Infosys, TCS, Wipro: Will top IT companies gain momentum in Q1FY26?

India Today

09-07-2025

India's top IT companies are stepping into Q1FY26 with little room for celebration. Despite what's typically a strong seasonal quarter, the outlook is tepid.Equirus Securities, in its earnings preview, signals a subdued performance for the sector, where even the heavyweights are struggling to regain momentum. 'Soft quarter' is the verdict across the board. Growth is likely to be muted. Deal flow isn't picking up pace. And cautious client behaviour—especially in manufacturing and hi-tech—continues to stall decision-making.advertisementTCS, Infosys, and Wipro may not have much to flaunt this quarter.
Equirus expects constant currency (CC) revenue growth for the top six IT firms to range between -2.6% and +1.4%, a narrow band that barely moves the needle. Even the engineering services players, often seen as growth engines, are expected to shrink by 3–3.6% QoQ.Infosys might offer a slight reprieve. It's likely to post 1.4% CC growth, with some help from inorganic deals. But even here, margins are expected to dip by 10 bps thanks to wage hikes and normalised expenses. The company could tweak its FY26 guidance slightly upward—from 0–3% to 1.0–3.25%—but that's hardly a showstopper.Wipro's performance could be softer still. Revenues may shrink by 2.6% in CC terms, and the company may guide for another flat-to-negative quarter ahead. Meanwhile, TCS is bracing for a modest 0.4% dip, weighed down by the ramp-down of the BSNL deal and weak traction overseas.WHAT ABOUT MIDCAP IT FIRMS?While the large caps are treading water, some mid-tier players could offer a glimmer of hope. Coforge, Persistent, Zensar, eClerx, and Mphasis are expected to post QoQ growth between 1.3% and 7% in dollar terms. Coforge, in particular, is projected to lead the midcap pack.Equirus remains bullish on Infosys and Tech Mahindra among the big names, while Zensar, KPIT, eClerx, and Mphasis stand out in the midcap universe. But overall, the firm advises investors to stay selective—valuations have already run up, and the earnings momentum just isn't keeping pace.LOWER CLIENT DEMANDAcross the sector, demand remains cautious. Clients—especially in the U.S.—are still hesitating, with delays in project ramp-ups and muted order flows. The one exception may be BFSI, which continues to offer some tailwinds. But even here, optimism is tempered by uncertainty around global trade and tariff decisions.The real story this quarter will be told in the commentary. How are clients thinking about tech budgets for FY26? Are mega deals moving forward? Are pricing pressures easing? These questions may matter more than the numbers themselves.WHAT TO WATCH?Infosys: Expect modest growth, but no fireworks. Guidance may inch up slightly, but margins could be under pressure. Project Maximus and the absence of visa costs offer some cushion, but not enough to turn the tide.advertisementTCS: Revenue is likely to dip slightly. Deferred wage hikes may help margins, but the bigger worry is soft demand and a slowdown in large deal closures.Wipro: Still in recovery mode. The Marelli bankruptcy may cloud the outlook further, and the street will be watching for clues on deal flow and growth strategy.HCL Tech: Seasonal softness is expected to drag down services revenue. Margins could compress by 77 bps. No change expected in its full-year guidance.Tech Mahindra: Revenue might dip slightly, but cost optimisation (under Project Fortius) and currency gains could lift margins. Investors will look for clues on the telecom business and 5G pipeline.The bottom line: India's IT giants are still in wait-and-watch mode. There are pockets of stability—and a few outperformers—but the sector's broader recovery remains sluggish. For now, the real story isn't in the Q1 numbers. It's in the tone of management commentary and whether it signals a real turnaround or just more of the same.- Ends