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Motilal Oswal Report
Indian IT sector is likely to report a muted start to FY27, with demand conditions remaining soft amid persistent macroeconomic, geopolitical and AI-led uncertainties, according to Motilal Oswal.
The brokerage expects tepid growth in Q1 FY27, with large-cap IT firms likely to post constant currency (CC) revenue growth in the range of -1.5% to 2% sequentially, reflecting weak discretionary spending and slower deal decision cycles. The softness is expected to extend into the second quarter as well.
Among large caps, Infosys is likely to lead growth with around 2% QoQ CC expansion, aided partly by acquisitions, while TCS and LTIMindtree may report flat growth. On the other hand, HCLTech and Wipro could see a sequential decline, driven by client-specific headwinds and delayed ramp-ups.
Mid-tier IT companies are expected to outperform, supported by large deal ramp-ups, with firms such as Persistent Systems, Mphasis and Hexaware Technologies delivering stronger growth compared to Tier-I peers.
Margins are likely to remain a mixed bag across the sector. Infosys, HCLTech and Tech Mahindra are projected to post modest margin expansion of 40–50 basis points, supported by cost efficiencies and operating leverage. However, TCS margins may come under pressure due to annual wage hikes, while companies such as Wipro, Coforge and Persistent could face margin headwinds from weaker utilisation, deal ramp costs and rising AI investments.
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