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Patchy but Promising: IT Sector Braces for Stop-Start Recovery in Q1FY25, Says Motilal Oswal

Masum Ali Published Apr 02, 2026, 02:35 PM Updated Sep 18, 2026, 01:57 AM

India’s IT services sector is heading into Q1FY25 with cautious optimism, as analysts at Motilal Oswal project a stop-start recovery driven by cost-focused deals and restrained discretionary spending. While Tier-I players like HCLTech and TCS are expected to post modest growth, mid-tier fir...

Here’s a detailed preview of what to expect from the sector’s first-quarter earnings.

Key Highlights from the Motilal Oswal Report

•⁠ ⁠Revenue growth for Tier-I firms is projected to be muted, ranging from -0.5 percent to +2.0 percent quarter-on-quarter in constant currency terms

•⁠ ⁠HCLTech and TCS may see 5–7 percent year-on-year growth, contingent on a pickup in flow business and discretionary spending

•⁠ ⁠Infosys is expected to lag due to a weak exit from FY24, while Wipro’s guidance remains conservative

•⁠ ⁠Mid-tier players like Coforge and Persistent Systems are likely to report stronger sequential growth, supported by robust deal pipelines and demand for data engineering

Sectoral Trends and Margin Outlook

•⁠ ⁠Margins are expected to remain range-bound, with supply-side pressures easing but offset by visa costs and a strong rupee

•⁠ ⁠Wage hikes are likely to be restrained across the industry, allowing companies to manage costs more effectively

•⁠ ⁠Commentary from management teams will focus on demand visibility for H2FY25, hiring trends, and GenAI-led transformation initiatives

Discretionary Spending and Deal Activity

•⁠ ⁠The brutal winter of discretionary spend cuts appears to be ending, but recovery in flow business remains elusive

•⁠ ⁠Deal activity continues to be skewed toward cost-takeout projects rather than innovation-led engagements

•⁠ ⁠Analysts will be watching for signs of revival in stressed verticals like telecom and manufacturing

Investor Sentiment and Strategic Picks

•⁠ ⁠Motilal Oswal maintains a positive outlook on Cyient and LTTS among mid-tier names, citing their exposure to aerospace, defence, and sustainability

•⁠ ⁠Among large caps, HCLTech is rated as a top pick due to its seasonally strong Products & Platforms business and stable margin profile

As Q1FY25 results begin to roll in, the IT sector’s performance will offer critical clues about the pace and shape of recovery—where resilience, adaptability, and strategic clarity will determine who leads the next growth cycle.

Sources: Motilal Oswal Research Report, New Indian Express, Financial Express

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