IT Major Result Scorecard: India’s top IT services companies delivered a mixed set of Q4FY26 earnings, with Tata Consultancy Services (TCS) outperforming peers on growth consistency and deal momentum, while Wipro, HCL Technologies, and Tech Mahindra showed early signs of recovery amid uneven demand and margin pressure.
On a quarter‑on‑quarter constant currency basis, TCS reported 1.2 per cent growth, ahead of Tech Mahindra’s 0.6 per cent and Wipro’s modest 0.2 per cent, while HCL Technologies posted a 3.3 per cent sequential decline, reflecting client‑specific ramp‑downs. Revenue growth in rupee terms was strongest at TCS at 5.4 per cent, followed by Tech Mahindra at 4.7 per cent.
TCS Leads in Profitability
Margins painted a clear hierarchy across the sector. TCS retained its industry‑leading profitability with an EBIT margin of 25.3 per cent, far ahead of Wipro’s 17.3 per cent, HCL Tech’s 16.5 per cent, and Tech Mahindra’s 13.8 per cent, though the latter saw a meaningful improvement over recent quarters. Attrition rates continued to ease across companies, settling in the 12–14 per cent range, signalling improved workforce stability after two years of elevated churn.
Deal momentum remained a key differentiator. TCS dominated the order book with $12 billion in total contract value (TCV) for the quarter, significantly outperforming peers such as Wipro ($3.5 billion), HCL Tech ($1.94 billion), and Tech Mahindra ($1.07 billion). TCS also stood out on artificial intelligence execution, reporting 28 per cent QoQ growth in AI services revenue, while peers provided limited or no quantitative disclosures on AI‑led revenues.
Quarterly Guidance and Outlook
In terms of guidance commentary, TCS met its quarterly guidance and maintained its full‑year FY27 constant‑currency revenue growth outlook of 1–4 per cent, with EBIT margins expected between 17.5 per cent and 18.5 per cent. Wipro’s near‑term outlook remained cautious, forecasting (-2 per cent) to 0 per cent CC growth for Q1FY27, while Tech Mahindra reiterated its aspiration to achieve 15 per cent EBIT margins in FY27, supported by deal wins and AI‑driven investments.
Tata Consultancy Services’ March-quarter performance has drawn a largely balanced response from brokerages, with strong deal wins and steady margins offset by lingering concerns around revenue momentum and macro uncertainty.
- Maintain a ‘Buy’ with a target price of Rs 3,350 versus Rs 3,300
- TCS posted in-line Q4FY26 numbers – which are In-line with attractive valuations.
- TCS appears well set for a recovery in FY27, after a -2.5% CC YoY decrease in FY26.
- Upgraded FY27E/28E EPS by 2.5 per cent/over 2.0 per cent, with USD/INR assumption rising to 93 from 88.
- FY26 was an exceptionally weak year for TCS from a growth perspective, but with solid margins and a stable deal-win showing.
- Stock has corrected sharply and is now trading at highly attractive valuation of 16.5 times PE FY27E
- Growth is expected to recover over next few quarters for TCS, as it recovers lost ground and the macro and Gen AI both gradually turn favorable.
Morgan Stanley on Tata Consultancy Services
- The brokerage maintains Overweight with target price Rs 2,880
- Target price cut from Rs 3,540 on lower growth and multiple assumptions
- 4Q results in line with slight improvement across geographies and verticals
- Management commentary balanced with cautious optimism on FY27 growth
- Macro uncertainty continues to weigh on decision making especially in BFSI
- AI services scaling up but core business may face productivity led deflation
- Revenue CAGR of 3 to 4 percent expected over FY26 to FY28 indicating slow growth environment
- Margins likely to remain range bound as investments take priority over expansion
- Continued investments in hiring partnerships and Hypervault capex to drive future growth
- Valuation seen attractive with improving growth vs FY26 and relative discount to peers
Goldman Sachs on Tata Consultancy Services
- The brokerage maintains ‘Buy’ with target price Rs 2,710
- 4Q results largely in line with expectations
- Strong deal wins but revenue growth momentum remains weak
- Limited visibility on FY27 growth despite stable demand environment
- Margins impacted by reinvestment in AI capabilities
- Neutral read-across for broader IT sector
Morgan Stanley on Tata Consultancy Services
- The brokerage maintains Overweight with target price Rs 3,540
- Revenue growth of 1.2 percent QoQ constant currency led by India business
- Order book strong at USD12bn with book to bill of 1.57 times
- BFSI growth weak but other verticals saw broad-based improvement
- Margins stable at 25.3 percent in line with estimates
- AI services revenue scaled to USD 2.3bn indicating strong traction
Wipro’s March-quarter performance sparked a mixed reaction on the Street, with a strong margin beat and a Rs 15,000 crore share buyback failing to offset concerns around weak revenue momentum and muted near-term growth outlook.
- The brokerage maintains ‘Underweight’ with target price cut to Rs 192 from Rs 242
- Weak 4Q revenue with organic decline of 1.3 per cent QoQ in constant currency
- FY26 revenue declined 1.6 per cent YoY with underperformance vs peers
- 1QFY27 guidance weak with expected -1.5 per cent to -2 per cent QoQ growth
- Margins resilient but likely to fall short of 17-17.5 per cent band in FY27
- Announced Rs150 bn buyback supporting capital return profile
- Cuts to revenue growth and margin estimates for FY27-28
- Relative underperformance expected with valuation discount to peers
- The brokerage maintains ‘Sell’ with target price of Rs 187
- Weak 4Q performance with sharper than expected revenue decline
- Guidance implies continued revenue contraction in near term
- FY27 likely to be fourth consecutive year of revenue decline
- Revenue and earnings estimates cut post results
- Neutral read across for broader IT sector
- The brokerage maintains ‘Neutral’ with target price of Rs 215
- Another soft quarter
- 1Q guidance underwhelming; BFSI impacted by client-specific headwinds
- Margin headwinds to persist in 1Q
- Top client decline and US BFSI weakness to weigh on near-term growth
- Miss on revenues & guidance and beat on margins; 1QFY27 guidance at -2% to 0% CC
- Deal TCV healthy, but revenue conversion remains the key monitorable:
- Model ~1.0% YoY CC revenue growth for FY27E, factoring in a weak start & continued near-term headwinds from ramp-up delays, top client decline, and vertical weakness.
- See limited room for margin expansion, given the wage hikes, lower-margin deal ramp-ups, and on going AI investments. We keep our estimates largely unchanged.
- Further improvement in execution and a stable conversion of deal TCV to revenue will be key to a constructive view
- The brokerage maintains ‘Buy’ with target price cut to Rs 225 from Rs 240
- Guidance on soft Q1FY27 revenue growth of -2 per cent to 0 per cent.
- Two acquisitions announced in March, ramp up expected from mid Q1FY27.
- Continued Investment in capabilities and AI platforms
- The brokerage maintains ‘Reduce’ with a target price of Rs 210
- Wipro aspires to maintain margins in a narrow band over the medium term
- EBITM in Q1 is likely to face headwinds from 2 incremental months of salary hike (Mar26 rollout)
- Lower margin owing to competitively won large deals in the initial phase
- Integration of low-margin M&As, and investments in Wipro Intelligence also is expected to pressure margins.
Brokerages issued mixed calls for Tech Mahindra’s after the company posted Q4FY26 performance, with revenue growth coming in slightly ahead of expectations and margins showing a meaningful improvement, reflecting early signs of a gradual demand recovery.
- The brokerage maintains ‘Buy’ with target price of Rs 1,750
- Q4FY26 revenue grew 0.6 per cent QoQ CC, beating estimates of flat growth
- YoY revenue growth stood at 2.4 per cent CC, indicating gradual demand recovery
- EBIT margin improved to 13.8 per cent, up 70bps QoQ, ahead of expectations
- Deal wins remained strong with TCV at USD 1,073 million, up 34 per cent YoY
- Broad-based growth seen across verticals, led by Manufacturing at 11.8 per cent YoY
- Telecom stable, BFSI steady, and Hi-tech recovered during second half FY26
- Total FY26 deal wins stood at USD 3.8 billion, growing 42 per cent YoY
- Continued investments in AI, LLMs, and platforms to support future growth
- Strong deal pipeline supports expected earnings CAGR of 23 per cent over next two years
HDFC Securities on Tech Mahindra
- The brokerage maintain Add with target price of Rs 1,510 (maintained)
- Q4 revenue growth at 0.6 per cent QoQ CC led by BFSI and communications recovery
- Strong deal wins with FY26 TCV at USD 3.8 billion
- Margin expansion continues with FY26 EBIT margin at 12.6 per cent
- AI-led capabilities and large deals to support growth
- Targeting better-than-industry growth with 15 per cent EBIT margin in FY27
- Value the stock at 17 times FY28E EPS
Goldman Sachs on Tech Mahindra
- The brokerage maintains Sell with a target price of Rs 1,410 (revised upward from Rs 1,340)
- Q4 performance in line with expectations, with stable growth
- Strong deal wins and continued margin improvement
- FY27 revenue growth expected at 3.9 per cent
- Valuations seen as expensive vs peers despite turnaround
- Value the stock at 18 times FY27E P/E
- The brokerage maintains Reduce with a target price of Rs 1,450 (Downside 0.9 per cent)
- Revenue grew 0.9 per cent QoQ, EBITM expanded to 13.8 per cent
- Margins expanded from Project Fortius, currency headwinds and Comviva seasonality
- Margins partly negated by investments in AI and transition costs
- Deals intake remain strong
- Management targets FY27 peer outperformance via broad-based growth, strong deal momentum, and strategic AI and consulting investments.
- Expects margin expansion in FY27 to be driven by a combination of continued cost takeout and operating leverage as revenue growth accelerates.
- The brokerage has reduced its earnings per share estimates for FY26 and FY27 by 1.7 per cent and 1.5 per cent, respectively, after factoring in the company’s Q4 FY26 performance.
Brokerages struck a cautious tone on HCL Technologies after the IT major delivered a mixed Q4FY26 performance and issued a softer-than-expected FY27 growth outlook, prompting multiple target price cuts and earnings downgrades.
Motilal Oswal On HCL Tech
- Maintain buy with target price of Rs 1650 versus 1700
- FY27 guidance soft on the back of muted 4Q
- Client-specific issues cloud the outlook, made worse by AI deflation
- Soft guidance due to client-specific situations as well as the March weakness
- Expect HCL Technologies to deliver a CAGR of ~4.0% over FY25–28 in USD revenue with 17.9% EBIT margin for each year, factoring in softer FY27 guidance, client-specific headwinds, and early signs of GenAI-led deflation.
- Co relative growth premium vs. large-cap peers narrows in the near term
- Trim our estimates by 2.5%/4.2% for FY27/FY28E
HDFC Sec on HCL Technologies
- The brokerage Maintains Buy with target price Rs 1465 (revised downward)
- Services revenue declined 0.1% QoQ CC with weakness across services, ER&D and software
- Weakness driven by telecom discretionary slowdown and SAP program ramp-down
- FY27 guidance of 1.5–4.5% YoY CC below expectations with 2–3% AI-led deflationary impact
- Deal wins weak at USD9.3bn reflecting macro uncertainty
- AI services ~5% of revenue growing ~30% with margin guidance at 17.5–18.5%
- Value the stock at 18x Mar-28E EPS
Goldman Sachs on HCL Technologies
- The brokerage maintain Neutral with a target price Rs 1340 (reduced from Rs1450)
- Weak quarter with miss across revenue, margins and deal wins
- FY27 revenue growth cut to 3.6% with EPS cuts up to 5%
- Guidance weak amid macro headwinds and AI disruption
- Negative read-across for broader IT sector with limited near-term catalysts
- Value the stock at 19.7 times FY27E P/E
Morgan Stanley on HCL Technologies
- The brokerage maintains Equal-weight with target price Rs 1760 (maintained)
- Miss on revenue, margins and deal wins with weak 4Q performance
- Services revenue declined QoQ while software saw sharp drop
- FY27 growth guidance below expectations with wider band
- Margins impacted by restructuring costs and weak demand
- The brokerage downgraded ratings to ‘Hold’ with target price of Rs 1400 versus Rs 1550
- FY27 Services revenue growth guidance of 1.5-4.5% was also below expectations.
- Weak FY27 guidance narrows HCLT’s edge, likely leading to valuation convergence with peers.
- IT Services was flat while ER&D declined, due to lower telecom spending and SAP program exits.
- Margins fell to 16.5% (-200bp QoQ) due to software seasonality and weak services growth.
- HCLT guides FY27 growth at 1–4% (consolidated) and 1.5–4.5% (services), with 50bp drag from SAP-related client issues.
- EBIT margins guidance range was upgraded to 17.5-18.5% (from 17-18% for FY26).
- HCLT’s 20x FY27 PE premium vs peers is hard to justify amid weak guidance
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
