Revenue guidance of large cap remains below FY25 growth; majorly in the range of -3.5% to +3% and mid-cap companies re-iterate their double digit/strong growth in FY26 (Coforge, L&T Tech).Margin guidance remains stable across companies under the brokerage’s coverage universe. Headwinds include cost takeout deals, clients prioritizing high ROI engagements, and passing AI benefits to clients and depreciation of USD/INR. Conversely, tailwinds stem from an increase in fixed-price contracts and a stronger offshore mix.
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Despite modest Q4 FY25 revenue growth and persistent macroeconomic headwinds including tariff wars, cautious client sentiment, and rupee appreciation, tier 2 IT firms outperformed their tier 1 peers such as Coforge, driven by strong traction in AI, data engineering and ERP-led transformations.
While BFSI, manufacturing, and communications remained stable, retail/auto-linked transportation sectors continued to face near-term pressure. Deal bookings remained robust across the board, excluding TCS, Infosys, and Cyient.
Global peers such as Accenture, Cognizant, and Service Now have exceeded expectations and revised an upward guidance. However, divergence in outlook emphasizes a growing macro sensitivity among the large-cap IT firms, particularly those with significant offshore exposure to the US, where tariff related disruptions have led several companies to trim spending forecast.
The appreciating rupee further compounds margin pressures for firms heavily reliant on US revenues, potentially weighing on FY26 profitability.
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