IT sector Q4FY26 preview: key dates and 3-5% FY27 view

Why the Q4FY26 season matters for Nifty IT

The Indian IT sector heads into Q4FY26 results after a sharp correction in the Nifty IT index, which is reported to have fallen nearly 20% as the results window approaches. Another market update in the provided material also describes a drop of nearly 11% in the Nifty IT Index, with heavyweight stocks such as TCS, Infosys, and HCL Technologies down over 10% in the past three months. Together, these data points frame a sector where expectations have come down and investors are looking for clarity on demand, pricing, and deal timing.

Brokerage commentary in the text points to a setup where near-term growth remains muted, but the market is also watching for signs of a modest recovery, especially for companies with improving year-on-year trends. The core questions for investors are straightforward: which firms can hold margins, which can convert pipelines into revenue, and how much of the growth narrative is being driven by AI-linked deal activity versus cost takeout and vendor consolidation.

Q4FY26 growth expectations: muted sequential trends

Kotak Institutional Equities expects Q4FY26 organic constant currency (CC) growth to remain muted sequentially, with quarter-on-quarter performance ranging between a decline of around 1% and growth of up to 1.5%. This range captures the mixed conditions referenced in the text: client decision delays, seasonality for some firms, and uneven conversion of large deals.

Within this muted band, the preview suggests a split between companies expected to stay marginally positive and those expected to see sequential declines. The material also notes that year-on-year trends indicate a modest recovery led by Infosys and HCL Tech, while other companies remain more subdued.

Company-by-company snapshot: what Kotak expects

Kotak’s Q4FY26 constant-currency expectations for tier-1 IT companies are laid out explicitly, and they point to a quarter where year-on-year growth differs sharply even when sequential growth is weak.

This table highlights a key pattern discussed in the input: sequential softness does not necessarily rule out a better year-on-year picture, especially for Infosys and HCL Tech. It also underlines why the market is likely to focus on management commentary around pipelines, decision cycles, and pricing.

Result dates: the sequence to watch

The sector’s reporting calendar is clearly defined in the material, starting with TCS. These dates matter because early commentary can shape expectations for the rest of the pack.

Infosys and HCLTech: recovery signals, but with caveats

For Infosys, the preview expects a dull quarter-on-quarter performance due to seasonality, while also noting its FY27 growth guidance of 3% to 5%. The text highlights three specific monitorables for Infosys: the impact of Generative AI, the deal pipeline, and client decision delays. These factors align with the broader sector narrative where AI-related work can support demand, but project start dates and discretionary spending still influence near-term revenue conversion.

HCLTech is expected to see services-led support, with product business seasonality acting as a partial offset. The preview also mentions currency tailwinds as a likely aid to margins, and references guidance indicating 3% to 5% growth. Separately, the input also notes that HCL Technologies improved pipeline conversion, which makes execution and deal flow an important lens for the quarter.

Wipro and Tech Mahindra: different kinds of pressure

Wipro is forecast to underperform peers, with weak growth guidance of -2% to 0% amid deal delays and pricing pressures. The key investor focus, as stated, remains on turnaround execution and any revival in large deal wins. With sequential numbers expected to be soft, commentary on deal closures and pricing becomes central to judging whether underperformance is narrowing.

Tech Mahindra is described as stable with flat revenue in the preview, and Kotak’s table also points to roughly flat QoQ CC growth with modest YoY growth. That combination typically keeps attention on order flow, margin levers, and whether enterprise spending sentiment changes across key verticals.

TCS vs Infosys: stability versus value-led upside framing

A separate investor framing in the provided material contrasts TCS and Infosys in portfolio terms rather than just quarterly numbers. It describes TCS as a choice for “rock-solid downside protection” and “reliable quarterly income,” and refers to roughly 3% in the context of income. Infosys is positioned as the more aggressive value play, targeting a 4% to 6% constant currency growth rate in that discussion.

This framing is not a forecast of what will happen in the next quarter, but it does explain why investors often split choices by objective. The text explicitly maps conservative goals like capital preservation and income to TCS, and capital appreciation and value to Infosys, especially when investors are seeking lower entry points.

Deals, GenAI, and order books: what’s driving the conversation

Beyond the large-cap results preview, the material points to deal momentum and GenAI positioning as sector-level themes. It states that Infosys and TCS reported stable large-deal wins supported by GenAI, cost optimisation, and vendor consolidation. It also notes that HCL Technologies improved pipeline conversion, while Happiest Minds saw robust GenAI deal traction.

Among mid-tier outperformers mentioned, Coforge is cited with order intake of $193 million and an executable order book of $1.72 billion, up 30% year-on-year. Persistent Systems is described as maintaining momentum with double-digit quarter-on-quarter TCV growth, driven mainly by BFSI, healthcare, and AI-led engineering. These references underline why, even in a muted growth environment, investors are segmenting the sector by execution and deal quality.

Market impact: valuations and what analysts are flagging

The input includes a sector valuation snapshot stating that Indian IT sector valuations have consolidated, and that the sector trades at 21.7 times forward earnings, roughly 14% below its five-year average. It also says this valuation reset has made tier-1 IT companies more attractive, leading HDFC Securities to upgrade Infosys and HCL Technologies to a ‘BUY’ rating, with a target price of Rs 1,800 for Infosys and Rs 1,740 for HCL Tech.

Separately, Kotak Institutional Equities identifies TCS, Infosys, Tech Mahindra, and Coforge as top picks in the IT sector “from an overall perspective.” These calls, along with the valuation reset, explain why Q4 commentary on FY27 demand and guidance can move stocks even if Q4 sequential growth stays within a narrow range.

Conclusion: a results season focused on guidance and conversion

The Q4FY26 setup for Indian IT services is defined by muted sequential constant-currency growth expectations, divergent year-on-year trends, and a market still digesting a steep sector correction. TCS kicks off the reporting cycle on April 9, followed by Infosys (April 16), HCLTech (April 21), Tech Mahindra (April 22), and Wipro (April 23).

With FY27 growth guidance referenced at 3% to 5% in the material, the key swing factors remain deal pipeline conversion, client decision timelines, pricing pressure, and how companies monetise Generative AI opportunities. The immediate next milestones are the scheduled result dates and management commentary alongside those releases.