Indian IT Services "Q4FY26 Review: trend reversal after two quarters of ..."

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Indian IT Services "Q4FY26 Review: trend reversal after two quarters of ..."

Global Research

14 May 2026ab

Indian IT Services Equities

IndiaQ4FY26 Review: trend reversal after two

quarters of beats Diversified Technology Services

Aditya Chandrasekar

Analyst

aditya.chandrasekar@ubs.com

Clear divergence between mid-tier and large-cap companies +91-22-6155 6056

Q4FY26 prints were mixed, with more misses than beats. Coforge stood out with a Heenal Gada

strong outlook, leading to upgrades, while Persistent and Mphasis also maintained Associate Analyst

strong growth narratives backed by deal momentum. In contrast, large caps, especially heenal.gada@ubs.com

HCLT, Infosys and Wipro, skewed weaker vs expectations. FY27 revenue growth +91-22-6155 6076

guidance of 1.5–3.5% YoY cc by Infosys and 1.5–4.5% YoY cc (services) by HCLT came

in below expectations of 2–5% and 3–6% respectively, with forward commentary

reflecting AI-related deflation and caution in discretionary spends. Consensus estimates

have been lowered modestly, with EPS cuts across most large caps (0–3% for FY27/

FY28). We also fine-tune our estimates and price targets (vs pre-4Q expectations and

consensus) (Figure 2Curentestimatesvspre4Qexpectationsandconsensus), leading to moderate downward revisions across the board, except

Coforge where our PT is up 21% as we factor in strong margin improvement (16.6% in

Q4FY26 and FY27 guidance of 16.5-17% vs consensus of 14.9% and 13.5-14%

respectively), resulting in a c16% increase in our FY27-28E EPS.

Macro remains subdued; BFSI resilient

Management commentary indicated that macro demand remains challenging with

cautious client behaviour driven by geopolitical uncertainty and tight IT budgets,

pressuring discretionary spend.