Concerns Raised by Accenture’s Outlook
The recent update by Accenture has further impacted the sentiment of investors about the IT sector.
The global technology consulting firm reduced its annual revenue growth guidance to 3% to 4% for FY26, compared with its earlier forecast of 3% to 5%. It also projected quarterly revenue below Wall Street expectations.
Accenture said the conflict between the US and Iran affected its consulting operations in the Middle East, resulting in a $400 million impact during the third quarter. The company also warned that geopolitical uncertainty could continue to affect business during the current quarter.
Rupee Depreciation May Support Reported Revenue
One factor that could provide some support to quarterly earnings is the depreciation of the Indian rupee against major global currencies.
During the June quarter, the rupee weakened by around 9.7% against the US dollar on a year-on-year basis, moving from ₹85.60 to ₹94.90. Since a large share of revenue is earned in foreign currencies, a weaker rupee generally boosts reported revenue after conversion into Indian currency.
However, markets believe this foreign exchange benefit is unlikely to change the broader demand picture.
Top IT Firms May Report 14% Revenue Growth
According to Reuters, India's six largest IT companies (TCS, Infosys, HCLTECH, Wipro, Tech Mahindra and LTM) are expected to report around 14% year-on-year revenue growth in rupee terms during the June quarter. The net profit is expected to rise by 12-13%. However, much of this growth is likely to come from the sharp depreciation of the Indian rupee. Excluding currency movements, revenue growth is expected to remain modest at just 2.8% in constant-currency terms.
TCS Q1 FY27 Results To Kick Off Earnings Season on Thursday
The sector's earnings calendar begins on July 9 when Tata Consultancy Services Ltd (TCS) announces its June quarter results. The company's numbers are expected to set the tone for the rest of the sector.
According to CNBC-TV18 poll estimates, TCS is expected to report rupee revenue of ₹71,847 crore for the June quarter, reflecting sequential growth of around 1.6%.
In US dollar terms, however, revenue is expected to decline by 0.1% sequentially. This indicates that most of the growth in reported rupee revenue is likely to come from currency movement rather than stronger business performance or higher deal execution. As a result, management commentary on client demand and the deal pipeline will be closely watched.
Expectations of the Market from Infosys, HCL Tech and Wipro Q1 FY27 Earnings
After TCS, Infosys Ltd, HCL Technologies Ltd and Wipro Ltd will report their results later this month.
Infosys is expected to post relatively steady revenue growth in the June quarter, supported by contributions from its healthcare and cloud-related acquisitions. Among the large-cap IT companies, investors believe Infosys may emerge as one of the better performers this quarter.
HCL Technologies may see a sequential decline in revenue, according to market estimates. However, investors' focus is likely to remain on the company's FY27 guidance. The recently announced $1.14 billion deal with a Fortune 50 European client is expected to provide some support to sentiments.
Wipro is also expected to report declines due to client-specific issues, delayed ramp-ups, and seasonal weakness.
What Should Investors Watch?
Investors will have to pay close attention to management commentary, especially on demand trends, deal wins, hiring plans and the outlook for the remainder of FY27.
Any improvement in discretionary spending or faster conversion of large deals may lift sentiment. On the other hand, another round of cautious guidance may add concerns that the sector's recovery may take longer than expected.
