India's leading IT services companies are set to report muted first-quarter results for FY27, as clients continue to prioritize cost-cutting over large-scale technology investments, according to an Equirus Securities report. The brokerage said growth visibility is unlikely to improve until enterprises move beyond cost optimization projects and begin investing in larger AI-led transformation programmes. Demand is expected to remain measured through FY27, weighed down by macroeconomic uncertainty and geopolitical risks.
Revenue growth likely to stay subdued
Equirus expects the top six large IT companies to report constant-currency organic US dollar revenue growth between a decline of 1.7% and an increase of 1.1% quarter-on-quarter for the June quarter. Wipro's IT Services business is expected to be at the lower end of the range, while Tech Mahindra is likely to lead growth. On a reported basis, constant-currency consolidated dollar revenue is projected to range from a 1.1% decline to 1.7% growth quarter-on-quarter. Cross-currency headwinds could reduce growth by up to 30 basis points.
The report noted that although AI adoption is accelerating, most enterprises are funding these initiatives through productivity gains and vendor consolidation instead of increasing overall IT budgets, limiting near-term revenue expansion.
Margins seen holding up despite weak demand
Equirus expects earnings margins to remain resilient, supported by a nearly 3% quarter-on-quarter depreciation in the average rupee-dollar exchange rate, lower supply-side pressures, continued cost optimization, and productivity improvements.
The brokerage also outlined guidance expectations for key players:
| Company | Guidance Expectation |
|---|---|
| Infosys | Revise FY27 constant-currency revenue growth to 2.8-4.3% (excluding Vertex acquisition); retain EBIT margin 20-22% |
| HCLTech | No change in 1.5-4.5% constant-currency services growth guidance and 17.5-18.5% EBIT margin |
| Wipro | Likely guide for 2% decline to flat QoQ growth in IT Services for Q2 |
AI remains long-term growth driver
Despite the near-term slowdown, Equirus believes IT service providers will continue to play a crucial role in enterprise AI adoption. The brokerage expects demand for legacy modernization, cloud migration, data engineering, and cybersecurity to support long-term opportunities.
Enterprise AI architectures are becoming increasingly complex, with organisations deploying a hybrid mix of large language models (LLMs), small language models (SLMs), and AI agents, driving demand for system integration expertise. While valuations have corrected significantly in 2026 so far, Equirus said meaningful improvement in stock multiples will likely depend on stronger growth visibility beyond the current quarter.
Sources:
