As the Q1 FY26 earnings season begins, the performance of India’s top IT companies—Tata Consultancy Services (TCS), Infosys, and Wipro—is in sharp focus. Investors are keen to see whether these firms can regain momentum amid global macro uncertainties, tariff risks, and evolving demand for digital transformation and AI-led services.
TCS: A Bellwether’s Barometer
TCS, India’s largest IT services exporter, is expected to post modest year-on-year growth in revenue and profit. Analysts estimate revenue growth of approximately 2.7–3.8 percent YoY and net profit growth around 1–3 percent YoY. While profit margins may dip compared to last year due to wage hikes and BSNL-related revenue normalization, sequential improvements are likely.
Key triggers for TCS include client spending patterns in North America and Europe, deal wins in cloud and AI, and management’s guidance for the remainder of the fiscal year. The market will also watch closely for commentary on the impact of potential tariffs on Indian IT exports.
Infosys: Walking a Cautious Path
Infosys has maintained a conservative outlook for FY26, with expected revenue growth in the flat to 3 percent range. This follows a weak Q4 FY25 performance and cautious client sentiment in key verticals such as BFSI and retail.
Q1 FY26 results are expected to show only marginal growth. While the company has been actively investing in GenAI capabilities, the impact on revenues may be gradual. Investors will closely monitor deal pipeline visibility and operating margin trends in this quarter.
Wipro: Under the Turnaround Lens
Wipro continues to face the challenge of reversing its recent underperformance. The new CEO’s strategy will be tested in Q1 FY26, particularly after weak Q4 FY25 results. Analysts expect Wipro to deliver flattish growth this quarter, with continued weakness in Europe and APAC regions.
This quarter could be pivotal in establishing whether the company’s turnaround plan is yielding early results. Investors will look for signs of improved deal flow, better execution, and strategic clarity.
Sector Overview: A Quarter of Transition
Overall, the Indian IT sector is expected to post modest Q1 results. While Tier-1 companies may report soft constant currency growth, mid-tier firms could outperform due to better agility and niche digital offerings. A favorable cross-currency environment may also provide some support to earnings.
This quarter is being seen as a “crossover phase” before a possible rebound in the second half of the fiscal year. The sector’s growth trajectory will heavily depend on the normalization of client budgets, AI adoption cycles, and global macro stability.
Key Factors to Watch
- Client Budget Trends: Outlook for discretionary IT spending in key markets.
- New Deal Wins: Especially in AI, cloud, and digital transformation.
- Margin Trends: Wage hikes, cost optimization efforts, and operational efficiency.
- Management Commentary: Guidance on full-year revenue and margin expectations.
- Geopolitical Risks: Tariff implications and their potential effect on future contracts.
Conclusion
Q1 FY26 is shaping up to be a defining quarter for the IT sector. While immediate acceleration in growth may be limited, the groundwork for long-term momentum could be laid now through strategic investments and operational discipline.
Investors should adopt a selective approach, focusing on companies with strong execution, healthy deal pipelines, and a clear AI roadmap. If the top-tier players manage to stabilize, a broader sector revival could be on the horizon in the second half of FY26.
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