The Indian IT sector is expected to record a sluggish quarter for the period ending September 2025, as the demand environment remains unchanged. FY26 guidance is pivotal as impact of the weak rupee, potential risks of H1-B visa fees and macro uncertainties unfold ahead. Select Tier 2 companies are likely to surpass Tier 1 companies like TCS, Wipro, Infosys and HCL Tech in the second quarter of the financial year 2025-26.
The quarterly earnings will commence from October 9th onward with Tata Group-backed companies Tata Elxsi and TCS Q2 results.
IT Sector Q2 Results Preview: Revenue Prediction
"Revenue growth for Q2FY26 would remain muted due to uncertainty in the macro environment led by tariff-related announcements by the Trump Administration," analysts at Geojit said in a report.
Overall, there are some green shoots in sectors such as BFSI and Tech. Also, the depreciation in rupee against USD by ~2.0% QoQ in Q2FY26 is expected to support INR-based reported growth. Also, the cross-currency tailwind in the quarter was negligible for our coverage companies.
Analysts at Geojit are predicting revenue growth to be in the range of 0.4% to 1.5% QoQ in USD terms for Tier 1 IT companies. These include TCS: 1.0%; Infosys: 1.5%; HCL Tech: 1.4%; Wipro: 0.4% and Tech Mahindra: 0.6%.
Meanwhile, revenue growth in Tier 2 IT companies is likely to be in the range of 1.1% to 5.7% QoQ in USD terms. These are --- LTIM: 2.1%; LTTS: 1.5%, Coforge: 5.7%, Persistent:3.6%, Mphasis: 1.6% & Happiest Minds: 1.1%.
Notably, Infosys in Tier 1 and Coforge in Tier 2 are expected to report the highest sequential revenue growth.
IT Sector Q2 Results Preview: EBIT Margin
According to analysts at Kotak Institutional Equities, rupee depreciation has come to the rescue in a quarter impacted by pricing pressures and will likely allow for steady margins. Companies may use rupee depreciation to offset the pricing pressure in large deals or increase variable compensation payout.
Thereby, analysts added, "We believe Tier 1 IT companies, except for HCLT, will report steady EBIT margins yoy. Mid-tier companies will likely report a yoy EBIT margin increase, led by leverage from growth and greater margin focus. Wage revision announcements in FY2026 are scarce and may be a focus area."
IT Sector Q2 Results Preview: FY26 Guidance
Among Tier 1 companies, Infosys is expected to raise its FY2026 revenue growth guidance to 2-3% from 1-3% earlier; however, Kotak analysts added that their prediction does not include the recent acquisition of Versent Group.
Meanwhile, HCL Tech is expected to retain its 3-5% revenue growth guidance for FY2026. Wipro's revenue growth guidance for 3QFY26 will likely move to a positive number of 0.5%, at the midpoint of (-)0.5% to +1.5%.
IT Sector Q2 Results: H1-B Visa Fees Impact
Last month, US President Donald Trump shocked the tech sector by announcing $1,00,000 fees on H1-B visas where Indian IT companies have significant exposure.
Tata Group's tech giant Tata Consultancy Services (TCS) is the second largest H-1B visas holder to 5,505 in 2025 so far. Other Indian tech players like Infosys hold 2,004 H-1B visa approvals, followed by LTIMindtree with 1,807 H-1B visas, HCL Tech with 1,728 visas, and Wipro with 1,523 approvals.
Will the new H1-B visa rule impact Q2 results of Indian tech players? According to analysts at Axis Securities, companies are also adapting their delivery models by hiring local talent in the US to mitigate the impact of the H-1B levy, while prioritising remote workforce solutions.
Also, analysts at Kotak said, ''We believe that the tighter H-1B norms will nudge companies to either increase the dependence on subcontractors or step up local hiring. 9MFY25 H-1B visa applications have been significantly lower across most companies.''
''While onsite tech unemployment remains near the long-term average, sudden changes in demand-supply dynamics could lead to an escalation in onsite wage costs for companies during a period of subdued demand. The ability to pass on these costs to clients would be monitored,'' they added.
Key Monitorables In Indian IT Sector:
As per Axis Securities, watch out for the management commentary for both IT and Telecom players on 1) Outlook on client spends, 2) Vertical outlook, 3) Geographical mix, 4) Deal wins, 5) AI deal pipeline 6) H1-B visa impact 7) Changing delivery model, 8) Gen AI transition 9) Tariff hikes on existing plans, and 10) Subscriber additions.
IT Companies Q2 Results Dates:
The sector's quarterly earnings will start with Tata Elxsi and TCS. Here are the key dates to watch out:
October 9: Tata Elxsi, TCS
October 13: HCL Technologies
October 14: Persistent Systems, Tech Mahindra
October 16: Infosys, LTIMindtree, Wipro
October 17: L&T Technology Services, Tata Technologies,
October 24: Coforge
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