JPMorgan has issued a revised outlook for India's IT sector, cutting target prices for several leading firms including Tata Consultancy Services Ltd., Infosys Ltd., HCL Technologies Ltd., Wipro Ltd., LTIMindtree Ltd., Mphasis Ltd., Coforge Ltd., Persistent Systems Ltd., KPIT Technologies Ltd., Tata Elxsi Ltd., and Tata Technologies Ltd. The brokerage anticipates a challenging year ahead, with fiscal 2026 guidance expected to reflect continued modest growth.
JPMorgan suggests that the fourth quarter will exhibit softer seasonality due to a combination of weaker macroeconomic conditions and some deflation in artificial intelligence. Growth is anticipated to be driven by mid-sized firms, while larger providers may struggle to maintain positive quarter-on-quarter growth momentum.
The brokerage has moderated FY26/27 revenue forecasts by 3-5% for tier 1 companies and 2-10% for tier 2 companies. JPMorgan expects FY26 to show no significant growth acceleration, with revenue guidance reflecting this new reality.
Company-Specific Updates:
HCL Tech has been downgraded from 'overweight' to 'neutral' due to softening momentum and slower projected growth for FY26.
Tech Mahindra has been upgraded from 'underweight' to 'neutral', with its margin expansion story seen as attractive in a challenging growth environment.
Top Picks And Avoids
JPMorgan's top picks for the quarter include Coforge, Infosys, KPIT Tech, LTIMindtree, and Tech Mahindra. Conversely, the brokerage advises avoiding TCS, Wipro, HCL Tech, Tata Tech, and Tata Elxsi.
The uncertain macroeconomic environment, driven by fears of a US recession and tariff hikes, is expected to impact client decision-making and result in a soft start to FY26. Revenue growth guidance for FY26 is anticipated to be modest, with Infosys and HCL Tech expected to guide for 2-5% and 3-5% growth respectively. KPIT Tech is projected to guide for 13-16% growth.
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