Indian IT companies are gearing up for a quieter earnings season, with most expecting only modest growth this quarter.
Overall Outlook
Analysts say the top six Indian IT firms will likely see about 4% revenue growth year‑on‑year and a 5% rise in profit for the December quarter. This is slower than the 6.5% revenue growth recorded in the September quarter.
Why Growth Is Slowing
- U.S. clients are spending less as they face economic uncertainty.
- Holiday shutdowns in the U.S. reduce billing days.
- Potential new U.S. tariffs and a proposed $100,000 visa fee add to the caution.
Company Forecasts
- Tata Consultancy Services (TCS) – Expected revenue up ~4.2% YoY when it reports on Jan 12.
- Infosys – Forecast revenue growth of about 8.1% YoY.
- HCLTech – Anticipated revenue rise of roughly 4.6% YoY.
Most brokers do not see these firms raising their full‑year revenue outlooks for FY 2026.
Sector Challenges
- Foreign investors pulled out $8.5 billion from IT stocks in 2025, nearly half of all foreign exits from Indian equities.
- The Nifty IT index fell 12.6% in 2025, making it the weakest sector.
- Fewer working days because of client holidays and higher wage costs pressure margins.
Possible Upside
- AI projects are beginning to pick up, with companies forming strategies through acquisitions and partnerships.
- The banking, financial services and insurance (BFSI) segment remains relatively strong.
- A weaker rupee could help earnings when foreign‑currency revenues are converted back to rupees.
What Investors Should Watch
Keep an eye on how quickly AI demand grows, any updates on U.S. tariff policies, and whether the major IT players can improve margins despite higher labor costs.
Remember, this is my perspective, not a prediction. Do your own research and consider your risk tolerance before making any investment decisions.