Indian IT Q4 Preview: TCS & Persistent To Lead As Brokerages Warn Of 'Subdued' Earnings
India’s $250-billion IT services sector is set to report a muted performance for the fourth quarter ended March 31, 2026. While Tata TCS and mid-cap star Persistent Systems are expected to outpace peers, the broader industry remains hamstrung by the US-Iran conflict and deflationary pressures from Generative AI. However, a 6.5% depreciation of the Rupee against the US Dollar is expected to provide a margin safety net.
The Indian IT earnings season kicks off on April 9 with bellwether TCS, followed by Wipro on April 16 and HCL Technologies on April 21. Brokerage consensus from HDFC Securities and Kotak Institutional Equities suggests a subdued quarter, with Tier-1 sequential revenue growth projected between -1.1% and +0.9% in constant currency terms.
TCS Leads, Infosys Struggles
The "Big Four" are expected to show divergent paths as they wrap up the fiscal year:
- TCS: Widely tipped to be the large-cap leader with 1.1%–1.5% QoQ CC growth, driven by its $8–10 billion deal pipeline and the integration of the Coastal Cloud acquisition.
- Infosys: Marginal revenue contraction of 0.2% to 0.8% is expected. The market is laser-focused on its FY27 revenue guidance, currently pegged at a cautious 2%–4%.
- HCL Tech: Likely to report a 1.1% to 1.6% decline in overall revenue due to seasonal weakness in its software products segment, though its core IT services remain steady.
- Wipro: Expected to post flat growth (0% to 0.5%), with its Q1 FY27 guidance range (-1% to +1%) being the key trigger for the stock.
The mid-tier space continues to show higher agility. Persistent Systems is the top pick, with predicted growth of 3.2% to 4.0% QoQ, fueled by heavy demand in BFSI and tech verticals. Mphasis (2.5%) and Coforge (2.0%) are also expected to outshine their larger counterparts.
War, AI, and Tariffs
Brokerages highlight three factors weighing on the Q4 outlook:
- West Asia Tensions: Ongoing geopolitical tensions from the US-Iran war have introduced a wait-and-watch approach to client discretionary spending, thus delaying large deal ramp-ups.
- AI-Led Deflation: HDFC Securities warns that new Generative AI models, like Claude and Palantir, are causing a 6–7% deflationary impact on traditional SaaS/IT models, though fresh AI-centric deals are partially filling the vacuum.
- Margin Cushion: The 6.5% Rupee depreciation is expected to boost EBIT margins by 40 to 320 basis points YoY across the top six firms, offsetting higher wage bills.
Despite the short-term macro gloom, Nuvama Equities has upgraded its outlook by assigning a 'Buy' rating to the top ten IT firms. Valuations have reset to pre-COVID levels after a 21–24% correction over the last three months. Thus, making the sector a high-value contrarian play. Most eyes remain on the management commentary regarding Project Maximus (Infosys) and the AI360 (Wipro) programmes to see if AI pilots are finally converting into commercial revenue.
Published By : Shourya Jha
Published On: 6 April 2026 at 16:31 IST