Indian IT companies will kick-start the March quarter earnings season for large-cap stocks, with Tata Consultancy Services (TCS) reporting results on April 10. The deterioration in the macroeconomic environment is expected to weigh on fourth-quarter numbers and FY26 guidance, according to brokerage firm Kotak Institutional Equities.

Among Nifty 50 IT stocks, Infosys is likely to guide for 1-4% growth, while HCL Technologies is expected to project 3-5%. Wipro’s Q1FY26 guidance could range from (-)0.5% to +1.5% quarter-on-quarter. Kotak expects EBIT margin guidance of 20-22% for Infosys and 18-19% for HCL Tech in FY26.

Given the ongoing uncertainty, Kotak suggests that FY26 growth could be similar to FY25 or even lower.

Midcap IT stocks such as Persistent Systems, Coforge, and Mphasis are expected to stand out with strong growth in Q4FY25, whereas incumbents like Infosys, TCS, Wipro, and Tech Mahindra are likely to report weak numbers.
Kotak expects a sequential revenue decline for all large IT firms in the March 2025 quarter due to seasonal weakness, fewer billing days, and marginal demand deterioration. LTIMindtree is also expected to disappoint.

The 20% correction in the Nifty IT index from its peak already reflects these concerns. However, assuming no recession, there are huge upsides in several stocks, Kotak said. It believes that the long-term revenue growth implied in stock prices—estimated at 5-7% for many large companies—is reasonable.

Kotak’s top stock picks include Infosys, TCS, Tech Mahindra, Coforge, and Indegene. The key risk to its outlook remains a potential recession, which could put pressure on valuations.

Meanwhile, brokerage house JM Financial expects large-cap IT companies to report (-1.4%) to 0.2% quarter-on-quarter growth in constant currency, while mid-caps under its coverage should fare better with 0.6-3.3% growth. KPIT, within the Auto ER&D segment, is expected to grow 3% in constant currency, defying the broader weak environment.

JM Financial believes the key question for investors is whether the current uncertainty will defer or derail the recovery. At this stage, the brokerage leans toward the “defer” argument.

Until greater clarity emerges, JM Financial recommends investors to focus on companies with valuation comfort like TCS and Infosys, and earnings visibility like TCS and Tech Mahindra. It also sees mid-caps, given their growth momentum and recent correction, as offering attractive upside potential.