CLSA on IT stocks: HCLTECH's rating raised from 'Hold' to 'Outperform', know what is its opinion on other stocks

IT sector: The market is now eyeing the fourth quarter results. The results season will begin with the results of IT companies. This time the market will not only look closely at the fourth quarter results but will also keep an eye on what are the prospects for the IT sector in the financial year 2026. CLSA has also released a report on this. Let's see what is special in this report.

How will Q4 be for the IT sector?

The uncertainty of the sector is now reflected in its prices. Stocks are currently weaker than the expected earnings cut. Nifty IT is down 15 per cent in the fourth quarter as against Nifty's 1 per cent. The market has very low expectations from the fourth quarter. Discretionary demand may extend for 1-2 quarters. CLSA has reduced the constant currency earnings growth forecast for FY26 by 3-4 per cent. Due to the weakness in the rupee, the EPS forecast for FY26 has been reduced only by 1-3 per cent. The brokerage says that in the uncertain environment, the focus will be on low-cost deals.

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CLSA on IT companies

CLSA has raised the rating of HCLTECH from Hold to Outperform. The brokerage says that the company's income growth in FY 2026 can be higher than the big companies. CLSA has given outperform rating to TCS, Wipro, Infosys, HCLTech and Tech Mahindra. CLSA has raised the rating of LTIMINDTREE from Hold to Outperform. The brokerage says that the valuation of the company is attractive. Giving its opinion on Wipro, CLSA has said that the company's constant currency growth can be between zero to minus 2 percent on a quarterly basis in the first quarter of FY 2026. At the same time, Infosys' constant currency income can grow by 2-5 percent and EBIT margin by 20-22 percent. Similarly, HCLTech's constant currency income can grow by 3-5 percent and EBIT margin by 18-19 percent.

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