Indian IT Q4 Preview: TCS & Persistent To Lead As Brokerages Warn Of 'Subdued' Earnings

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:

1. 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.
2. 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.
3. 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.

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