News

IT Sector Q1 Preview: Stable quarter likely but seasonal strength missingAmong the Tier-1 IT companies, Infosys is expected to lead revenue growth of 1.5% quarter-on-quarter in constant currency terms aided by seasonality and weak base of Q4FY25.By Reema Tendulkar    | Meghna Sen   July 8, 2025, 1:34:51 PM IST (Published)3 Min ReadIndian IT companies will kick start the June quarter earnings season for large-cap stocks with TCS reporting results on Thursday, July 10. A stable quarter is expected for the IT sector, though it may lack the typical strength usually seen in the first quarter (Q1), due to softness in tariff-impacted verticals and unchanged demand trends.

Early indications from CNBC-TV18's poll suggest a mixed performance, with large-cap companies showing weakness, while midcaps are expected to lead the charge.

Four out of five IT companies are likely to report a decline in revenue. Commentary across the board is expected to reflect that while the macro environment has not improved, it has not deteriorated either.

CC revenue growth in Q1

Among the Tier-1 IT companies, Infosys is expected to lead revenue growth of 1.5% quarter-on-quarter in constant currency terms aided by seasonality and weak base of Q4FY25.

Other companies like TCS, Wipro, HCL Tech, and Tech Mahindra are expected to log sequential declines of 1.4%, 2%, 1.1%, and 0.7%, respectively, according to a CNBC-TV18 poll.

Guidance

Infosys may revise its revenue growth guidance upward from 0-3% to 1-3%, or even to 1.5-3.5%, supported by approximately 50 basis points of contribution from recent acquisitions.

Meanwhile, HCL Technologies could adjust the lower end of its guidance from 2-5% to 3-5%.

Management commentary across the board is expected to indicate that while the demand environment has not improved, it has not worsened either.

Company-wise key expectations

TCS: TCS is expected to report revenue growth decline in CC terms due to the ramp-down of BSNL deal. EBIT margin is likely to improve by 10 basis points quarter-on-quarter.

Infosys: Infosys is expected to report a revenue growth of 1.5% in CC terms q-o-q led by Financial services and aided by MRE Consulting and Missing Link consolidation. EBIT margin is expected to improve sequentially by 25 bps.

HCL Technologies: HCLTech may report a sequential revenue growth of -1.1% in CC terms with cross-currency tailwinds of 200 bps. EBIT margin is expected to decline by 70 bps q-o-q.

Wipro: Wipro is expected to report a sequential revenue growth of -2% q-o-q in CC terms, within its Q1 guided range, of -1.5% to -3.5%. EBIT margin is expected to be flat sequentially.

Midcaps likely to outperform?

Midcap IT companies are expected to deliver healthy Q1 growth, driven by market share gains and a favourable portfolio mix. Companies with lower exposure to the manufacturing vertical are likely to benefit the most.

According to a CNBC-TV18 poll, quarter-on-quarter constant currency growth is estimated at 0.85% for LTIMindtree, 1.5% for Mphasis, 3.8% for Persistent Systems, 6.5% for Coforge, and 2.5% for Hexaware.

Nifty IT lags broader market

The Nifty IT index has underperformed the broader market so far this year, delivering a negative return of around 10% year-to-date, compared to a 7.5% gain in the Nifty 50.

Despite the underperformance, valuations remain elevated.

The Nifty IT index is currently trading at 25.3 times forward earnings, which is in line with its five-year average. Large-cap IT stocks are trading at a price-to-earnings (PE) multiple of 23.7x, while midcap IT firms are trading at a much steeper 32.8x, a 38% premium to large caps.Continue ReadingNote To ReadersDisclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!TagsInfosys Q1 resultsIT stocksshare market todayTCS q1