The IT stocks are buzzing in Tuesday’s trade ahead of their quarterly results starting this week. The NIFTY IT index soared 2.5% on Tuesday morning as investors reassessed the risks and the value IT stocks provide at current levels.
The NIFTY IT index has fallen over 26% in 2026 on a YTD basis and trades 39% lower than the record high levels last touched in December 2024.
Since 2025, the IT sector has witnessed structural headwinds, starting from a high-interest-rate scenario in developing countries to advancements in Artificial Intelligence. The structural changes and earnings impact in the previous quarters have repriced the valuations for the IT stocks. Owing to all the above factors, several IT stocks are trading near their 52-week low levels. Investors will be closely monitoring the upcoming Q1FY27 results and the guidance commentary from the IT sector for further cues. Here is what to expect from Q1FY27 IT sector results.
Muted topline
The topline growth for the IT bellwether companies is expected to remain muted for Q1FY27, clouded by geopolitical tensions and the repricing of the traditional software and consulting model. The consulting global major Accenture Plc recently revised its earnings growth for the coming quarters by 1% in the upper band. The downward revision by the global IT major indicated weak demand with pricing fluctuations. Alongside this, the Middle East region’s demand is also expected to remain weak, which will be visible in earnings. However, the impact of deal wins and contracts during the quarter will also be closely monitored.
Global broking companies like Citi, Jefferies, and CLSA expect the topline growth to remain flat on a sequential basis, led by weak discretionary demand and slower larger deal ramp-ups.
Stable operating margins
Amid slower deal ramp-ups and weak discretionary spending in the developing nations, the weak topline growth will be supported by favourable currency movements, which will aid stable margins for IT majors. At the company-specific levels, TCS, Infosys, and HCL Technologies are expected to maintain their margin range of 20% to 25%, with no major deviations. Additionally, in the aftermath of AI, IT companies are repricing the deals at lower price levels, indicating poor pricing dominance, which remains a key margin drag for the sector.
Growth guidance commentary in focus
Amid the growing anxiety about the overall Impact of an AI-led deflationary environment in the IT industry, the focus on outlook will remain the key focus in the coming earnings season. Commentary on the outlook and revenue guidance for top-tier IT companies like HCL Technologies, Wipro, TCS and Infosys will give significant cues for the next direction of IT companies. Alongside, the outlook on deal wins and inorganic growth through acquisitions will also be closely examined during the earnings call.
Company-specific expectations by global brokerages
TCS: Flat to negative topline growth; wage hikes and slower deal conversions to impact margins.
Infosys: steady growth in revenue cushioned by inorganic growth in healthcare and cloud acquisitions. UBS expects Infosys to outperform among large-cap IT companies.
HCL Technologies: Sequential decline expected by UBS; FY27 guidance in focus.$1.14 billion deal wins from Fortune 50 European giant to cushion sentiment.