IT sector Q4FY25 review: After a muted show, can investors expect a turnaround in next quarter?
''The earnings season for the quarter ending March 31, 2025, began with leading IT firms releasing their financial results in the first week of April and concluded in the final week of May 2025.
In Q4FY25, major Indian IT services company saw a quarter-on-quarter decline in revenue—marking the first time this has happened since Q1FY21, when performance was affected by the COVID-19 outbreak
According to analysts, the slowdown was primarily caused by delays in project ramp-ups, weak performance in certain industry segments, and reduced demand stemming from the ongoing tariff war.
Brokerage firm Choice Broking said in a note that Tier-l IT players have lowered their FY26E revenue guidance band by 1%, with the lower end factoring in continued demand weakness and the midpoint assuming the closure of key large deals under current macro conditions, in response to the uncertain environment.
' We expect IT services companies to post modest growth in FY26E, constrained by cautious client spending and a challenging demand environment. Tier-I players are expected to grow in the range of -2.2% to 4.0%, while mid-tier firms are likely to outperform with growth of 5% to 28%,' said the brokerage firm.
The Nifty IT Index has surpassed the broader market's performance by 2.2% in the past month, fueled by renewed optimism stemming from the US-China trade deal.
'We remain constructive on firms with diversified portfolios catering to both costs takeout and discretionary IT spending. Within large caps, we favor TCS and Tech Mahindra for their balanced exposure and execution strength. In the mid-cap space, Coforge stands out for superior growth prospects and margin resilience,' the firm said.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
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