India's top IT companies are set to report another quarter of weak earnings and could trim their annual revenue growth forecasts, five brokerages said, as AI-driven pricing pressure and tepid spending by clients bite.
The rise of AI-based technology has battered the $315-billion information technology sector, especially vulnerable because of its reliance on billable hours, forcing companies to rejig business models and offer steep discounts. The sector has been among the market's worst performers over the past year.
"AI-led deflation has more legs to go and demand environment is not improving," Jefferies said in a note on Tuesday, citing additional pressure from higher oil prices and interest rates.
India's top IT services company, Tata Consultancy Services , kicks off earnings on October 8, with peers Infosys , HCLTech and Wipro reporting later this month.
IT companies typically post strong performance in the first two quarters of the fiscal year helped by higher billing days and project starts. However, first-quarter results were muted and expectations from the second are similarly subdued.
The industry, which employs nearly 6 million in the world's most populous country, is expected to report its weakest sequential performance in three years for the July-September quarter, according to Jefferies, with revenue growth projected at 0.7% to 3.5% quarter-on-quarter for the top six firms.
Year-on-year, analysts expect revenue to rise about 10% in rupee terms.
While acquisitions and deal ramp-ups could boost performance for some large companies, organic revenue growth is expected to be weak. The country's largest IT firms are projected to report lacklustre growth, after stripping out currency fluctuations.
The Nifty IT has dropped about 27% in 2026 so far, lagging the benchmark Nifty 50's 13.4% drop.
With demand conditions largely unchanged since the last quarter, investors will focus on annual revenue growth forecasts.
Infosys is expected to trim the upper end of its 1.5% to 3% revenue growth forecast to 2.5%, analysts at Kotak said. Jefferies expects a sharper cut, to 0.5% to 2%.
Brokerages expect HCLTech and Tech Mahindra to lead among the larger companies, while Wipro is likely to lag.
Margins may improve modestly as rupee depreciation offsets some pricing pressure, though foreign exchange hedging losses could weigh on profit at Tech Mahindra, Coforge and Hexaware.
