As Indian IT stocks prepare for the September quarter results, analysts predict a mixed picture marked by cautious client spending, AI-driven pricing pressures, and a stark divide between larger and mid-cap companies, with some firms poised to outperform despite challenging conditions.
Indian IT stocks are heading into the September quarter earnings season with brokerages broadly expecting another soft set of numbers, even though some companies may get help from a weaker rupee, better utilisation and tighter cost control. The central theme across analysts is that clients remain cautious, discretionary spending is still slow to recover and artificial intelligence is increasingly pressuring pricing, even as some firms benefit from fresh deal ramps and acquisitions. According to the preview cited by Zee Business, the sector’s latest results are likely to show a clear split between larger, slower-growing names and a stronger set of mid-cap performers.
Among the companies drawing the most attention is Mphasis, where Motilal Oswal, HDFC Securities and Jefferies all see room for upside from the October 1 closing price of Rs 2,250.20. Motilal Oswal has a buy call and a target of Rs 2,700, while HDFC Securities is more bullish at Rs 2,840. Jefferies is more restrained, rating the stock hold with a target of Rs 2,350. The brokerages are looking for Mphasis to post sequential constant-currency growth of about 3% to 3.5% in the quarter, helped by continued momentum in banking and financial services. Jefferies said that could be the company’s strongest quarterly growth in three years.
Coforge is also expected to post one of the sector’s better results, aided by the Encora acquisition. Motilal Oswal expects around 12% sequential constant-currency growth, including 3.5% organic growth, while Jefferies sees growth of 13.2%, with 4% organic expansion. JP Morgan, meanwhile, has an overweight rating and said the company’s board transition has come earlier than expected, allowing attention to return to core execution, artificial intelligence opportunities, Encora integration and longer-term goals. At the same time, Persistent Systems is expected to remain one of the stronger mid-tier names, with HDFC Securities projecting 6.3% sequential constant-currency growth and Motilal Oswal looking for about 5%, helped by the Concise Systems acquisition and large-deal ramp-ups.
By contrast, the large-cap group is expected to deliver a far more subdued quarter. Infosys is likely to post only modest growth, with brokerages looking for sequential constant-currency revenue growth of about 1.3% to 1.8%. The bigger focus, according to Jefferies and HDFC Securities, will be the company’s FY27 guidance, with the former expecting a cut of 100 basis points to 0.5% to 2% constant-currency growth and the latter expecting a smaller reduction to 2% to 3%. TCS is also seen as muted, with estimates clustered around 0.5% to 0.6% sequential constant-currency growth. Jefferies has an underperform rating on the stock and expects investors to focus on banking and financial services demand, North America, Europe, deal wins and the second phase of the BSNL contract. HCL Technologies is expected to be among the stronger large-cap performers, with Jefferies looking for 2.7% sequential constant-currency growth, including around 100 basis points from acquisitions, while also watching for a narrower FY27 services growth guide.
Tech Mahindra is projected to post moderate growth, helped by large-deal ramp-ups and inorganic gains, but analysts say margins, communications and banking exposure and the company’s three-year plan will be under scrutiny. Wipro is expected to remain one of the weaker large-cap names, with brokerages looking for a sequential decline in IT services revenue. Jefferies expects a 1.4% drop in constant-currency terms, while HDFC Securities and Motilal Oswal both see a smaller fall. That weakness has kept sentiment cautious, with attention now shifting to the company’s FY27 outlook, deal bookings and whether large contracts can begin to translate into better revenue traction.
One of the more closely watched names is LTIMindtree, where the views are more sharply divided. HDFC Securities and Motilal Oswal remain positive, pointing to the benefit of Randstad’s IT business consolidation and expecting solid sequential growth, while Goldman Sachs has downgraded the stock to sell and cut its target price. Jefferies, too, is bearish and expects only modest growth, citing delays in billing in the Middle East. Analysts will be looking for comments on FY27 growth, the performance of the top two clients and the health of discretionary spending.
Across the sector, outside analysts are sounding a similarly cautious note. JM Financial, as cited by the Economic Times, expects large Indian IT firms to deliver another subdued quarter, extending a pattern of slow growth. Kotak Neo Research says HCL Technologies may lead large-cap peers on organic growth, but the wider sector still faces weak client spending and AI-led productivity pressure. Venturasecurities and Financial Express both note that artificial intelligence is changing the economics of outsourcing by improving productivity while also putting pressure on billing models. CLSA, meanwhile, has warned of downside risk to earnings per share for TCS, Infosys, HCL Technologies and Wipro, arguing that weak macroeconomic conditions, geopolitical tension and higher rates are keeping discretionary demand restrained. Taken together, the message from brokerages is clear: Q2 FY27 may not show a broad recovery yet, but it should reveal which companies are best positioned to grow through a difficult demand cycle.
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