India’s IT bigwigs enter the March quarter earnings season dragged down by macro concerns overseas, lacklustre client expenditures, and broker downgrades galore. The season kicks off today with Tata Consultancy Services (TCS), and not much is likely to cheer in the short term, analysts believe.
Nomura expects “largecaps to have a subdued quarter with all companies likely posting a sequential drop in revenues,” citing 1 per cent QoQ revenue decline for Infosys, 0.8 per cent for Tech Mahindra, and 0.5 per cent each for TCS and HCL Tech.
Margins too are expected to remain under pressure. “We expect both Infosys and HCLT to have a 150 bps QoQ margin decline due to salary hikes and seasonal factors,” Nomura added.
Trump tariffs and trade war fears cast a long shadow
US trade negotiations are becoming a major overhang. “Some of the US macroeconomic indicators have begun to indicate a slowdown, increasing the threat of a stagflation at worst and a recession at least,” cautioned BNP Paribas, adding discretionary tech spending won’t be immune.
Motilal Oswal echoed the concern: “Clients are going to be wait-and-watch as they take stock of the trade war, a slower Fed rate cut cycle, and other macro-economic risks.”
Mid-caps shine, deal wins drive select optimism
Even with bearishness, some mid-cap stocks such as Coforge and Persistent Systems remain stable. Kotak predicts Coforge to rise by 3.1 per cent QoQ, while Persistent can witness a 3.9 per cent rise due to large-ticket orders.
Nomura recommends Infosys, Coforge and eClerx as top choices. BNP Paribas likes Infosys, HCLT, LTIMindtree and Persistent. HSBC favours mid-cap players in the restructuring mode, saying, “In the top-end, we like Infosys due to its present 10% discount to TCS, and LTIM as a restructuring tale.”
Investor outlook: caution with selective optimism
Nuvama believes risk-reward has turned interesting. “We still like some of the large-cap (TCS, Infosys) and mid-cap (Coforge, Persistent and Mphasis) recommendations.”
But BNP Paribas provides a caveat: “We see companies incorporating some caution in their FY26 guidance.”
While Q4 numbers come in, the investor focus will still be on margin health, deal pipeline, and changes in the guidance, since survival is the ultimate victory in this storm.
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