Will Indian IT Giants Experience a 2.1% Revenue Growth in Q2 FY26?
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Synopsis
As the Q2 earnings season unfolds, India’s IT giants face a pivotal moment. Will they achieve a modest revenue increase of 2.1%? Discover insights into macroeconomic challenges, demand trends, and the future of tech investments in this comprehensive report.
Key Takeaways
- Projected revenue growth of up to 2.1% for Q2 FY26.
- Stable demand trends and increased deal conversions.
- Currency depreciation benefits aiding revenue.
- Sector valuations to remain range-bound.
- Focus on AI investments and productivity gains.
New Delhi, Oct 8 (NationPress) As the Q2 earnings season kicks off, India's prominent IT corporations are projected to achieve a modest quarter-on-quarter revenue increase of up to 2.1 percent during the July-September timeframe, according to a report released on Wednesday.
Concerns regarding the macroeconomic environment are anticipated to restrict additional tech expenditures; however, demand patterns remain stable, and an increase in deal conversions along with favorable currency movements could bolster growth, as stated by the report from Equirus Securities.
Forecasts indicate that consolidated constant-currency sales in US dollars for the six largest companies in the sector may rise by 0 to 2.1 percent quarter-on-quarter.
"We anticipate that the top six major IT firms will showcase sales growth between 0 percent to 2.1 percent QoQ in Q2," the brokerage firm mentioned. Among midcap firms, healthy sales growth is expected for four companies.
With beneficial currency influences (the INR/USD depreciated by 3 percent on average during Q2 for most firms) and manageable supply-side challenges, the firm predicts that effective execution on EBITM will persist in the second quarter for large-cap companies.
Sector valuations are likely to remain under surveillance and confined within a certain range in the near to medium term, primarily due to the fluctuating macro landscape influenced by rising geopolitical tensions and tariff-related uncertainties, the report noted.
Moreover, any increased demand from clients for AI-driven productivity enhancements and growing investor caution regarding potential changes in US visa regulations may also serve as tailwinds, as per the brokerage firm.
"Nonetheless, we also believe that clients may not significantly delay their investments in adopting GenAI or Agentic AI, which could lead them to drive further savings by securing cost-cutting deals to invest in AI-led transformations," the report elaborated.
Earlier this month, HSBC Global Investment Research stated that sustainable growth within India's IT services sector is likely to remain between 4 to 5 percent, surpassing the trendline observed over the past three years.
Analysts predict reduced macro volatility in the forthcoming quarters, anticipating a growth recovery in FY27.
- –IANS
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Point of View
The anticipated growth of Indian IT firms is a testament to their resilience amid global uncertainties. The focus on adapting to evolving technologies like AI showcases the sector's commitment to innovation. This growth trajectory, though modest, underscores the importance of strategic planning in navigating economic challenges.
NationPress
08/10/2025
Frequently Asked Questions
What is the projected revenue growth for Indian IT firms in Q2 FY26?
The projected revenue growth for India's largest IT firms in Q2 FY26 is expected to be up to 2.1 percent on a quarter-on-quarter basis.
What factors are influencing the growth of the IT sector?
Factors influencing growth include stable demand trends, increased deal conversions, and favorable currency movements, despite macroeconomic concerns.
What are the expectations for midcap IT companies?
Healthy sales growth is anticipated for four midcap IT companies, showcasing their potential amidst larger market trends.
How does currency fluctuation impact IT firms?
Currency benefits, particularly the depreciation of INR/USD, have provided a tailwind for revenue growth in IT firms during Q2.
What is the long-term growth outlook for India's IT services sector?
The long-term outlook suggests sustainable growth within the IT services sector is likely to be in the range of 4 to 5 percent, exceeding the trendline of the past three years.
