Shares of Tata Consultancy Services (TCS) and HCL Technologies slipped marginally in early trade on Monday as investors turned cautious ahead of their December-quarter (Q3FY26) earnings announcements scheduled later today. TCS will kick off the Q3 earnings season for Indian IT companies, with HCLTech’s results also closely tracked by the Street.
According to multiple brokerage reports, the Indian IT sector is expected to report a muted quarter, weighed down by soft demand from the US, continued client caution on discretionary spending, and seasonal furloughs during the holiday period. As a result, revenue growth is likely to remain subdued, while margins may face pressure due to wage hikes and lower utilisation.
What brokerages expect
Brokerages expect TCS to report modest sequential revenue growth, supported by deal wins and steady performance in core verticals such as BFSI. However, growth is likely to be capped by slower decision-making from clients in North America and Europe. Analysts are also watching commentary on deal pipelines, demand recovery timelines, and FY26 growth guidance.
For HCLTech, brokerages anticipate relatively better margin resilience compared to peers, aided by its higher exposure to engineering services and cost optimisation initiatives. That said, revenue growth is also expected to be modest, with continued weakness in discretionary IT spending impacting overall performance.
Key focus areas
Market participants will closely track management commentary on:
- Demand trends in the US and Europe
- Outlook for discretionary spending
- Deal wins and pipeline visibility
- Margin outlook amid cost pressures
- Hiring plans and attrition levels
With IT stocks having underperformed the broader market in recent months, any positive surprise on growth outlook or margins could drive near-term stock movement. However, analysts caution that a meaningful recovery in the IT sector may still take time, given ongoing global macro uncertainties.
TCS and HCLTech results are expected to set the tone for the rest of the IT earnings season.
