HomeMarket NewsJPMorgan warns of USD revenue estimate cuts for Indian IT in Q1; check its top picks
A subdued first quarter could make it increasingly difficult for IT companies to achieve their full-year growth targets, as the sector typically derives a larger share of growth during the first half of the financial year. As a result, FY27 could turn out to be another year of muted growth for the industry. However, JPMorgan does not expect companies to lower their FY27 revenue guidance at this stage.
By Meghna Sen June 5, 2026, 8:25:25 AM IST (Published)
2 Min Read
Indian IT stocks are expected to remain in focus on Friday, June 5, after global brokerage JPMorgan flagged the possibility of a weaker-than-expected start to the first quarter for the sector.
In a note on the Indian IT services industry, JPMorgan said its channel checks with companies and industry participants indicate that June-quarter performance could fall short of current expectations.
The brokerage warned that this may lead to a 50-100 basis point reduction in FY27 dollar revenue growth estimates, although earnings per share could remain relatively protected due to favourable currency movements.
According to the brokerage, prolonged geopolitical uncertainty and client-specific challenges have delayed deal signings and project ramp-ups, resulting in slower decision-making by customers.
JPMorgan mentioned that demand conditions, which weakened in March, have shown little improvement through April and May. This has led to longer sales cycles and postponement of deal closures across multiple client segments.
While deal pipelines remain healthy, the slowdown in signings is affecting revenue conversion and growth momentum. The brokerage also said that productivity commitments embedded in vendor consolidation deals could further weigh on revenue ramp-ups over the coming quarters.
A subdued first quarter could make it increasingly difficult for IT companies to achieve their full-year growth targets, as the sector typically derives a larger share of growth during the first half of the financial year. As a result, FY27 could turn out to be another year of muted growth for the industry, JPMorgan said.
However, the brokerage does not expect companies to lower their FY27 revenue guidance at this stage, as management teams are likely to remain hopeful of a recovery beginning in the second quarter.
JPMorgan also believes that, in the absence of a meaningful acceleration in revenue growth, investor sentiment towards IT stocks will continue to be influenced more by developments in artificial intelligence than by underlying business fundamentals.
Within the sector, the brokerage prefers Tech Mahindra and Infosys among large-cap names, while Coforge and Persistent Systems remain its preferred picks in the mid-cap space.
Note To Readers
Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
