Earnings revival to stay elusive for top IT firms in Q3

Client caution and macro concerns will cloud earnings of India's top 10 information technology (IT) services companies in the December quarter, at least four brokerages said, signalling a longer wait for demand pickup.

- Jas Bardia

IT's Big Five await resuming of non-essential tech spends.

(AFP)

Just three months earlier, analysts had predicted that the quarter would see a demand revival for IT's Big Five, which are still awaiting Fortune 500 companies to resume nonessential tech spending.

The top three of Tata Consultancy Services Ltd, Infosys Ltd, and HCL Technologies Ltd are expected to report sequential revenue growth of 0.1-3.6%, with growth led by third-largest HCLTech, estimates from Motilal Oswal Financial Services, Axis Capital, ICICI Securities and Deven Choksey Research showed. Fourth-largest Wipro Ltd and fifth-largest Tech Mahindra Ltd are expected to report either a revenue decline of up to 0.3% and 1.2%, or at best a growth of 2.3% and 1.2%, respectively.

"Amid macro-tariff uncertainty and a new tech cycle, we believe clients remain cautious on committing incremental spending to large programmes. As a result, we expect demand to stay steady, at best marginally incremental, until January 2026, as planning cycles reset and budgets firm up," Motilal Oswal analysts Abhishek Pathak, Keval Bhagat, and Tushar Dhonde, in a 2 January note.

According to a Mint analysis, this is the third straight quarter where brokerages have outlined sequential growth below 4%, signalling a tempered outlook. This follows efforts by companies to pursue new growth averages.