IT Sector Q1 Results Preview: Will Tariffs Impact TCS, Infosys, Wipro, HCL & Other Tech Players Earnings?

Indian tech companies are likely to report a steady quarter for the period ending June 30, 2025, better than the preceding one; however, the brunt of US tariffs is likely to act as a spoilsport. Overall, revenues of tier-1 IT players are expected to slow down, with TCS, Tech Mahindra and Wipro likely to disappoint. The Q1FY26 earnings season will kickstart with TCS and Tata Elxsi results on July 10, 2025.

"We believe that the quarter will be a mixed one, with mid-tier IT services companies reporting strong growth, while large IT companies and ERD names will disappoint. We expect in-line EBIT. Deal wins will be strong, although not necessarily net new for the industry. Coforge, in our view, will lead the growth, followed by Persistent, Hexaware and Mphasis. TCS, Wipro and ERD names will likely face cuts in EPS after results," said, analysts at Kotak Institutional Equities.

Tech Companies Q1 Results Date:

The first ones to report Q1 earnings are Tata Group-backed midcap and largecap tech players like Tata Elxsi and Tata Consultancy Services (TCS) on July 10. They will be followed by HCL Technologies and Tata Technologies on July 14.

Further, companies like L&T Technology Services (LTTS) and Tech Mahindra will declare their Q1 results on July 16, followed by LTIMindtree on July 17. Coforge, Persistent and Infosys are scheduled to declare their earnings on July 23.

IT Sector Q1 Results Preview:

For the entire sector, analysts at Prabhudas Lilladher said, "Q1FY26 revenue performance is expected to be weak in an otherwise seasonally strong quarter. Although the intensity of tariff uncertainties has reduced to some extent, demand recovery in tariff-induced verticals Continues to be weak with global enterprises remaining cautious and sensing near-term uncertainties. The weakness in demand also tends to defer compensation revision for most of the names."

Tariff uncertainty is set to impact Indian tech companies significantly.

Further, PL's analysts added, "Despite the deferment in wage hikes the improvement in margins would either be flat or negligible due to missing operating leverage. We expect median revenue growth to decline by 1.2% QoQ in CC terms & grow 0.5% QoQ in USD terms. Currency volatility continues with major currencies like EUR and GBP having strengthened against USD by 5.9% and 7.6% QoQ, respectively, which will translate into tailwinds to the tune of 60-400bps QoQ in reported terms.

Tier 1 Tech Companies:

According to Kotak's analysts, the disruption caused by the imposition of reciprocal tariffs by the US will impact spending in manufacturing and, to a lesser extent, in retail verticals as well.

Accordingly, expect muted revenues for tier-1 names: 4 of the 5 large IT companies are expected to report sequential declines, while revenues for the entire Tier 1 will likely slow down to low-single digit growth to decline in constant-currency on yoy comparison.

"TCS, Tech Mahindra and Wipro will likely disappoint, while Infosys and HCLT will likely report in-line numbers. The positive, in our view, is demand deterioration has been consistent with the companies' expectations, although a bit lower than Street expectations," said Kotak's analysts.

On a company-wise basis, Elara Capital's analysts are predicting TCS to report a 20bp QoQ margin on cost moderation related to the BSNL project as well as deferment of wage hikes for Q1.

While Infosys may see a flat QoQ EBIT margin despite robust revenue growth due to the wage hike impact for the quarter for a few senior employees and large deal transition costs. For WPRO, Elara's analysts said, "We expect the margin to drop by 10bp QoQ despite weak revenue, due to continued work on cost optimisation."

Moreover, HCLT may report a 90bp QoQ drop in Q1 margin, due to weak revenue, especially in its services part. TECHM margin may improve by 40bp QoQ on continued cost rationalisation under project Fortius. LTIM may report a 40bp QoQ margin expansion on operating leverage.

Mid-Tier Companies:

The majority of experts believe mid-tier companies outperform large-cap tech giants.

"We expect PSYS to report a 40bp QoQ rise in EBIT margin to 16%, as wage hike cost is likely to hit in Q2. COFORGE may report a 20bp QoQ improvement in EBIT margin. MPHL should post a 10bp QoQ margin improvement," Elara's analysts said.

Additionally, Kotak's analysts added, "Smart deal structuring, share gains and favourable portfolio (low manufacturing exposure) will drive strong growth for mid-tier, with Coforge (+6.4% qoq) and PSYS (+4.1% qoq) leading the way. Hexaware (+2.5% qoq) and Mphasis (+1.4% qoq) will also likely report a strong quarter. Expect strong growth for Coforge, PSYS and Hexaware for FY2026E."

FY26 Guidance:

The Kotak analysts are expecting Infosys to hike its FY26 revenue growth guidance to 1-3% from 0-3% earlier, after baking in ~40 bps from the MRE and The Missing Link acquisitions. On the contrary, HCL Tech may retain 2-5% revenue growth guidance for FY2026, with the full focus on closing large deals that underpin the upper half of the guidance. But, Wipro's revenue growth guidance for 2QFY26 will move to flat revenues, at the midpoint of -1 to +1% from a sharp decline in the June 2025 quarter.

Overall, the demand is expected to be mixed. Kotak's note said, "An unchanged demand environment can protect current FY2026 revenue growth assumptions for Indian IT and perhaps lead to upsides for a few. Infosys, Tech Mahindra, Hexaware, Coforge and Indegene are our key picks.

Apart from the Q1 earnings report, investors will eye management commentary, FY26 guidance, outlook, and corporate actions like dividends, bonuses and stock splits.

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