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Informist, Thursday, Oct. 16, 2025

 

By Anjana Therese Antony

 

MUMBAI – Despite persistent concerns about US policies and no major improvement in demand, India's information technology companies are likely to report better sequential earnings in the September quarter due to higher revenue conversion and lower project delays and deferrals, according to broking firms. Most IT companies are expected to post sequential growth in their bottom line and top line, with mid-cap IT players likely to outperform their larger peers at least for the 20th quarter in a row. 

 

"The demand environment has not deteriorated, though weak discretionary spending, slower decision making, cautious approach by clients amid macro uncertainty and AI-led tech disruption continue to weigh on growth," Emkay Global Financial Services said in its earnings preview report. The recovery in banking, financial services, and insurance segment continued in the September quarter, although weakness persists in other verticals such as manufacturing, retail, and logistics, the broking firm said. 

 

Brokerage houses do not expect any major impact of the hike in fee for new H-1B visas to $100,000 announced by the US administration during the quarter. This is because of higher localisation in the US, minimal number of new H-1B filings per quarter, and mature nearshoring delivery models in countries such as Canada, Mexico, and Latin America.

 

Of the 13 IT companies which are part of the Nifty 200 index, 12 are together expected to post 3% sequential growth and 6% on-year rise in aggregate net profit to almost INR 320 billion, as per estimates from 17 broking firms. This is better than the sequential fall of 0.6% in net profit these companies posted in the June quarter, which was the first decline in the past four quarters. Estimates for Oracle Financial Services Software were not available. 

 

The total revenue of these 12 companies is likely to grow almost 4% on quarter and 6% on year to INR 2.09 trillion, as per estimates. This will be better than the 0.3% sequential rise and the 5% on-year increase in the top line posted in the June quarter. 

 

Of these 12 companies, two entities--Tata Technologies and Wipro--are likely to post a sequential fall in their bottom line. Tata Consultancy Services has already reported a 5% on-quarter decline in its consolidated net profit for the September quarter due to significant restructuring costs. Compared to the year-ago period, KPIT Technologies is likely to post a near-5?ll in net profit and Tata Elxsi has already reported a 33?cline in its bottom line for the latest quarter. 

 

In terms of revenue, all 12 companies are expected to post sequential growth. From the year-ago period, Tata Technologies is likely to post a decline of 1.4% in the metric and Tata Elxsi has reported a 4?ll. 

 

LARGE-CAPS VS MID-CAPS

Earnings of mid-cap players are likely to be better than their larger peers, as has been the case for at least the last 17 quarters. "For large-tier companies we assume 0% to 2% q-o-q growth (in USD terms), while for mid-tier we assume -1% to +5.5%," HSBC Equities said in its report. 

 

The aggregate net profit of six mid-cap IT companies in the Nifty 200 index is expected to grow almost 9% sequentially, sharply higher than the 2% profit rise anticipated for the six large players. The on-year figure, too, is likely to paint a better picture for the mid-cap companies, with the bottom line expected to increase nearly 16% while the net profit of the large-cap entities will likely rise only a little over 5%. 

 

Similar will likely be the case with sequential revenue growth figures, with the metric seen near 6% for mid-caps, better than the 4% expected for the large-cap group. From the year-ago period, the top line of mid-caps will rise over 15%, way higher than the near 5% seen for the large-cap firms. 

 

The six large-cap IT companies in the 200-stock index are TCS, Infosys, HCL Technologies, Wipro, LTIMindtree, and Tech Mahindra. The six mid-cap players, excluding Oracle Financial for which estimates were not available, are Coforge, KPIT Technologies, Mphasis, Persistent Systems, Tata Elxsi, and Tata Technologies.

 

GUIDANCE

IT players are unlikely to make any major upward revision to their guidance for revenue growth and operating margins for 2025-26 (Apr-Mar), given the uncertainty over US policies and no major changes in clients' discretionary spends. "Margin guidance across companies is expected to remain stable with most firms operating at peak utilisation levels," HDFC Securities said.

 

For India's second-biggest IT company Infosys, brokerages had different views about the revenue growth guidance for FY26. While half a dozen brokerages expect the company to retain the growth guidance of 1-3%, other broking firms' estimate ranges between 1% on the lower end of the guidance and 3% on the higher end. The company Thursday revised its revenue growth guidance to 2-3% from 1-3?rlier, and retained its margin view of 20-22% for the 11th time in a row. HCL Technologies Monday retained its FY26 revenue growth guidance of 3-5% as well as the 17-18?rnings before interest and tax margin, in line with expectations.

 

Views about the revenue growth guidance for Wipro, the fourth-largest IT company, differ. Some broking firms expected the December quarter revenue growth to be (-)1% to 1% in constant currency terms, same as the guidance the company had given for the September quarter, while the guidance estimates from other broking firms range between (-)0.5% and 2%. On Thursday, Wipro said it sees the revenue growth to be between (-)0.5% and 1.5% sequentially for the December quarter. 

 

VALUATIONS

Broking firms said the sharp fall in large-cap IT stocks in the past three months has brought their valuations to reasonable levels, but that of mid-cap shares remain expensive due to their earnings growth outperformance. The Nifty IT has fallen about 13% in the last three months, triggered by the H-1B visa fee hike, proposed outsourcing tax bill, and fears of further tightening of outsourcing policies under the Donald Trump administration. Thursday, the Nifty IT index closed 0.4% higher at 35531.05 points. 

 

"The valuations for tier-1 IT companies appear reasonable, while mid-tier valuations continue to be elevated," HDFC Securities said in its pre-earnings report. The IT sector's valuation of 21.7 times is 14?low its five-year average of 25.4 and 2?ove the 10-year average of 21.2, the broking firm said.

 

Following are the Jul-Sept earnings estimates for 12 IT companies, excluding Oracle Financial Services Software, which is part of the Nifty 200, from 20 brokerages:

 

Company name	Sales (INR million)	PAT (INR million)	Sales (Y-o-Y Change %)	PAT (Y-o-Y Change %)	Sales (Q-o-Q Change %)	PAT (Q-o-Q Change %)	EBITDA (INR million)	Result Date	Number of estimates available
Coforge +	40,821	3,644	33.30	80.23	10.67	27.33	7,283	Oct 24	13
HCL Tech +	315,983	42,752	9.48	0.95	4.12	11.25	63,109	Oct 13	16
Infosys +	441,135	71,969	7.63	10.62	4.34	3.99	104,325	Oct 16	16
KPIT Technologies +	15,671	1,945	6.50	-4.52	1.84	13.17	3,177	Jan 00	10
LTIMindtree +	102,982	12,780	9.17	2.16	4.65	1.90	17,594	Oct 16	16
Mphasis +	38,772	4,626	9.65	9.27	3.88	4.72	6,881	Oct 30	15
Persistent Systems +	35,239	4,435	21.63	36.46	5.71	4.37	6,408	Oct 14	15
Tata Elxsi	9,172	1,557	-3.97	-32.12	2.81	7.88	1,901	Oct 09	8
Tata Technologies +	12,779	1,633	-1.43	3.72	2.70	-4.12	1,956	Oct 17	8
TCS +	651,435	124,958	1.38	4.93	2.69	-2.07	171,811	Oct 09	16
Tech Mahindra +	138,078	12,945	3.72	3.55	3.42	13.49	21,021	Oct 14	17
Wipro +	227,251	33,172	1.90	3.38	2.67	-0.40	44,017	Oct 16	16
Total	2,029,318	316,415	5.49	5.82	3.63	2.44

 

Notes:
+ Consolidated Figure
* Net interest Income
Y-o-Y: Year-on-Year
# Net premium income
Q-o-Q: Quarter-on-Quarter
N.A.: Not Available
 
Estimates from:
Anand Rathi Share and Stock Brokers Ltd., Antique Stock Broking Ltd., Centrum Broking Ltd., Dolat Capital Market Pvt. Ltd., Elara Securities (India) Pvt. Ltd., Emkay Global Financial Services Ltd., HDFC Securities Ltd., HSBC Global Research, ICICI Securities Ltd., IIFL Capital Services Ltd., JM Financial Institutional Securities Pvt. Ltd., Kotak Institutional Equities, Motilal Oswal Financial Services Ltd., Nirmal Bang Equities Pvt. Ltd., Nomura Equity Research, Nuvama Wealth Management Ltd., Prabhudas Lilladher Pvt. Ltd., Sharekhan Ltd., Systematix Shares and Stocks (India) Ltd., and YES Securities (India) Ltd.

 

End

 

US$1 = INR 88.78

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 
Compiled by Shivaji Jagatap

Edited by Deepshikha Bhardwaj

 

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