New Delhi
India’s IT services sector is expected to witness muted growth in Q1FY26, despite seasonal tailwinds, according to a report by Equirus Securities. The report notes that large-cap companies like Infosys and Tech Mahindra may see soft performances, while some mid-cap firms such as Zensar, Mphasis, and KPIT could fare better.
Equirus anticipates mixed earnings, especially a weak quarter for engineering and R&D (ER&D) service providers. Infosys may revise its FY26 sales guidance slightly upward to 1.0–3.25% constant currency (CC) growth, factoring in minor inorganic contributions, while maintaining its EBIT margin guidance at 20–22%.
Top six large-cap IT firms are expected to post a quarter-on-quarter (QoQ) growth range between -2.6% and +1.4% in CC terms. Favorable cross-currency tailwinds between 120–230 basis points could support performance, but overall demand remains cautious.
TCS is expected to see a 0.4% dip in QoQ revenue in CC terms, mainly due to the BSNL deal winding down and weaker international sales. Wipro’s revenue is projected to decline 2.6% QoQ, while HCL Tech may grow by 1.4%.
Tech Mahindra’s revenue could fall by 0.8% QoQ, as seasonal weakness in its Comviva division and lower demand from hi-tech clients impact results.
On the brighter side, some mid-cap IT and BPO companies are likely to report steady growth, and vendors in the BFSI sector are beginning to see better demand signals, the report adds.