Indian IT Firms Deliver Steady Q2 Growth, but Goldman Warns AI Shift May Cap Valuations

Indian IT companies Infosys, Wipro, and LTIMindtree reported steady Q2 growth, with sequential revenue upticks across the board. However, Goldman Sachs warns that AI-driven productivity gains and muted discretionary spends may keep sector valuations under pressure. The brokerage cautions that while demand stabilisation suggests a soft recovery ahead, visibility into CY26 remains poor.

Indian IT companies Infosys, Wipro, and LTIMindtree reported steady Q2 growth, with sequential revenue upticks across the board. However, Goldman Sachs warns that AI-driven productivity gains and muted discretionary spends may keep sector valuations under pressure. The brokerage cautions that while demand stabilisation suggests a soft recovery ahead, visibility into CY26 remains poor.

LTIMindtree, an IT services firm, delivered a robust performance in the September quarter of financial year 2026 (Q2FY26), reporting revenue and margin growth that exceeded market expectations. The company’s strong deal wins and margin expansion have drawn bullish reactions from major brokerages. On the bourses, LTIMindtree share rose as much as 2.32 per cent to hit an intraday high of 5750.60 per share. The IT services firm posted revenue of $1.18 billion, up 2.4 per cent quarter-on-quarter (Q-o-Q) in constant currency, above analysts’ estimates of 2.0 per cent-1.9 per cent Q-o-Q CC growth. Ebit margin expanded 160 basis points to 15.9 per cent, also surpassing expectations, while PAT stood at ₹1,380 crore, broadly in line with estimates. In rupee terms, revenue, Ebit, and PAT grew 8.9 per cent, 8 per cent, and 10.4 per cent year-on-year (Y-o-Y) in the first half of FY26.

Wipro Limited, another leading technology services and consulting company, announced financial results for the quarter ended September 30, 2025. Gross revenue at Rs 227.0 billion ($2,556.6 million), increased by 2.5% QoQ and 1.8% YoY. IT services segment revenue was at $2,604.3 million, an increase of 0.7% QoQ and a decrease of 2.1% YoY. Total bookings were at $4,688 million, down by 6.1% QoQ and up by 30.9% YoY in constant currency. Large deal bookings were at $2,853 million, an increase of 6.7% QoQ and 90.5% YoY in constant currency. IT services operating margin for Q2’26 was 16.7%, impacted by a provision of Rs 1,165 million ($13.1 million) made with respect to bankruptcy of a customer. Adjusted for this event, IT Services Margin for the quarter was 17.2%, a contraction of 0.1% QoQ and an expansion of 0.4% YoY. Net income for the quarter was at Rs 32.5 billion ($365.6 million), a decrease of 2.5% QoQ and an increase of 1.2% YoY. Earnings per share for the quarter at Rs 3.1 ($0.031), a decrease of 2.5% QoQ and an increase of 1.0% YoY. Operating cash flows of Rs 33.9 billion ($381.5 million), a decrease of 17.6% QoQ and 20.7% YoY and at 103.8% of Net Income for the quarter.

Infosys, a global leader in next-generation digital services, also reported Q2 growth. The company’s revenue grew by 0.3% QoQ in constant currency terms, and net income increased by 1.2% YoY. The company's adjusted operating margin expanded by 0.4% YoY. However, the company warned that visibility into CY26 remains poor, and AI-driven productivity gains and muted discretionary spends may keep sector valuations under pressure.

Goldman Sachs cautions that while demand stabilisation suggests a soft recovery ahead, visibility into CY26 remains poor. The brokerage notes that AI-driven productivity gains and muted discretionary spends may keep sector valuations under pressure. The brokerage expects revenue, Ebit, and PAT to grow at a compound annual growth rate (CAGR) of 11 per cent, 16 per cent, and 18 per cent over FY25-28, on the back of strong total contract value of large deals signed in the first half and productivity gains from cost optimisation programmes.