Expect Top-6 large IT cos to report CC US$ Sales growth of 0-2.1% QoQ in Q2: Equirus Securities
Financial services firm Equirus Securities has released a press note detailing a preview of Q2FY26 earnings of the IT sector. As per the press note, the Top-6 large IT companies are likely to report CC US$ Sales growth of 0% to 2.1% QoQ in Q2 (expect LTI Mindtree & Infosys at close to upper end and Wipro IT Services close to lower end). The midcap IT companies are expected to post healthy QoQ sales growth in Coforge, Persistent Systems, R-Systems and eClerx.
The heightened macroeconomic concerns that started in March 2025 has been keeping enterprise clients to remain cautious on incremental Tech led Services spend. But, at the same time demand trends are stable QoQ in Q2. Hence, with likely conversion of increasing deal wins (on cost-take-out side) into revenues, Equirus Securities expect most of the large caps to show some improvement in QoQ CC US$ sales growth rates in Q2 vs Q1FY26. Good execution on EBITM is likely to continue in 2Q with QoQ dip of 36bps (for Wipro IT Services) to increase of 71bps in top-6 large caps considering tailwinds from currency benefits (INR/US$ depreciated by nearly 3% QoQ in Q2 on an average for most companies) and benign supply-side issues, cost optimisation and productivity led gains.
Expect higher QoQ Sales growth in most of Top 6 large caps in 2Q vs. 1Q
Equirus Securities expect top 6 large caps to register QoQ growth of flat to 2.1% in US$ Sales in CC terms in 2QFY26E. A marginally positive impact of 2-28 bps QoQ is expected from cross currency tailwinds across most of the top 6 large caps in Q2. The sales performance will likely be healthy from some of the midcap companies incl. Coforge, Persistent Systems, R-Systems and eClerx with expected US$ Sales growth in the range of 3.6% to 5.8% QoQ (Persistent Systems at the lower end and Coforge at the upper end) in CC terms. Equirus Securities expect CC US$ Sales growth to remain tepid in most the ER&D companies (led by soft demand continuing in Mobility/Auto) with LTTS to lead with expected 1.6% CC QoQ growth in US$ Sales in Q2.
Demand commentary likely to remain cautious
Equirus Securities expects demand commentary to remain cautious (unless some certainty relating to tariff related issues emerges ahead). However, it believes vendors are still witnessing better demand tailwinds in BFSI. For 2QFY26E, they expect mix trends on deal TCV (on Qoq basis). Key thing to watch will be management commentary regarding deal pipeline and any further delays in decision-making regarding deal awards and start/ramp up of earlier won deals.
Expect some tweak in Infosys’s FY26E Sales growth guidance
Equirus Securities expects Infosys to guide for 2.0-3.0% CC growth in US$ Sales (vs. current growth guidance of 1-3%; inorganic growth contribution from Versent Group unlikely to be factored into growth guidance given its pending closure) with no change in its EBITM guidance of 20-22% for FY26E. Equirus Securities expects no change in HCL Tech’s CC US$ Sales growth guidance of 3-5% (c.2-4% Organic) both for Services & Consol. US$ Sales with no change in its Consol. EBITM guidance of 17-18% for FY26E. The research house expects Wipro to guide for (-) 0.5% to (+) 1.5% QoQ growth in IT Services US$ Sales for 3QFY26E in CC terms.
Remain selective
Equirus Securities recommends remaining selective and prefer Infosys/Tech Mahindra amongst large caps and prefer Mphasis/Zensar/KPIT/eClerx amongst midcaps on a relative basis.
TCS
US$ revenue is expected to grow QoQ by 0.6% in CC terms; tepid growth is largely due to expected growth softness in international markets. Equirus Securities expects EBIT margins to improve by 47 bps largely led by INR/US$ depreciation which will help compensate headwinds from wage hikes eff 01 September 2025 for junior staff and ongoing investments. Equirus Securities’ estimates exclude severance/restructuring cost likely eff Q2FY26. The research house expects steady deal TCV QoQ with one mega deal win announced by TCS in Q2. Equirus expects other income to dip QoQ given one time income in Q1. Key things to look for, will be Demand outlook in BFSI, retail, communication, hi-tech and other key segments, impact of volatile macro/tariff issues on demand/its clients, deal pipeline esp. for large/mega size deals, client decision making and pricing trends, outlook on CY25/FY26 and beyond, any further update on growth strategies and dependency on H1B visas.
Infosys
Equirus Securities expects 2.1% QoQ increase in US$ Sales (CC: +1.8% QoQ growth) including inorganic growth contribution of nearly 0.15% QoQ. EBIT margins are expected to increase by 40 bps QoQ led by currency benefits, cost efficiencies through project Maximus to be partly compensated by headwinds from likely normalisation of certain cost QoQ. Equirus Securities expects Infosys to guide for 2-3% CC growth in US$ Sales in FY26E without factoring inorganic growth from announced M&A of Versent Group (vs. current guided growth of 1-3% without factoring inorganic growth contribution from Versent Group) with no change in its EBIT margin guidance (20-22%) for FY26. Equirus Securities expects QoQ dip in large deal TCV given high base. Key things to look for, Demand outlook in FY26/H2FY26, deal pipeline esp. for large/mega size deals, client decision making, pricing trends, details/assumptions for FY26E Sales and EBITM guidance and dependency on H1B visas.
Wipro
Equirus Securities expects flattish QoQ growth in IT Services US$ Sales in CC terms (vs. guidance of QoQ) dip of 1% to growth of 1% in CC terms). Recurring IT Services EBIT margins are expected to dip 36 bps QoQ given large deal ramp up cost which will be compensated by tailwinds from currency. Equirus expect Wipro to guide for a decline of 0.5% QoQ to growth of 1.5% QoQ in IT Services' US$ Sales in CC terms for 3QFY26E. Expect Order intake (esp. for large deals) to normalise and dip given 1QFY26 TCV included TCV from many large/mega deal wins. Equirus expects PAT to show higher increase than revenue growth QoQ considering absence of restructuring cost that was incurred in Q1FY26. Key things to look for, IT services US$ sales growth and margin outlook esp. for Q3FY26 and beyond, margin outlook for near term as well as medium to long term, any portfolio/client specific issues esp. resulting from ongoing geopolitical/macro concerns, update on deal pipeline (esp. for mega deals), client decision making, details on capital allocation policy, any further sizable M&A , any further update on growth strategies and dependency on H1B visas.
HCL Tech
Equirus Securities expects US$ revenue growth of 1.5% QoQ in CC terms. The research house expects CC growth of 1.6% QoQ in Services with flattish CC QoQ growth in P&P (3.9% YoY dip in CC in P&P). EBITM are expected to improve QoQ by 58bps QoQ largely led by currency benefits and seasonal strength which will help compensate headwinds from certain one-time restructuring cost and certain investments. Equirus Securities expects no change in HCL Tech CC US$ Sales growth guidance of 3-5% (~2-4% organic) both for Services & Consol business for FY26. Equirus Securities also do not expect any change in its Consol. EBITM guidance of 17-18% for FY26E. The research house expects strong QoQ growth in deal TCV. Key things to look for, Demand outlook for ER&D services, P&P, business application, IMS and digital services in FY26. Impact from ongoing macro issues on HCL Tech growth/margin outlook or on its clients, if any. Any update on the acquisition strategy in the medium term, capital allocation policy and deal pipeline/wins and dependency on H1B visas.
Tech Mahindra
Equirus Securities expects QoQ growth of 0.9% in US$ Sales in CC terms with growth likely to be led by BFSI & Retail. EBIT margins are expected to improve by 70 bps QoQ largely led by cost optimisation efforts (Project Fortius) and currency benefits which will be partly compensated by investments. The research house expects deal TCV to remain healthy on YoY basis. Their estimates for Q2FY26 excludes any one off-items/non-recurring charges, if any. Key things to look for, FY26/long term sales growth & margin outlook, impact of ongoing geopolitical/macro concerns on Tech Mahindra/clients, telecom/enterprise segment's demand outlook, demand commentary related to 5G technology, new business TCV wins, deal pipeline and client decision making for same. Update on capital allocation policy, any further update on growth strategy and dependency on H1B visas.
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