TCS to kick off Q1 FY26 earnings season with muted expectations as IT sector braces for Trump’s tariff impact

India’s largest IT services company, Tata Consultancy Services , will announce its quarterly results for the first quarter of FY26 tomorrow (i.e. July 10), kicking off the earnings season and setting the tone for other IT companies that follow later next week. Analysts are expecting a largely muted set of numbers. Brokerage firms like Kotak Securities, ICICI Securities , and Motilal Oswal all expect a sequential revenue decline in constant currency ranging from 0.4% to 3.4%, and deal wins to be flat. The major headwinds that most analysts have pointed to remain the uncertainty around the impact of tariffs by the United States, deferred ramp-ups of projects, and the slowdown in the BSNL deal. However, momentum in the Banking and Financial Services sector could provide a breather.

In the large-cap IT companies' space, following TCS will be HCLTech , which will announce its earnings on July 14, and Tech Mahindra along with L&T Technology Services on July 16. LTIMindtree and Infosys will declare their numbers on July 17 and 23 respectively. For the sector in particular, HSBC Global Investment Research expects the top six companies to report flat to slightly positive growth, which it sees as better than feared post the Liberation Day and a bottoming out of an earnings downward cycle. “FY26 is likely weak as well due to the tariff impact. We maintain our long-standing expectation of 4–5% CAGR sector growth over the medium to long term. With a low base of three years (FY24–26), we expect a revival in FY27,” the report said. While it sees both Infosys and HCL as unlikely to change their full-year guidance, it expects currency to be net positive this quarter.

While the deal pipeline remains strong, “Almost every IT company in recent times has alluded to a strong pipeline led by vendor consolidation deals. We believe these deals find presence in the pipeline of every company; hence, at the industry level, we don't believe this provides a strong positive read-across. Still, we expect deal momentum to improve from 2Q as some of the slipped deals in 4QFY25 and even in 1QFY26 may come through going forward. We worry for the banking sector outlook though, which has been the key optimistic vertical in the past six months,” the July 1st report further added.

On the other hand, Nomura Research, in its report taking cue from Accenture’s earnings, pointed out that the revenue growth momentum continues to be strong in Financial Services and that there has been no noticeable change in the macroeconomic environment. “We expect the growth momentum in the financial services vertical to continue in the near term for Indian IT services companies. There has been no meaningful deterioration of the demand environment since the 90-day pause on tariff imposition by the US administration in early April. However, a sharp growth revival hinges on macroeconomic improvement, particularly in the U.S.,” the report said.