According to Nirmal Bang research report, India's IT sector is expected to report a subdued start to FY27, with revenue growth pressure anticipated across most large-cap technology companies. The brokerage has maintained a cautious stance on the sector ahead of the June-quarter earnings season, assigning 'Sell' ratings to six stocks while retaining a lone 'Buy' recommendation on KPIT Technologies. Among the stocks under coverage, Nirmal Bang has retained 'Sell' ratings on TCS, Infosys, HCLTech, Wipro, LTIMindtree and Tech Mahindra.
As reported by Anand Rathi, India's IT sector is set for another subdued quarter, with the combined impact of the Middle-East conflict and AI-led deflation emerging as a 'double whammy' for the industry in Q1 FY27. The brokerage expects muted revenue growth across most technology companies, with most top-six firms sitting near flat at -1.0% to +1.8% QoQ constant currency growth, with median growth of approximately 0.3% versus 0.4% in Q4 FY26. Organic growth is led by Tech Mahindra at around 1% among large caps and Persistent at 3% among mid-caps.
According to Anand Rathi, margins remain pressured with top-six median at 16.1% versus 16.9% in Q4 FY26, while mid-caps face even steeper compression at 14.2% versus 15.5%. Despite INR depreciation of -3.3% quarter-on-quarter, wage hikes, AI-led pricing pass-through and acquisition amortisation offset the currency tailwind. Tech Mahindra and LTIMindtree also book hedge losses, which will impact their profit after tax. Valuations stay overhung by potential Anthropic/OpenAI IPOs, though the report favors scaled, execution-focused IT plays tied to LLM and hyperscaler partnerships.
According to the Nirmal Bang report, the brokerage has assigned 'Hold' ratings to Persistent Systems, Coforge, Mphasis, Birlasoft, Zensar Technologies, Tata Elxsi and Tata Technologies. KPIT Technologies remains the only stock with a 'Buy' recommendation among the IT stocks under coverage. On FY27 guidance expectations, Anand Rathi anticipates Infosys, HCLTech and HCLTech services to raise FY27 growth guidance to 2-4% (vs 1.5-3.5% earlier), 1.5-4.5% (vs 1-4% earlier) and 2-5% (1.5-4.5% earlier) respectively, aided by strategic acquisitions and major deal wins.
