$1 = INR 96.42

 

Edited by Shubhayan Bhattacharya

 

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