Motilal Oswal expects Q1 revenue and total contract value (TCV) numbers across large-cap IT companies to be largely unremarkable. For large caps, quarter-on-quarter constant currency (QoQ cc) growth is expected to range in between -2.5% and +1.5%.For mid-caps, revenue growth is seen in the range of -2.0% to +7.0%.
Looking ahead, the outlook on deal signings in Q2FY26 and beyond will be crucial.
Despite near-term caution, the setup for select IT services stocks appears favourable, supported by the potential for a US Fed rate cut, a seasonally strong H1FY26, and improving deal win rates, especially among mid-tier firms.Valuations remain elevated, but there is room for expansion if earnings or outlook surprise positively.
Motilal Oswal’s top large-cap picks remain HCL Technologies and Tech Mahindra. The brokerage could turn constructive on Infosys if guidance improves meaningfully and deal wins accelerate.
Among mid-caps, Coforge remains the top pick, while LTIMindtree is also favoured in the context of an improving environment.
Mphasis could see an upgrade in rating if the deal TCV outlook materially improves. Meanwhile, Persistent Systems continues to deliver best-in-class execution, though the potential for further re-rating is seen as limited.
The brokerage expects TCS and HCLTech to report QoQ CC revenue decline of 0.5% and 1.2%, respectively, in Q1. Infosys is anticipated to clock 1.5% growth, driven by recent deal ramp-ups and 20 basis points inorganic contribution from its recent acquisition.
Meanwhile, Tech Mahindra and Wipro are likely to post QoQ CC revenue decline of 1.0% and 2.5%, respectively, in Q1. LTIMindtree could deliver 1.5% QoQ CC growth, driven by deal ramp-ups and seasonally strong Q1.
