The landscape of India’s Information Technology (IT) sector is poised for a mixed bag of earnings as the fiscal year 2025 draws to a close. With ongoing regulatory challenges and economic fluctuations, industry experts predict that these factors could significantly affect Q4 results and guidance for FY2026. According to insights from analysts at Nuvama Institutional Equities, while major IT firms may see a drop in sequential revenues, mid-cap companies are anticipated to showcase solid organic growth on a quarter-on-quarter (QoQ) basis.

Earnings Outlook for Major IT Firms

TCS: A Glimpse into Q4 Performance

Tata Consultancy Services (TCS), the largest software services provider in India, is projected to achieve a modest 0.9% QoQ revenue growth, reaching approximately ₹64,550 crore in Q4FY25. However, in constant currency (CC) terms, a slight 0.2% decline is expected, with USD revenues anticipated to drop by 1% due to the winding down of the BSNL project. Yet, this dip could be countered by a recovery in markets abroad. The net profit is forecasted to increase by 1.5% QoQ to around ₹12,568 crore, with operating margins expected to stay stable.

Infosys: Navigating Revenue Decline

Infosys is expected to report a 1% decline in revenue in CC terms and a 1.5% drop in USD terms, aligning with its previous guidance. Analysts predict a contraction of 100 basis points in EBIT margins, primarily due to wage increases. The net profit for Q4FY25 is projected to decrease by 1.3%, landing at ₹6,720 crore. Looking ahead, Nuvama Equities suggests that Infosys may forecast a revenue growth range of 2% to 5% in CC terms for FY26.

HCL Technologies: Anticipated Adjustments

HCL Technologies is on track to report a 0.7% decline in CC revenue, alongside a 1.3% drop in USD revenue. This trend is largely attributed to a 15% decline in Products & Platforms (P&P), despite a 0.5% growth in its Services segment. A 6.6% decline in net profit is expected, bringing it down to ₹4,288 crore, with EBIT margins potentially contracting by 170 basis points due to seasonal effects.

Wipro: A Flat Revenue Forecast

Wipro is looking at a projected 0.4% decline in IT services revenue in CC terms, with a 1.0% drop in USD terms. Operating margins are expected to remain largely unchanged, while net profit may fall by 3.6% to around ₹3,233 crore. For Q1FY26, Wipro is expected to guide for revenue growth between -1% to +1% in CC terms, and stakeholders will closely monitor developments in its consultancy sector.

Tech Mahindra: Challenges and Stability

Tech Mahindra is forecasted to see a 0.7% decline in CC revenue and a 1.5% drop in USD terms, affected by the reversal of furloughs and seasonal fluctuations in Comviva. Despite undergoing wage hikes, operating margins are expected to remain stable. Investors will be keen to hear management’s insights on FY27 revenue prospects and ongoing strategic initiatives.

Summary of Key Insights

• TCS: Expected 0.9% QoQ revenue growth, stable margins.
• Infosys: Anticipated 1% revenue decline, EBIT margins impacted by wage hikes.
• HCL Tech: 0.7% revenue decline, net profit expected to drop by 6.6%.
• Wipro: 0.4% revenue decline, net profit projected at ₹3,233 crore.
• Tech Mahindra: 0.7% decline in revenue, management guidance crucial for investor confidence.

In summary, while the Indian IT sector grapples with uncertainties, the performance of these giants will be closely watched as they navigate the challenges of a shifting economic landscape. Investors and stakeholders alike are eager for guidance on future growth and performance metrics as the sector looks to rebound in the coming fiscal years.