IT stocks in focus: Motilal Oswal sees weak IT demand; Infy, HCLTech may cut FY27 guidance
Motilal Oswal expects another weak quarter for Indian IT firms. Check TCS, Infosys, HCL Tech, Wipro and midcap earnings expectations, guidance risks and demand outlook.
- Jul 1, 2026,
- Updated Jul 1, 2026 1:23 PM IST
Ahead of results season for India Inc, Motilal Oswal Financial Services said demand commentary for Indian IT companies is likely to remain soft in 1QFY27, with macroeconomic pressure, uncertainty around AI and geopolitical overhang continuing to weigh on discretionary spending and decision-making cycles. Tata Consultancy Services Ltd (TCS) will announce is Q1 results on Thursday, July 9.
In its results preview, the brokerage said the weak start could extend into 2QFY27 as well. It added that with the first half running below the pace needed to sustain the upper end of FY27 guidance bands, companies may scale back those targets this quarter.
According to Motilal Oswal, Infosys may cut the upper end of its FY27 guidance by 50 basis points, while HCL Technologies could reduce the upper end of its services growth guidance by 100 basis points. For its coverage universe, the brokerage expects revenue, EBIT and PAT to rise 14.4 per cent, 16.4 per cent and 13.3 per cent, respectively, year-on-year in rupee terms.
It sees 1QFY27 constant-currency growth in the range of -1.5-2 per cent for large-caps and -1 per cent to 4.8 per cent for mid-caps, with mid-caps again supported by large-deal ramp-ups.
Motilal Oswal expects TCS and LTM to report flat quarter-on-quarter constant-currency revenue, while Infosys may lead large-cap growth at about 2 per cent or 1 per cent organically, helped by acquisitions. Tech Mahindra Ltd may post around 1 per cent growth on telecom deal ramp-ups.
HCL Tech and Wipro Ltd, however, are expected to decline because of client-specific issues, delayed ramp-ups and seasonal weakness. It also said sequential cross-currency headwinds of about 20-50 basis points are likely across most of its coverage.
Among mid-tier firms, Motilal Oswal expects Hexaware Technologies to lead growth at about 4.8 per cent QoQ in constant currency, followed by Persistent Systems at around 3 per cent, and Mphasis Ltd and Tata Technologies Ltd at about 2 per cent each. Coforge and Zen Technologies are likely to remain flat.
In the ER&D segment, LTTS and Tata Tech are expected to benefit from deal ramp-ups, Tata Elxsi Ltd may grow about 1.2 per cent on recovery in Healthcare and Media, and Cyient DET may decline about 1 per centas deal conversion remains gradual. Motilal Oswal said vertical trends remain uneven.
BFSI continues to be the most resilient, backed by deal ramp-ups and stable spending. Hi-Tech is mixed, with AI-related work offsetting client-specific weakness in parts of portfolios. Telecom remains soft, while manufacturing demand is uneven across auto and industrial clients. It cited recent Accenture commentary pointing to slower decision-making and continued caution.
Margins are expected to remain mixed. Infosys Ltd and HCL Tech may improve by about 40 basis points each, while Tech Mahindra could post another quarter of around 50 basis points of expansion, supported by Project Fortius and delivery efficiencies. TCS may see a sharp decline because of annual wage hikes, while LTM is likely to stay broadly stable.
Among mid-caps, Hexaware, Mphasis and KPIT Tech may improve modestly, while COFORGE, PSYS, WPRO, TELX and ZENT could face pressure. TTL margins should improve on better utilisation, and Cyient DET may remain broadly flat. The brokerage said it had cut target multiples by about 15-20 per cent across most of its coverage to reflect a slower growth outlook.
It said Tier-I valuations are about 30 per cent and 40 per cent below their 10-year and 5-year averages, with TCS and Infosys around -1 standard deviation P/E levels and about 46 per cent and 39 per cent below their 10-year averages, while TechM is closer to its 10-year average.
Motilal Oswal said any rerating would require clearer signs of demand improvement, stabilising revenue growth and AI-led opportunities scaling enough to offset productivity-related headwinds.
Ahead of results season for India Inc, Motilal Oswal Financial Services said demand commentary for Indian IT companies is likely to remain soft in 1QFY27, with macroeconomic pressure, uncertainty around AI and geopolitical overhang continuing to weigh on discretionary spending and decision-making cycles. Tata Consultancy Services Ltd (TCS) will announce is Q1 results on Thursday, July 9.
In its results preview, the brokerage said the weak start could extend into 2QFY27 as well. It added that with the first half running below the pace needed to sustain the upper end of FY27 guidance bands, companies may scale back those targets this quarter.
According to Motilal Oswal, Infosys may cut the upper end of its FY27 guidance by 50 basis points, while HCL Technologies could reduce the upper end of its services growth guidance by 100 basis points. For its coverage universe, the brokerage expects revenue, EBIT and PAT to rise 14.4 per cent, 16.4 per cent and 13.3 per cent, respectively, year-on-year in rupee terms.
It sees 1QFY27 constant-currency growth in the range of -1.5-2 per cent for large-caps and -1 per cent to 4.8 per cent for mid-caps, with mid-caps again supported by large-deal ramp-ups.
Motilal Oswal expects TCS and LTM to report flat quarter-on-quarter constant-currency revenue, while Infosys may lead large-cap growth at about 2 per cent or 1 per cent organically, helped by acquisitions. Tech Mahindra Ltd may post around 1 per cent growth on telecom deal ramp-ups.
HCL Tech and Wipro Ltd, however, are expected to decline because of client-specific issues, delayed ramp-ups and seasonal weakness. It also said sequential cross-currency headwinds of about 20-50 basis points are likely across most of its coverage.
Among mid-tier firms, Motilal Oswal expects Hexaware Technologies to lead growth at about 4.8 per cent QoQ in constant currency, followed by Persistent Systems at around 3 per cent, and Mphasis Ltd and Tata Technologies Ltd at about 2 per cent each. Coforge and Zen Technologies are likely to remain flat.
In the ER&D segment, LTTS and Tata Tech are expected to benefit from deal ramp-ups, Tata Elxsi Ltd may grow about 1.2 per cent on recovery in Healthcare and Media, and Cyient DET may decline about 1 per centas deal conversion remains gradual. Motilal Oswal said vertical trends remain uneven.
BFSI continues to be the most resilient, backed by deal ramp-ups and stable spending. Hi-Tech is mixed, with AI-related work offsetting client-specific weakness in parts of portfolios. Telecom remains soft, while manufacturing demand is uneven across auto and industrial clients. It cited recent Accenture commentary pointing to slower decision-making and continued caution.
Margins are expected to remain mixed. Infosys Ltd and HCL Tech may improve by about 40 basis points each, while Tech Mahindra could post another quarter of around 50 basis points of expansion, supported by Project Fortius and delivery efficiencies. TCS may see a sharp decline because of annual wage hikes, while LTM is likely to stay broadly stable.
Among mid-caps, Hexaware, Mphasis and KPIT Tech may improve modestly, while COFORGE, PSYS, WPRO, TELX and ZENT could face pressure. TTL margins should improve on better utilisation, and Cyient DET may remain broadly flat. The brokerage said it had cut target multiples by about 15-20 per cent across most of its coverage to reflect a slower growth outlook.
It said Tier-I valuations are about 30 per cent and 40 per cent below their 10-year and 5-year averages, with TCS and Infosys around -1 standard deviation P/E levels and about 46 per cent and 39 per cent below their 10-year averages, while TechM is closer to its 10-year average.
Motilal Oswal said any rerating would require clearer signs of demand improvement, stabilising revenue growth and AI-led opportunities scaling enough to offset productivity-related headwinds.