IT Sector Q3 Results Preview - How Will TCS, Infosys, HCLTech And Other IT Firms Perform In December Quarter

IDBI Capital Report

Despite seasonality (with fewer furloughs YoY), most IT companies are poised for positive YoY growth. Technology spending is expected to improve in CY25, driven by core modernization, cloud, and data horizontally, and financial services vertically, while the manufacturing sector remains weak due to ongoing program deferrals and cancellations from OEMs.

U.S./banking, financial services and insurance will sustain strong performance, positively impacting hi-tech. Tier-2 companies are likely to outperform tier-1 firms this quarter, with a clearer outlook emerging post-CY25 budget finalisations and shifts in client behaviour.

Continued pricing pressures and revenue composition shifts may strain margins for some, though a cautious hiring strategy, gradual demand improvements, and a favorable USD-Indian rupee exchange rate should provide margin cushion in FY26.

Midcap IT companies are expected to face margin compression due to wage hikes, while large-cap margins were largely priced in during H1 FY25.

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