The Indian IT sector is in focus, with TCS set to announce its second-quarter results on October 9, followed by HCL Technologies on October 13, and Persistent Systems and Tech Mahindra on October 14, among others. Kotak Institutional Equities believes India’s IT services industry will post a steadier September quarter (Q2FY26) as demand shows early signs of stabilisation and margins remain firm. Kotak expects sequential growth between 0.2% and 6% across major IT companies.

The big H-1 B concern

It also flagged tighter H-1B visa rules in the US as a concern, warning that higher onsite wage costs could pressure margins if companies fail to pass them on to clients. Wage hikes remain limited this year, which may further support profitability.

Kotak on impact of weak rupee on IT sector

The report highlighted that rupee depreciation has come to the rescue in a quarter impacted by pricing pressures and will likely allow for steady margins. “We expect a steadier quarter for IT services, with sequential growth of 0.2–6% across companies. Rupee depreciation, combined with cost measures, will ensure steady margins,” the brokerage noted.

The brokerage expects Infosys, Coforge, and LTI Mindtree to report a strong quarter, while Wipro and TCS will trail.

Muted quarter for TCS; 12,000-employee layoff plan under spotlight 

TCS is likely to post muted sequential revenue growth of 0.2% due to ramp-downs in a few client accounts, but the EBIT margin could remain steady at around 24.6%. Kotak expects the company to close deals worth more than $10 billion during the quarter. The report noted that the focus for TCS will be on the rationale behind the planned layoff of 12,000 employees, its impact on employee morale, and the costs associated with the move.

Kotak sees 1.8% qoq growth for Infosys

Infosys is expected to post 1.8% quarter-on-quarter growth in constant currency, supported by higher billing days and healthy traction in the financial services vertical. The company could also raise its FY26 revenue guidance to 2–3%, from 1–3% earlier. Margins are expected to remain stable.

Kotak estimates a total contract value (TCV) of around $3 billion for Infosys in the quarter.

HCL Tech steady; Wipro trails

HCL Technologies is projected to report 1.7% sequential growth led by engineering services. EBIT margins could rise to 17%, aided by rupee depreciation. The company is expected to maintain its full-year revenue growth guidance of 3–5% and margin guidance of 17–18%.

Wipro’s performance, meanwhile, may improve slightly, with Kotak forecasting 0.2% growth. The brokerage said Wipro’s EBIT margin could decline 40 basis points to 16.9% due to upfront costs on large deals, but deal activity remained healthy with $1.5 billion in new wins.

Kotak Institutional Equities retained its ‘neutral’ view on the IT sector but said the “risk-reward is turning attractive” after recent corrections.

Coforge, Persistent to lead growth among mid-tier IT players

Among mid-tier players, Coforge and Persistent Systems are expected to deliver the strongest growth. Coforge could see 6% sequential growth driven by the ramp-up of new deals, while Persistent may post 4% growth on broad-based momentum.

LTIMindtree, another mid-tier favourite, is expected to report a 2% sequential rise, supported by ramp-ups in large deals announced earlier this year. Mphasis is projected to post 1.8% sequential growth, helped by gains in financial services and hi-tech verticals.


AI, visa norms and wage costs in focus for IT firms


Kotak highlighted that the key metrics to watch include deal wins, headcount, capabilities and enterprise adoption of GenAI, and onsite wage implications following tighter H-1B norms. The report noted that the ongoing adoption of generative AI could have a short-term deflationary impact of around 2–3% on revenues over the next few years, as clients use automation to cut costs. However, Kotak expects the trend to create new service opportunities over time.