TCS, Infosys, Tech Mahindra Brace For Soft Q3; IDBI Capital Bullish On Mid-Tier IT

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IDBI Captial Report

IDBI Capital expects the Indian IT-services sector to report a muted performance in Q3 FY26, impacted by seasonal furloughs and an unchanged macro environment. Client decision-making remains cautious, particularly for discretionary spending, resulting in subdued sequential growth across most tech companies.

While tier-1 players are likely to see limited upside, mid-tier firms are expected to outperform due to better agility and stronger exposure to cost-optimisation deals. Deal execution continues to provide support, with AI-led transformation and infrastructure modernization emerging as key drivers of medium-term growth.

Margins are projected to remain stable, aided by currency movements and operational efficiencies, offsetting wage hikes and seasonal pressures.

Despite near-term softness, IDBI Capital maintains a positive medium- to long-term outlook for the sector, citing enterprise-wide scaling of AI initiatives and robust deal pipelines.

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