Indian IT Faces Weak Q1, Guidance Resets Likely: Motilal Oswal

Accenture narrowed its full-year 2026 revenue growth guidance to 3-4% from 3-5% last month. Its shares fell sharply. The move sent a signal across the global IT services industry: demand recovery is not happening as fast as hoped.

Motilal Oswal Financial Services, in a note this week, said that tone is likely to carry into the June quarter for Indian IT firms. The brokerage expects several companies to walk back the top end of their guidance bands when they report Q1 results in July. "We expect demand commentary to stay soft in 1QFY27, as macro, AI and geopolitical overhangs continue to weigh on discretionary spending and decision-making cycles," Motilal Oswal said.

Accenture's ACN stock page carries an Alpha Score of 45/100, slotting it in the Mixed category – a reflection of the cautious market view.

KPIT Technologies provided an early warning. The company said Tuesday that its first-quarter revenue would fall about 1% year-over-year. It blamed "sudden actions by some European OEMs triggered by their recent profit warnings and adverse business outlook." That kind of client-side volatility, Motilal Oswal argued, is likely to spread.

The brokerage's core message: don't expect a quick rebound. It expects the weakness to stretch into the second quarter. With the first half tracking below the run-rate needed to sustain the upper end of fiscal 2027 guidance ranges, "the ask on 2H to bridge the gap becomes increasingly impractical." The logical outcome, the report said, is that companies will walk back the top end of their guidance bands this quarter.

Specific names are on the line. Infosys (Alpha Score 57/100, Moderate) is likely to lower the upper end of its FY27 revenue growth forecast by 50 basis points, to a range of 1.5-3% year-over-year from the current band. HCL Technologies could trim the high end of its services growth guidance by 100 basis points. Both moves would signal that near-term demand is not recovering as quickly as earlier hoped.

For the June quarter, Motilal Oswal expects large-cap Indian IT firms to report constant currency growth between -1.5% and 2% quarter-over-quarter. Mid-caps, buoyed by continued large-deal ramp-ups, are forecast to do slightly better: growth ranging from -1% to 4.8%. That split suggests the bigger companies face more pressure from client hesitation on discretionary projects.

Vertically, the picture is uneven. The banking and financial services vertical, including insurance, remains the most resilient corner of coverage, supported by deal rollouts and steady spending. Hi-tech is mixed – AI-related work is offsetting weakness in specific client accounts. Telecom stays soft. Manufacturing is splitting along auto and industrial lines, with car makers pulling back after their own profit warnings.

A stronger-than-expected demand commentary from any of the large firms could ease concerns. Motilal Oswal sees that as unlikely given the current environment. The brokerage expects the guidance resets to happen in July.