Software & Services share price target

The AI driven build-out of global technology infrastructure is structurally elevating demand for specialty chemicals companies, making them integral across semiconductor fabrication and data center ecosystems. The data center specialty chemicals market is expected to scale from ~$11.8bn in CY25 to ~$27.4bn by CY32 (12.8% CAGR), led by GPU-intensive AI workloads and hyperscale expansion. The segment remains highly attractive given its stringent purity requirements (99.999%+), high chemical intensity (~280kg per kg of silicon), and recurring consumption nature, enabling premium pricing and margins....

4QFY26 is expected to be soft and slightly discouraging in an otherwise progressive quarter, after Q3 seasonality and furloughs overhang. Beyond the continued macro softness in few pockets, the cloud of Geo-political conflicts is affecting enterprise spending decisions for few names within our coverage universe. The Middle East tension is directly or indirectly impacting industries around Travel, Transport, Logistics, Energy, O&G and few adjacent areas. The smaller short-burst deals see execution deferrals and delayed closures, leading to elongated sales cycle and slower revenue conversion. We expect median revenue growth of 1.0% QoQ in CC terms & 1.2% QoQ...

The Nifty IT index has witnessed a sharp correction over the past few months, declining ~25% YTD, primarily driven by rising concerns around the potential impact of Generative AI (Gen AI) on the long-term business model of IT services companies, along with macro and geopolitical uncertainties. Large-cap and midcap IT stocks have corrected meaningfully despite relatively stable operating performance and continued deal wins, as investors reassess near-term growth...

Organic growth raised from 2% to 2.5%, driven by 1HFY26 (August YE) performance. But lower than 4% delivered in FY25

Information Technology Sector: AI-New Growth Wave in Technology Services

Accenture's (ACN: NYSE) CC revenue growth exceeded street estimates and came near the top end of its guidance. The impact of the US Federal business on revenue growth was relatively higher; excluding the US-Fed business, the Americas segment grew 6% YoY in CC terms (vs. 3% YoY CC reported). The evolving AI landscape is perceived as an enabler, accelerating enterprise integration architecture even faster amid expectations of rising workloads. Management believes small and mid-market clients will increasingly adopt technology as costs decline, thereby expanding the addressable market through new verticals and geographic presence. With improving...

India's data center capacity is expected to rise by 4x from 1.5GW in 2025 to 7GW by 2035. This would generate domestic demand for critical minerals, also aided by our...

The month of December saw mixed chemical price movement: heavy soda ash was up 11% MoM, Toluene was down 11%, and TDI saw a 12% increase. The price growth in Ref gases picked up pace again, as the refrigerant gases index grew by 10% MoM. Contrary to earlier trends, this pick up was on the back of 16% price jump in R32 prices. This is expected to have an effect on the results of our coverage companies, NFIL and SRF, which had previously guided for a...

The Indian IT-service sector is expected to see a seasonally soft quarter, with furloughs and an unchanged macro environment weighing on near-term growth. Client decisionmaking remains cautious, particularly for discretionary spending, resulting in muted sequential performance across most of the tech companies. Deal execution continues to provide support, and mid-tier firms are likely to outperform Tier-1 peers due to better agility and stronger exposure to cost-optimization deals. Market focus is gradually shifting toward medium-term signals, as enterprises scale AI-initiatives from pilots to enterprise-wide deployments. AI-led transformation and infrastructure modernization continue to drive deal pipelines and are increasingly becoming central to client...

The Indian IT sector is poised for a gradual recovery in Q3FY26, driven by accelerating AI-led transformations, cloud modernization, and vendor consolidation amid cautious global spending.

Organic growth guidance of FY26 (Aug YE) of 2% is lower than actual 4% in FY25. ACN indicated no material change in demand either way

The US Government on Friday, Sept. 19, 2025, announced fee hike to US$100k for applicants to the H-1B visa program for skilled foreign workers starting with FY26 lottery cycle. The one-time fee applicable on all companies (Indian/US) that use the...

In Q1 FY26, the Indian IT sector delivered a soft performance, with Tier-2 firms like Coforge outperforming large players in both revenue growth and execution. Largecap companies such as TCS, Infosys, and HCLTech were impacted by macroeconomic uncertainty that delayed discretionary spending, leading to muted growth. However, strong deal wins especially at Infosys and HCLTech indicates improvement in demand, prompting both firms to raise the lower end of their FY26 revenue guidance. Tier-2 players meanwhile maintained their strong growth outlooks. GenAI, cloud, and digital transformation remained key drivers of interest but monetization continues to lag as clients focus on pilots rather than scaled adoption. The absence...

hikes the improvement in margins would either be flat or negligible due to missing operating leverage. We expect median revenue growth to decline by 1.2% QoQ in CC terms & grow 0.5% QoQ in USD terms. Currency volatility continues with major currencies like EUR and GBP having strengthened against USD by 5.9% and 7.6% QoQ, respectively, which will translate into tailwinds to the tune of 60-400bps QoQ in reported terms. Vertical wise, BFSI should continue its growth momentum, while hi-tech and ENU should also support growth for selective names. Manufacturing and...

Accenture's (ACN: NYSE) performance in Q3 came above consensus estimates and at top end of the guidance despite the underlying challenges. The growth was driven by managed services, attributed to FS & Americas, a positive read through for Indian IT companies. However, revenue guidance for Q4 (USD 1717.6 bn) implies softness on account of caution among enterprise clients along with Federal mandates to prioritize spending. We believe the degree of intensity is more noticeable in the former than the latter, as the bookings growth on outsourcing decelerated further (down 10% YoY), while Public Service and Americas are growing at Consol business growth. For the Indian...

ER&D spending set for major growth .......................................................................................... 9 ER&D services expand beyond mechanical function..................................................... 10 Manufacturing segment drives spending in outsourcing ............................................ 12 Digital mix cannibalizing legacy ER&D spend .................................................................... 14 Growing intensity of ER&D outsourcing .............................................................................. 15 Indian ESPs to grow faster than GCCs................................................................................. 16 India emerging as a global ER&D service provider .......................................................... 17 Segment-wise India opportunity ....................................................................................... 18...

weakness reported last quarter. Although we believe the tariff-related headwinds are yet to get fully captured into 4Q operations, earlier weakness in selective pockets along with anticipated ramp-down for a few, would impact exit rates for a few IT names (PL coverage universe). Similarly, the softness in revenue growth should make it difficult to pull up margins, while making it even more difficult for companies having residual/partial impact of compensation EUR, GBP and AUD have weakened against USD by 1.4%, 1.8% and 3.7% QoQ,...

Discretionary spending revival could be delayed due to macro uncertainties key markets and geographies will be detrimental to the IT services sector. Until Q3FY25, gradual recovery in demand was visible within certain pockets; however, all this could change quickly with inflationary trade policies further escalating uncertainties among global enterprises, and requiring them to revisit budgetary spends. Discretionary small-size deals are most likely to get Additionally, we believe cost-focused AI programs that have achieved some level of maturity would get infused into large deals and provide some respite to ACVs. We believe the cost + AI theme would playout meaningfully in the...

YoY organic growth is expected to decelerate from ~4.5% in 2QFY25 to 0.5% in 4Q. Implies a US$2.6bn annualized organic revenue loss