IT Q4 Results Preview - Motilal Oswal Expect Cautious FY26E Guidance; Tech Mahindra, Coforge Remains Top Pick

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Motilal Oswal Report

As we argued in our previous report, the discretionary spending recovery that we saw picking up in H1 FY25 has been stuck in the second gear; and clients are likely to be in wait-and-watch mode as they take stock of the trade war, a slower Fed rate cut cycle, and other macro-economic risks.

The net result of this will be a stop-start recovery in discretionary spending, pegging FY26E revenue growth for most large-caps in the range of 2-5% in constant currency.

There are three key questions that we would like to address:

1. Is there an upside risk to FY26 growth estimates?

2. Is feeble large-cap growth already in the price? and

3. Is further de-rating possible if the trade war escalates and US/Europe macro worsens?

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