Infosys, Wipro, HCL Tech, Hexaware, LTIM: Q3 IT preview, stock price targets

Emkay Global in its December quarter preview note said seasonal factors are expected to weigh on growth for its IT services coverage in the December quarter (Q3), resulting in moderate sequential revenue growth, even as year-on-year (YoY) growth momentum is likely to improve. 

The domestic brokerage attributed the expected YoY improvement to continued strength in BFSI, a stable demand environment, fewer project deferrals, steady deal momentum and improving revenue conversion. Furloughs in Q3 were seen to be in line with historical trends.

Emkay Global said overall demand conditions remained largely unchanged, with discretionary spending still restrained and clients maintaining a cautious stance amid macroeconomic uncertainty. Ongoing AI-led technology shifts continued to influence growth momentum. Among verticals, BFSI was expected to sustain its recovery in Q3, while momentum in Healthcare, Manufacturing and Retail was yet to meaningfully pick up.

Within large-cap IT, Emkay Global expects HCL Technologies Ltd, Wipro Ltd and LTIMindtree Ltd to lead sequential revenue growth, while other tier-1 companies are likely to report largely flattish performance. In the tier-2 segment, Persistent Systems, Coforge and Mphasis are expected to outperform, while Hexaware Technologies Ltd and Sonata Software Ltd are seen posting muted revenue growth. Margin performance across the IT universe is expected to be mixed, depending on wage-hike cycles, ramp-up of large deals, seasonality, business mix and merger-and-acquisition-related factors.

The brokerage said most IT services companies are likely to report an improvement in YoY revenue growth in Q3, though seasonal furloughs and fewer working days versus Q2 are expected to cap QoQ growth. Large caps, barring HCL Technologies, Wipro and LTIMindtree, are expected to post muted sequential growth. Cross-currency movements are seen having a marginal negative impact on reported dollar revenue, with tier-1 companies expected to post constant-currency revenue growth of 0–3 per cent and tier-2 companies in the range of minus 0.4 per cent to 5.5 per cent.

By vertical, BFSI is showing positive momentum, aided by rate cuts, while Communication and Manufacturing, particularly auto, remain weak. Growth trends in Hi-tech, Retail and Healthcare are described as mixed. ER&D players continue to face pressure due to weakness in the auto sector and tariff-related uncertainties.

For FY26, Emkay Global expects Infosys Ltd to narrow its constant-currency revenue growth guidance to 2.5–3 per cent year-on-year, while maintaining Ebitda margin guidance of 20–22 per cent. HCL Technologies is expected to narrow its revenue growth guidance to 4–4.5 per cent constant currency, while retaining margin guidance of 17–18 per cent. Wipro is expected to guide for 1.5–3.5 per cent constant-currency sequential revenue growth in Q4.

On margins, Emkay Global said Q3 Ebitda margins are likely to reflect mixed trends, influenced by wage hikes at select companies, rupee depreciation, changes in business mix, cost-optimisation initiatives, deal ramp-ups and contributions from acquisitions. Tier-1 companies, barring Wipro and LTIMindtree, are expected to see sequential margin expansion, while mid-cap players could witness a wider range of margin movement, from contraction of up to 160 basis points to expansion of up to 90 basis points. Net hiring is expected to remain subdued.

The brokerage said clients are likely to finalise their technology budgets by early calendar year 2026, which should offer greater clarity on the potential for growth acceleration. It cautioned that consensus and its own CY26 and FY27 estimates, which build in a gradual recovery driven by higher discretionary spending, carry downside risks if macro uncertainties persist. Emkay Global noted that the Nifty IT index has outperformed the broader market by about 2 per cent over one month and 6 per cent over three months, supported by hopes of demand recovery, rupee depreciation and signs that the earnings downgrade cycle is bottoming out. It upgraded Firstsource Solutions to Add from Reduce.