Coforge, Persistent, Mphasis, Hexaware, Infosys, TCS: IT picks ahead of Q2 results

Brokerage Nuvama Institutional Equities said the September quarter (Q2FY26) is expected to reflect signs of stability for the Indian IT sector after the tariff-related uncertainties that weighed on Q1. Almost all companies under its coverage are likely to post sequential revenue growth—with only Birlasoft and Zensar expected to see a decline.

Nuvama noted that the macro environment remains uncertain, especially after the recent H1B visa fee hike in the US, but expects cautious commentary from companies rather than worsening outlooks. “The recent correction in stock prices has made risk-reward incrementally attractive. We remain positive on the sector from a medium-to-long term perspective,” the brokerage said.

Among Tier-1 IT firms, Nuvama expects Infosys to post 1.8 per cent QoQ constant currency (CC) growth, followed by HCL Tech (1.5 per cent) and Tech Mahindra (0.9 per cent). TCS and Wipro are projected to lag, reporting modest growth of 0.2 per cent and 0.1 per cent QoQ in CC terms, respectively. Infosys is likely to maintain its FY26 revenue growth guidance of 1–3 per cent, while HCL Tech should retain its 3–5 per cent outlook. Margin guidance across Tier-1 players is expected to be maintained.

Nuvama highlighted that Tier-2 IT companies are set to outperform their larger peers. Coforge is expected to lead with 6 per cent CC QoQ growth, followed by Persistent Systems (3.7 per cent), Hexaware (3.2 per cent), LTIMindtree (1.9 per cent) and Mphasis (1.3 per cent). “Tier-2 names continue to post strong growth and remain our preferred picks,” the brokerage said, adding that it stays positive on LTIMindtree, Coforge, Persistent, Mphasis and Hexaware.

Engineering R&D players are projected to deliver modest numbers, with LTTS expected to grow 1.5 per cent and Cyient 0.3 per cent, pressured by weakness in the auto vertical. In the small-cap pack, Firstsource is likely to post 2.2 per cent growth, while Birlasoft (-0.5 per cent) and Zensar (-0.1 per cent) are seen reporting sequential revenue declines.

Nuvama acknowledged elevated uncertainty due to tariff changes, the H1B visa fee hike, and the proposed HIRE Bill in the US, but said it sees no material impact yet on IT demand. “Growth will be driven by cost-takeout deals, while discretionary spends remain subdued. A medium-term recovery in tech spending is expected as enterprises resume investments to modernise legacy IT systems,” the brokerage said.

It concluded that it remains selectively positive on Tier-1 names Infosys and TCS, alongside its stronger preference for Tier-2 players.