Information Technology – Oct-Dec’25 Earnings Preview – Seasonality intensifies underlying weakness
Published on 02 Jan 2026
3QFY26 is expected to be soft due to seasonality on top of the underlying weakness. The furloughs and holidays impact is expected to be similar compared to last year’s Q3. Even the demand beyond necessary areas or certain pockets does not seem to have changed notably during the same period. Q3 will have more bearing on topline growth due to BFS having usual impact of furloughs vs other verticals, which also happens to be the only silver lining during tough macros. The weakness in demand also tends to defer compensation revision for most of the names (except HCLT, PSYS, TataTech, TLXI, KPIT) in Q3, the margin improvement would be flat to marginally positive, partly aided by INR depreciation. We expect median revenue growth of 1.0% QoQ in CC terms & 0.8% QoQ in USD terms. The currency volatility is limited in Q3, major currencies like EUR and GBP have weekend against USD by 1.6% and 0.1% QoQ, respectively, countering INR depreciation of 2.4% against USD.
Structurally H2 tends to be weaker for IT Services, and with no incremental signs of recovery, we expect revenue guidance for Infosys and HCL Tech to largely remain unchanged, at least at the top-end.
