<p>Bengaluru: Top Indian information technology firms are set to report another lacklustre quarter, with revenue and profit seen rising around 10% year-on-year largely on a weaker rupee rather than underlying growth, seven brokerages said.</p><p>Uncertainties due to wars, weak discretionary spending and concerns around artificial intelligence will keep weighing on client budgets, making the revenue forecast for the next fiscal year a key focus for investors, they added.</p>.War risks keep numbers flat, outlook uncertain: Analysts .<p>Tata Consultancy Services, Infosys, HCLTech and other software services exporters are due to report fourth quarter results starting April 9.</p><p>"We expect limited deal win surprises, patchy ex-BFSI growth and slow start to (the first half of 2027) on macro/gen AI uncertainty," Ambit Capital analysts said in a preview note.</p><p>The Indian rupee fell 4% against the U.S. dollar during the March quarter, and slid to record low levels.</p>.Anthropic's AI push raises analyst concerns over IT services revenues.<p>Software services companies typically benefit as they bill in foreign currencies while incurring most costs in rupees, inflating profits when dollar revenues are converted.</p><p>The $315 billion sector, employing about 5.9 million people, last reported double-digit revenue growth in the March 2023 quarter. Since then, demand has softened as clients cut discretionary spending, deal cycles lengthened, and spending shifted towards cost optimisation and AI-led projects.</p><p>Infosys and HCLTech are likely to provide annual revenue forecasts of a rise between 2%-4% and 4%-6% respectively for the fiscal year 2027, the brokerages said.</p><p>Revenue for the top six firms -- TCS, Infosys, HCLTech, Wipro, Tech Mahindra, and LTM -- is expected to grow about 10.9% year-on-year in the March quarter, with net profit rising 10.3%.</p><p>On a constant currency basis, or stripping out exchange-rate effects, the top four IT firms are more likely to see revenue rise only 1.8% for the year, Ambit said.</p><p>Analysts at Yes Securities said performance was likely to be uneven, with relative resilience in banking and financial services, while retail, healthcare, and hi-tech segments could face pressure due to higher exposure to discretionary spending.</p><p>"Our recent interactions suggest that overall client budgets have not increased materially and discretionary spending remains at bay," analysts at Jefferies said in a preview note.</p><p>However, even a modest revenue forecast could support stock prices, HSBC analysts said, noting valuations currently reflect only low-single-digit growth.</p><p>While the fears around the impact due to AI are "difficult to validate or falsify, the burden of proof now sits with IT companies. Re-rating, thus, depends on proof of surviving and thriving," said analysts at Motilal Oswal. Shares of IT companies are down 20% so far this year, on investor worries that advanced AI tools launched by Anthropic and Palantir could disrupt IT's traditional business models and cannibalise business. The Nifty 50 is down 13%.</p>
<p>Bengaluru: Top Indian information technology firms are set to report another lacklustre quarter, with revenue and profit seen rising around 10% year-on-year largely on a weaker rupee rather than underlying growth, seven brokerages said.</p><p>Uncertainties due to wars, weak discretionary spending and concerns around artificial intelligence will keep weighing on client budgets, making the revenue forecast for the next fiscal year a key focus for investors, they added.</p>.War risks keep numbers flat, outlook uncertain: Analysts .<p>Tata Consultancy Services, Infosys, HCLTech and other software services exporters are due to report fourth quarter results starting April 9.</p><p>"We expect limited deal win surprises, patchy ex-BFSI growth and slow start to (the first half of 2027) on macro/gen AI uncertainty," Ambit Capital analysts said in a preview note.</p><p>The Indian rupee fell 4% against the U.S. dollar during the March quarter, and slid to record low levels.</p>.Anthropic's AI push raises analyst concerns over IT services revenues.<p>Software services companies typically benefit as they bill in foreign currencies while incurring most costs in rupees, inflating profits when dollar revenues are converted.</p><p>The $315 billion sector, employing about 5.9 million people, last reported double-digit revenue growth in the March 2023 quarter. Since then, demand has softened as clients cut discretionary spending, deal cycles lengthened, and spending shifted towards cost optimisation and AI-led projects.</p><p>Infosys and HCLTech are likely to provide annual revenue forecasts of a rise between 2%-4% and 4%-6% respectively for the fiscal year 2027, the brokerages said.</p><p>Revenue for the top six firms -- TCS, Infosys, HCLTech, Wipro, Tech Mahindra, and LTM -- is expected to grow about 10.9% year-on-year in the March quarter, with net profit rising 10.3%.</p><p>On a constant currency basis, or stripping out exchange-rate effects, the top four IT firms are more likely to see revenue rise only 1.8% for the year, Ambit said.</p><p>Analysts at Yes Securities said performance was likely to be uneven, with relative resilience in banking and financial services, while retail, healthcare, and hi-tech segments could face pressure due to higher exposure to discretionary spending.</p><p>"Our recent interactions suggest that overall client budgets have not increased materially and discretionary spending remains at bay," analysts at Jefferies said in a preview note.</p><p>However, even a modest revenue forecast could support stock prices, HSBC analysts said, noting valuations currently reflect only low-single-digit growth.</p><p>While the fears around the impact due to AI are "difficult to validate or falsify, the burden of proof now sits with IT companies. Re-rating, thus, depends on proof of surviving and thriving," said analysts at Motilal Oswal. Shares of IT companies are down 20% so far this year, on investor worries that advanced AI tools launched by Anthropic and Palantir could disrupt IT's traditional business models and cannibalise business. The Nifty 50 is down 13%.</p>