TCS, Infosys, HCL Tech, Mphasis, Cyient, LTTS, Wipro: Q4 previews & targets for IT stocks
IT sectors Q4 results preview: Ahead of upcoming results season, HDFC Securities believes that the Indian IT services sector is expected to witness a subdued performance in Q4FY26.
- Apr 3, 2026,
- Updated Apr 3, 2026 10:44 AM IST
IT sectors Q4 results preview: Ahead of upcoming Q4 results season, domestic brokerage HDFC Securities believes that the Indian IT services sector is expected to witness a subdued performance in Q4FY26, with tier-1 companies projected to see growth between -1.1 per cent to 0.9 per cent quarter-on-quarter (QoQ) in constant currency (CC) terms.
Mid-tier firms are forecasted to experience a wider range from -1.8 per cent to 3.4 per cent, as ongoing macroeconomic uncertainty, geopolitical tensions and cautious client spending on large deals amid war escalation risks impact near-term revenue growth, notes HDFC Securities. The Nifty IT index has underperformed amid AI disruption concerns and slow growth recovery.
HDFC Securities highlights that while rupee depreciation offers some margin relief, concerns around AI-driven deflation have led to a recent correction in IT stocks over the past three months. New generative AI models from platforms like Claude and Palantir have raised fears of disruption to traditional SaaS and IT service models. Indian IT companies see challenges in deploying these AI models in complex regulatory environments.
HDFC Securities expects a 6-7 per cent deflation impact, up from 4 per cent, but this will be partly offset by fresh AI-centric deals within a $300-400 billion opportunity pool. Despite this, the recovery pace in the sector is likely to remain moderate. Valuations have been corrected to pre-COVID levels, presenting attractive entry points post-correction.
HDFC Securities projects an average cross-currency tailwind of about 35 basis points for Q4FY26E. Tier-1 companies’ dollar revenue growth is expected to range between -0.6-1.5 per cent quarter-on-quarter, with year-on-year growth between 2.1-8.1 per cent. TCS and Wipro are forecasted to lead tier-1 growth, supported by acquisitions like Coastal Cloud for TCS and Harman integration for Wipro Ltd. Conversely, HCL Technologies Ltd, Infosys and Tech Mahindra Ltd are expected to report negative QoQ CC growth.
Among mid-tier firms, Persistent is anticipated to grow 3.4 per cent QoQ led by BFSI and technology sectors, followed by Mphasis Ltd at 2.5 per cent, LTTS and Tech Mahindra at 1.7 per cent each. Mastek Ltd is expected to report 0.9 per cent growth while Birlasoft Ltd may see a 1 per cent decline.
Looking ahead, HDFC Securities notes that Infosys Ltd is expected to guide 2-4 per cent YoY CC growth for FY27E, while HCL Tech may forecast 3-5 per cent growth, driven by deal wins and AI leadership. Wipro’s guidance for Q1FY27E is seen between 0-1 per cent QoQ growth and L&T Technology Services Ltd aims for a high single-digit outlook.
Margin guidance is projected to remain stable, supported by currency tailwinds and peak utilisation, with Infosys maintaining margins between 20-22 per cent, HCL Tech at 17-18 per cent and TCS at 26-28 per cent. Tata Consultancy Services Ltd is projected to report total contract values of $8-10 billion and Infosys $2-3 billion.
HDFC Securities states that the Nifty IT Index currently trades at a price-to-earnings ratio of 17.8 times one-year forward earnings, around 16% below its 10-year average, but slightly above pre-COVID levels. The sector is forecasted to achieve a 5.9 per cent dollar revenue CAGR and 10.8 per cent EPS CAGR over FY26-28E, improving over the past three years.
From the IT pack, HDFC Securities has a 'buy' rating on Infosys (Target Price: Rs 1,600), HCL Technologies (Target Price: Rs 1,520), LTIMindtree (Target Price: Rs 5,560), Birlasoft (Target Price: Rs 435), Firstsource Solutions (Target Price: Rs 330), Happiest Minds Technologies (Target Price: Rs 490) and Mastek (Target Price: Rs 2,300).
It has an 'add' rating on TCS (Target Price: Rs 3,000), Wipro (Target Price: Rs 225), Tech Mahindra (Target Price: Rs 1,515), Mphasis (Target Price: Rs 2,660), Persistent Systems (Target Price: Rs 6,240), L&T Technology Services (Target Price: Rs 3,500), Tata Elxsi (Target Price: Rs 5,000), Zensar Technologies (Target Price: Rs 690) and Cyient (Target Price: Rs 1,110).
IT sectors Q4 results preview: Ahead of upcoming Q4 results season, domestic brokerage HDFC Securities believes that the Indian IT services sector is expected to witness a subdued performance in Q4FY26, with tier-1 companies projected to see growth between -1.1 per cent to 0.9 per cent quarter-on-quarter (QoQ) in constant currency (CC) terms.
Mid-tier firms are forecasted to experience a wider range from -1.8 per cent to 3.4 per cent, as ongoing macroeconomic uncertainty, geopolitical tensions and cautious client spending on large deals amid war escalation risks impact near-term revenue growth, notes HDFC Securities. The Nifty IT index has underperformed amid AI disruption concerns and slow growth recovery.
HDFC Securities highlights that while rupee depreciation offers some margin relief, concerns around AI-driven deflation have led to a recent correction in IT stocks over the past three months. New generative AI models from platforms like Claude and Palantir have raised fears of disruption to traditional SaaS and IT service models. Indian IT companies see challenges in deploying these AI models in complex regulatory environments.
HDFC Securities expects a 6-7 per cent deflation impact, up from 4 per cent, but this will be partly offset by fresh AI-centric deals within a $300-400 billion opportunity pool. Despite this, the recovery pace in the sector is likely to remain moderate. Valuations have been corrected to pre-COVID levels, presenting attractive entry points post-correction.
HDFC Securities projects an average cross-currency tailwind of about 35 basis points for Q4FY26E. Tier-1 companies’ dollar revenue growth is expected to range between -0.6-1.5 per cent quarter-on-quarter, with year-on-year growth between 2.1-8.1 per cent. TCS and Wipro are forecasted to lead tier-1 growth, supported by acquisitions like Coastal Cloud for TCS and Harman integration for Wipro Ltd. Conversely, HCL Technologies Ltd, Infosys and Tech Mahindra Ltd are expected to report negative QoQ CC growth.
Among mid-tier firms, Persistent is anticipated to grow 3.4 per cent QoQ led by BFSI and technology sectors, followed by Mphasis Ltd at 2.5 per cent, LTTS and Tech Mahindra at 1.7 per cent each. Mastek Ltd is expected to report 0.9 per cent growth while Birlasoft Ltd may see a 1 per cent decline.
Looking ahead, HDFC Securities notes that Infosys Ltd is expected to guide 2-4 per cent YoY CC growth for FY27E, while HCL Tech may forecast 3-5 per cent growth, driven by deal wins and AI leadership. Wipro’s guidance for Q1FY27E is seen between 0-1 per cent QoQ growth and L&T Technology Services Ltd aims for a high single-digit outlook.
Margin guidance is projected to remain stable, supported by currency tailwinds and peak utilisation, with Infosys maintaining margins between 20-22 per cent, HCL Tech at 17-18 per cent and TCS at 26-28 per cent. Tata Consultancy Services Ltd is projected to report total contract values of $8-10 billion and Infosys $2-3 billion.
HDFC Securities states that the Nifty IT Index currently trades at a price-to-earnings ratio of 17.8 times one-year forward earnings, around 16% below its 10-year average, but slightly above pre-COVID levels. The sector is forecasted to achieve a 5.9 per cent dollar revenue CAGR and 10.8 per cent EPS CAGR over FY26-28E, improving over the past three years.
From the IT pack, HDFC Securities has a 'buy' rating on Infosys (Target Price: Rs 1,600), HCL Technologies (Target Price: Rs 1,520), LTIMindtree (Target Price: Rs 5,560), Birlasoft (Target Price: Rs 435), Firstsource Solutions (Target Price: Rs 330), Happiest Minds Technologies (Target Price: Rs 490) and Mastek (Target Price: Rs 2,300).
It has an 'add' rating on TCS (Target Price: Rs 3,000), Wipro (Target Price: Rs 225), Tech Mahindra (Target Price: Rs 1,515), Mphasis (Target Price: Rs 2,660), Persistent Systems (Target Price: Rs 6,240), L&T Technology Services (Target Price: Rs 3,500), Tata Elxsi (Target Price: Rs 5,000), Zensar Technologies (Target Price: Rs 690) and Cyient (Target Price: Rs 1,110).