Overview
- Following sell‑side previews published on July 3 and 4, major brokerages have cut FY27 revenue forecasts and lowered target prices for large Indian IT firms.
- Analysts expect June‑quarter revenue for incumbents to be roughly flat to down about 1 percent sequentially because AI‑driven pricing pressure is reducing billable work.
- Margins are expected to hold broadly steady as a weaker rupee eases pricing pressure but many firms face delayed profit benefits from cash‑flow hedges and higher wage and AI investment costs.
- The sector has re‑rated sharply, with the combined market cap of top five IT firms down about 46 percent from peak levels, and brokerages now favour mid‑cap challengers over some incumbents.
- Market focus is on the Q1 FY27 earnings season starting with TCS for confirmation of guidance cuts, client demand commentary, hedge impacts and how companies plan to capture AI value.