TCS, Infosys, HCL Tech, TechM, Wipro, LTM, Coforge, HEXT: Fresh target, Q2 previews for IT stocks
Indian IT stocks may report a mixed Q2FY27, with large caps facing subdued growth while mid-tier firms outperform, Nirmal Bang and JM Financial said.
- Oct 2, 2026,
- Updated Oct 2, 2026 1:20 PM IST
Nirmal Bang Institutional Equities and JM Financial have said the Indian IT sector is likely to report a mixed performance in Q2FY27, with large-cap companies expected to post subdued constant currency revenue growth while mid-tier and mid-cap firms continue to outperform.
Both brokerages said demand for large caps remains mixed, discretionary spending is still subdued, and AI-led productivity pressure and competition continue to weigh on the sector. They added that margins are likely to remain broadly stable and deal momentum healthy, even as clients increasingly prefer shorter-duration contracts and seek measurable productivity benefits.
They said support is coming from BFSI, EURS, cost optimisation, vendor consolidation and AI-led engagements. Nirmal Bang said large-cap companies under its coverage are likely to report constant currency revenue growth of -1.1 per cent to 1.5 per cent quarter-on-quarter, while mid-cap players may post 3.0 per cent to 13.1 per cent growth.
It said margins should remain broadly stable, supported by operating leverage, internal cost optimisation, offshore transition and productivity initiatives. Wage hikes, restructuring costs, higher subcontracting and investments towards AI readiness remain key headwinds, it said, though easing seasonal pressures and a focus on operational efficiencies should support margin resilience.
The brokerage also said deal momentum is likely to remain healthy, with large transformation, AI-led, cost optimisation and vendor consolidation deals continuing to drive the pipeline, while smaller and shorter-duration AI-led projects gain traction.
JM Financial said mid-tier Indian IT companies continue to perform well despite macro uncertainty, AI-led productivity and increasing competition, largely driven by execution. It said the roughly 75 per cent valuation premium of mid-tier IT over large-tier IT is likely to sustain or widen.
It expects mid-tier IT revenue, including acquisitions, to grow 2.7 per cent to 13.0 per cent constant currency quarter-on-quarter and 5.4 per cent to 47 per cent year-on-year, against -0.5 per cent to 2.6 per cent quarter-on-quarter for large-tier firms. It said mid-tier IT is likely to deliver double-digit organic revenue growth in FY27, with strong growth in the first half, while large-tier firms are still working towards mid-single-digit revenue growth.
JM Financial also said Indian BPO companies are likely to report another decent quarter, with double-digit constant currency revenue growth year-on-year in Q2FY27. It said Tata Technologies could report 4.4 per cent constant currency quarter-on-quarter growth in services, driven by the ramp-up of the Tenneco deal and full vehicle programmes despite softness in the automotive space.
Among BPO and ER&D names under its coverage, it prefers Sagility and Firstsource. It added that it sees no meaningful improvement in large-tier IT demand and has marginally revised FY27-FY29 EPS for most companies to reflect exchange rate changes and other parameter tweaks.
From the large-cap IT space, Nirmal Bang has a 'sell' rating on TCS (Target Price: Rs 1,581), Infosys Ltd (Target Price: Rs 908), HCL Tech (Target Price: Rs 949), Wipro Ltd (Target Price: Rs 137), LTM (Target Price: Rs 3,235) and Tech Mahindra Ltd (Target Price: Rs 1,187). It has a 'hold' rating on mid-caps such as Persistent Systems (Target Price: Rs 5,734), Coforge Ltd (Target Price: Rs 1,971) and Mphasis Ltd (Target Price: Rs 2,375).
Among mid-cap IT companies, JM Financial has a 'buy' rating on Mphasis (Target Price: Rs 2,645), Sagility (Target Price: Rs 56), Firstsource Solutions (Target Price: Rs 310) and Capillary Technologies (Target Price: Rs 645). However, it has a 'reduce' rating on KPIT Technologies (Target Price: Rs 505), Tech Technologies (Target Price: Rs 730) and MapmyIndia (Target Price: Rs 870).
JM Financial has an 'add' rating on stocks such as Coforge (Target Price: Rs 1,940), Persistent Systems (Target Price: Rs 5,800), Hexaware Technologies (Target Price: Rs 540), IKS Health (Target Price: Rs 1,965) and Black Box (Target Price: Rs 920).
Nirmal Bang Institutional Equities and JM Financial have said the Indian IT sector is likely to report a mixed performance in Q2FY27, with large-cap companies expected to post subdued constant currency revenue growth while mid-tier and mid-cap firms continue to outperform.
Both brokerages said demand for large caps remains mixed, discretionary spending is still subdued, and AI-led productivity pressure and competition continue to weigh on the sector. They added that margins are likely to remain broadly stable and deal momentum healthy, even as clients increasingly prefer shorter-duration contracts and seek measurable productivity benefits.
They said support is coming from BFSI, EURS, cost optimisation, vendor consolidation and AI-led engagements. Nirmal Bang said large-cap companies under its coverage are likely to report constant currency revenue growth of -1.1 per cent to 1.5 per cent quarter-on-quarter, while mid-cap players may post 3.0 per cent to 13.1 per cent growth.
It said margins should remain broadly stable, supported by operating leverage, internal cost optimisation, offshore transition and productivity initiatives. Wage hikes, restructuring costs, higher subcontracting and investments towards AI readiness remain key headwinds, it said, though easing seasonal pressures and a focus on operational efficiencies should support margin resilience.
The brokerage also said deal momentum is likely to remain healthy, with large transformation, AI-led, cost optimisation and vendor consolidation deals continuing to drive the pipeline, while smaller and shorter-duration AI-led projects gain traction.
JM Financial said mid-tier Indian IT companies continue to perform well despite macro uncertainty, AI-led productivity and increasing competition, largely driven by execution. It said the roughly 75 per cent valuation premium of mid-tier IT over large-tier IT is likely to sustain or widen.
It expects mid-tier IT revenue, including acquisitions, to grow 2.7 per cent to 13.0 per cent constant currency quarter-on-quarter and 5.4 per cent to 47 per cent year-on-year, against -0.5 per cent to 2.6 per cent quarter-on-quarter for large-tier firms. It said mid-tier IT is likely to deliver double-digit organic revenue growth in FY27, with strong growth in the first half, while large-tier firms are still working towards mid-single-digit revenue growth.
JM Financial also said Indian BPO companies are likely to report another decent quarter, with double-digit constant currency revenue growth year-on-year in Q2FY27. It said Tata Technologies could report 4.4 per cent constant currency quarter-on-quarter growth in services, driven by the ramp-up of the Tenneco deal and full vehicle programmes despite softness in the automotive space.
Among BPO and ER&D names under its coverage, it prefers Sagility and Firstsource. It added that it sees no meaningful improvement in large-tier IT demand and has marginally revised FY27-FY29 EPS for most companies to reflect exchange rate changes and other parameter tweaks.
From the large-cap IT space, Nirmal Bang has a 'sell' rating on TCS (Target Price: Rs 1,581), Infosys Ltd (Target Price: Rs 908), HCL Tech (Target Price: Rs 949), Wipro Ltd (Target Price: Rs 137), LTM (Target Price: Rs 3,235) and Tech Mahindra Ltd (Target Price: Rs 1,187). It has a 'hold' rating on mid-caps such as Persistent Systems (Target Price: Rs 5,734), Coforge Ltd (Target Price: Rs 1,971) and Mphasis Ltd (Target Price: Rs 2,375).
Among mid-cap IT companies, JM Financial has a 'buy' rating on Mphasis (Target Price: Rs 2,645), Sagility (Target Price: Rs 56), Firstsource Solutions (Target Price: Rs 310) and Capillary Technologies (Target Price: Rs 645). However, it has a 'reduce' rating on KPIT Technologies (Target Price: Rs 505), Tech Technologies (Target Price: Rs 730) and MapmyIndia (Target Price: Rs 870).
JM Financial has an 'add' rating on stocks such as Coforge (Target Price: Rs 1,940), Persistent Systems (Target Price: Rs 5,800), Hexaware Technologies (Target Price: Rs 540), IKS Health (Target Price: Rs 1,965) and Black Box (Target Price: Rs 920).