All eyes on IT growth guidance

Investors in Indian IT stocks have stepped into FY26 on an anxious note. The latest blow: new tariffs by the US that threaten to further derail the sector's already-stalled revenue growth. Companies continue to battle the same headwinds—cautious clients, muted discretionary tech spending, and prolonged deal cycles—all of which are slowing revenue conversion and triggering fresh earnings cuts.

- Harsha Jethmalani

"We once again cut revenue and EPS estimates (after cuts in March 2025) for our coverage universe, baking in the reciprocal tariffs imposed by the US against many countries," said a Kotak Institutional Equities report on 4 April.

A worry is that FY26 could end up being worse than FY25 for some of the companies. The brokerage has lowered its FY2025-27 revenue growth estimates by 1.2-3.4% and Ebit margin projections by 10-50 basis points, resulting in a 1.6-5.8% cut in earnings per share forecasts.

Tier-I IT firms are likely to report a lackluster Q4FY25, with revenues either flat or declining sequentially due to firm-specific challenges amid the broader slowdown.