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Indian IT Q4FY26 Preview

ICICIdirect Research 03 Apr 2026 DISCLAIMER

We expect Q4FY26 earnings season to see -0.3% to +3.2% QoQ CC revenue growth across IT services companies, supported by stable client budgets, healthy deal TCV and modest currency tailwinds.
Among Tier-1 players, TCS is expected to post ~1.4% growth led by BFSI and tech verticals along with some contribution from the Coastal Cloud acquisition, while Infosys (-0.2% QoQ CC) and Tech Mahindra (-0.3% QoQ CC) may see soft growth due to fewer billing days and productivity pass-through. HCLTech revenues may decline ~1% QoQ CC due to seasonally weak software products business. Notably, LTM is expected to post growth of ~1% QoQ CC, partly impacted by the US-Iran conflict and some delay in the ramp up of the CBDT deal (a USD 320mn, 7-year deal).
Tier-2 IT firms are again expected to outperform, led by strong deal ramp-ups and BFSI traction. Persistent Systems is likely to deliver ~3.2% QoQ CC growth, while Mphasis (~2.5% QoQ CC) and Coforge (~2% QoQ CC) are expected to post healthy growth driven by strong deal wins over the last few quarters and ramp-up of transformation programs.
We expect margins performance to be mixed for the quarter with INR depreciation acting as a tailwind (30-35 bps for most of the companies), offset by company specific headwinds such as wage hikes, large deal ramp-up costs and fewer billing days. Coforge is likely to see the highest margin expansion (~+130 bps QoQ) due to absence of prior quarter headwinds from wage hikes, furloughs and 3rd party software costs, while LTM may see margin decline of 100 bps QoQ due to wage hikes and SG&A normalisation. Similarly, weak revenues, absence of one-off benefit (for Infosys) and restructuring costs (for HCL Tech) will keep their margins weak QoQ by 60-65 bps.
Deal activity remains healthy with strong TCV across companies and stable CY26 client budgets. Management commentary is expected to focus on FY27 growth outlook, wherein we expect tier 1 companies to guide in the low- mid single digit revenue growth for FY27 (which will be largely similar to FY26). Other key monitorables would be AI-led productivity impact and impact of Middle East conflict on decision-making and billing cycles.

 

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