Four IT Stocks in Focus Before Q2 Earnings as Analysts See Upside Potential

Indian information-technology stocks are entering the September-quarter earnings season with expectations unusually divided between weak near-term industry growth and valuations that some brokerages consider increasingly attractive.

Tata Consultancy Services, Infosys, HCL Technologies and Mphasis are among the closely watched names after HDFC Securities published revised price targets ahead of Q2 FY27 results. The brokerage's calls remain forward-looking assessments rather than guarantees of stock performance.

The broader operating backdrop remains difficult. HDFC Securities expects large IT companies to record between a 0.4% sequential decline and 2% growth in constant currency during the quarter, while mid-sized firms could grow between 0.6% and 6.3%, partly because of acquisitions. The brokerage cited restrained discretionary technology spending, slower client decision-making and AI-related pricing pressure as continuing headwinds.

Reuters separately reported that analysts expect India's largest IT-services companies to produce one of their weakest quarterly growth performances in recent years as artificial intelligence puts pressure on traditional pricing models and customers remain cautious about spending.

Against that backdrop, the following four stocks carry positive HDFC Securities targets ahead of their Q2 announcements.

TCS: Target at ₹2,470 Ahead of October 8 Results

Tata Consultancy Services closed at ₹2,114.40 on the NSE on October 5, up 1.9% for the session. HDFC Securities has assigned TCS a ₹2,470 target price with an Add recommendation.

Using the October 5 NSE closing price rather than the price on which the brokerage originally based its report, the target represents approximately 16.8% potential upside. HDFC Securities' original note described the target as implying about 20% upside at its reference price. These percentages differ because share prices move after brokerage reports are prepared.

TCS has formally scheduled its board meeting for October 8, 2026, to consider Q2 FY27 financial results. The company will also consider an interim dividend. TCS disclosed the meeting through its investor-relations announcements in September.

Analysts are not expecting rapid growth. HDFC Securities has estimated TCS' quarterly deal total contract value at roughly $8 billion to $10 billion, while industry forecasts point to modest sequential revenue expansion. Those numbers are analyst estimates and should not be confused with results that TCS has reported.

The Q2 announcement will therefore be watched not simply for headline revenue and profit but also for deal conversion, margins, discretionary demand and management commentary on the impact of AI-driven productivity on pricing.

Infosys: ₹1,250 Brokerage Target as Investors Await October 23

Infosys ended October 5 at approximately ₹1,029.20 on the NSE, according to LSEG market data carried by the Financial Times.

HDFC Securities has a Buy recommendation and a ₹1,250 target price on Infosys. The brokerage's published Q2 preview described that target as offering roughly 26% upside from the price used when its report was prepared.

Against the October 5 NSE close, the same target equates to approximately 21.4% potential upside.

Infosys itself confirms that its results for the quarter ended September 30 will be released on October 23, 2026. The date appears in the company's official investor calendar and shareholder information.

The upcoming announcement carries an additional point of interest: full-year guidance.

Several brokerages expect Infosys to deliver only modest sequential growth in Q2, while some analysts believe weaker demand and AI-linked pricing pressure could prompt the company to revise its FY27 revenue-growth outlook. Such expectations remain analyst forecasts until Infosys publishes its results and management guidance on October 23.

The company's actual Q2 revenue, operating margin, large-deal bookings and any change in guidance will therefore be more authoritative than pre-results estimates.

HCLTech: Growth Expectations Stronger Than Large-Cap Peers

HCL Technologies closed at ₹1,201.90 on the NSE on October 5, falling 3.31% during the session.

HDFC Securities has set a ₹1,370 target price for the stock. From the October 5 close, that represents potential appreciation of about 14%. The brokerage's earlier calculation indicated approximately 11% upside from the reference price used in its research note.

HCLTech is scheduled to report its September-quarter results on October 12, 2026, according to the published Q2 earnings calendar.

Among major Indian IT companies, analysts generally expect HCLTech to produce one of the stronger sequential growth performances this quarter. HDFC Securities estimates approximately 2% quarter-on-quarter constant-currency growth and around a 50-basis-point sequential improvement in operating margin. These are brokerage projections, not reported Q2 figures.

The company entered the quarter with official FY27 guidance for total revenue growth of 1% to 4% year-on-year in constant currency, services revenue growth of 1.5% to 4.5%, and an EBIT margin of 17.5% to 18.5%. Those ranges come from HCLTech and are distinct from external analyst estimates.

Its October update should show whether strong contract activity is converting into revenue quickly enough to support that outlook.

Mphasis: Mid-Tier Growth and BFSI Exposure Draw Attention

Mphasis closed at ₹2,297.10 on the NSE on October 5, gaining 2.08%.

HDFC Securities has assigned the company a ₹2,840 target price with an Add rating. The brokerage originally described the target as carrying approximately 32% upside from its reference price. Based on the October 5 closing price, the potential increase to that target is closer to 23.6%.

Mphasis has officially scheduled its board meeting for November 5, 2026, when directors will consider and approve audited standalone and consolidated results for the quarter and half-year ended September 30. The company has scheduled its earnings call for November 6 at 8:30 a.m. IST.

HDFC Securities expects Mphasis to post approximately 3.5% sequential growth, supported in part by continued momentum in banking, financial services and insurance. Other brokerages also expect mid-tier IT companies to outperform larger peers during the quarter, although their individual forecasts differ.

Again, that growth estimate is not a company result. Mphasis will provide the definitive September-quarter figures in November.

Target Prices Versus Current Market Prices

Using October 5 NSE prices where available, the four HDFC Securities targets translate into a different level of potential upside from the percentages quoted when the brokerage report was prepared.

The recalculated percentages simply measure the distance between the October 5 market price and the brokerage's stated target. They are not forecasts that those returns will occur.

No Verified Stop-Loss Levels in HDFC Securities' Fundamental Calls

A distinction is necessary on stop-loss levels.

The HDFC Securities Q2 sector recommendations reviewed for these stocks provide ratings, fundamental price targets and earnings estimates. They do not publish stop-loss levels for TCS, Infosys, HCLTech or Mphasis as part of these recommendations.

A stop-loss commonly appears in short-term technical trading recommendations, whereas institutional fundamental research generally relies on ratings, valuation assumptions and target prices.

Accordingly, attaching an unverified stop-loss number to these HDFC Securities calls would misrepresent the brokerage's research. Technical analysts may publish separate trading levels for individual stocks, but those should be identified as separate recommendations rather than presented as part of HDFC Securities' Q2 outlook.

Why Brokerages Still See Opportunity Despite a Soft Quarter

Positive price targets across parts of the IT sector do not mean analysts expect a strong September quarter across the board.

HDFC Securities expects subdued growth in a quarter that is normally seasonally favourable. Its analysts point to soft deal activity, cautious corporate technology budgets and pressure on pricing as clients seek to retain part of the productivity gains created by AI.

At the same time, lower valuations have changed the risk-reward assumptions in some brokerage models. HDFC Securities has shifted its valuation framework forward to September 2028 earnings and has highlighted free-cash-flow yields after the broader decline in IT shares.

Margins are another factor. The brokerage expects currency movements, higher utilisation, operating efficiencies and staggered wage increases to provide some support, although pricing pressure remains a risk.

Mid-sized companies may also receive more help from acquisitions and specific deal ramp-ups than their large-cap counterparts.

Those considerations explain the positive valuation calls, but they remain part of analysts' forward-looking models. They are not confirmed earnings outcomes.

AI Pricing Pressure Remains a Key Industry Risk

Artificial intelligence is increasingly important to both the opportunity and the risk facing Indian IT services companies.

Companies are winning work connected with data, cloud modernisation and generative AI. At the same time, automation can reduce the amount of labour required to complete conventional software and outsourcing contracts.

Analysts say customers are increasingly asking service providers to pass some of those productivity savings back through lower pricing. That can limit revenue growth even when the volume of technology work remains stable.

The Q2 earnings season should provide further evidence on whether new AI-related work is expanding quickly enough to counter that deflationary effect.

Conclusion

TCS, Infosys, HCLTech and Mphasis enter the Q2 FY27 earnings season with positive HDFC Securities price targets but against a challenging industry backdrop.

At October 5 closing prices, the brokerage's targets imply approximately 14% to 24% upside across the four stocks, although HDFC Securities' originally published upside figures were calculated from different reference prices.

TCS will report first on October 8, followed by HCLTech on October 12 and Infosys on October 23. Mphasis has scheduled its Q2 results for November 5.

Investors will be watching revenue growth, deal conversion, operating margins, guidance and the impact of AI on pricing. Importantly, these are brokerage expectations until the companies publish their actual figures.

HDFC Securities' fundamental Q2 recommendations reviewed here contain no specified stop-loss levels, and none have been added independently. The targets and ratings are analysts' assessments, not assurances of future returns or personal investment advice.

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