Athira Sethu
Kochi, 7 Jan 2026
Brokerage firm Motilal Oswal has expressed its outlook on how Indian IT companies are likely to perform during the coming result season. Rather than just analyzing short-term figures, Motilal Oswal is analyzing the larger trends involving demand patterns, spending plans among clients, as well as the increasing use of Artificial Intelligence. On this basis, Motilal Oswal’s favourites among IT companies have emerged as Infosys, Tech Mahindra among large-cap companies, while Coforge and Hexaware Tech among mid-cap companies.
The third quarter could witness sluggish growth on account of some normal factors such as the furlough of employees, according to a brokerage firm. Normally, such furloughs influence billing days, which negatively impact growth of revenue. However, Motilal Oswal expects the market to ignore this temporary data and instead pay heed to statements on demand and client budgets for CY 2026.
The firm also highlighted that global uncertainty, including tariff issues and shifts in the technology cycle, are making clients cautious. Many customers are delaying big spending decisions and are not yet committing to large projects. Demand is expected to therefore remain steady or show only slight improvement until early 2026, when new budgets are finalized.
For the third quarter, Motilal Oswal estimates large IT companies to report constant currency growth in the range of 0.3-2.3 percent. Mid-cap IT companies would perform a tad better, according to the estimates, with growth ranging from a 2.5 percent decline to a 3.5 percent increase.
Going forward, the brokerage sees the bottom of the growth cycle for the IT sector in 2026. The second half of FY27 and FY28 will witness better growth, with the growth of artificial intelligence services transitioning from the testing phase to the live phase. The IT companies have already begun investing in AI, and initial signs of demand driven by AI have emerged.
As far as individual companies are concerned, INFY may experience flat revenues because of furloughs, although its American banking and financial services operations are likely to perform well. TECHMAHINDRA may experience moderate growth with improved revenues due to an improvement in the European market. COF may experience strong growth despite likely revenue pressures because of wage hikes. HEXTECH may face a temporary slowdown in revenues because of market-related conditions, including low licence revenues.
