Q3FY26: Street Watches for Demand Signals in Subdued IT Landscape

Indian IT companies are expected to report muted Q3FY26 performance, with subdued demand, client caution, and weak discretionary tech spending weighing on revenue growth. While the Nifty IT index has gained ~8% in the past three months, underlying business momentum remains soft. Analysts are closely watching Q3 results for signs of recovery, especially ahead of the March–April budget reset period. 1. Revenue Growth Trends - Q3FY26 estimated sequential constant currency growth: ~1.2%, second lowest in five years. - Historical Q3 growth: - Q3FY22: 5.4% - Q3FY23: 2.2% - Q3FY24: 0.9% - Q3FY25: 1.3% - Seasonally weak quarter compounded by client budget constraints and delayed decision-making. 2. Company-Level Expectations -

, , , , , , , expected to post flat to low-single-digit growth. - Firms with higher Europe exposure face cross-currency headwinds. - Wage hikes and furloughs may pressure margins. 3. Demand and Deal Activity - Discretionary tech spending remains sluggish, especially in BFSI and retail verticals. - AI-led deals and cost optimization continue, but large transformational deals are slow to materialize. - Analysts await signs of pipeline conversion and budget clarity. 4. Macro and Currency Factors - Rupee depreciation offers partial revenue tailwind. - Cross-currency volatility impacts firms with multi-region exposure. - Global macro uncertainty continues to affect client sentiment. 5. Outlook and Sector Sentiment - March–April budget resets may offer better visibility into FY27 demand. - Investors will track commentary on deal wins, hiring trends, and margin guidance. - Despite near-term softness, long-term digital transformation themes remain intact.