Q2FY26 preview: Modest revenue growth expected as IT sector reels from visa shock and global uncertainty
Trump’s H-1B Shock Sends IT Stocks Tumbling
A dramatic hike in H-1B visa fees—up to $100,000 per permit, a 50-fold jump—by U.S. President Donald Trump has triggered a sharp selloff in Indian IT stocks. The move stunned the tech world and threatens to significantly raise the cost of on-site deployment for Indian IT firms heavily reliant on U.S. clients.
- The BSE IT index plunged 7.34% between Sept 19–26, 2025.
- TCS led the fall, down 8.5%, eroding ₹97,598 crore in market value.
- Infosys, Wipro, HCL Tech, and others collectively lost over ₹100,000 crore in valuation.
What to Expect in Q2FY26: A “Status Quo” Quarter
According to ICICI Securities, Q2FY26 will likely be uneventful for Tier-1 IT firms, with no major surprises expected.
- Revenue growth is projected at 0.5–1.5% QoQ in constant currency (CC) terms.
- HCL Technologies is forecasted to lead the quarter among large caps.
- TCS and Wipro are likely to report muted, flat-to-moderate growth.
- Infosys may benefit slightly from inorganic contributions (approx. 20 bps boost).
“Q2 may be a pause before clarity returns. Markets are focused on commentary around margins, visa costs, and client budgets,” ICICI Securities said.
Visa Fee Hike and GCC Threat: Long-Term Headwinds?
The unprecedented H-1B fee hike could hurt profitability for companies with significant on-site delivery dependencies—especially in BFSI and healthcare verticals.
- Visa cost shock may not reflect fully in Q2, but margin commentary will be closely scrutinized.
- Rising costs could accelerate the Global Capability Centre (GCC) shift, as global firms in-house digital and tech operations, challenging Indian IT incumbents.
Profitability: Stable but at Risk
EBIT margins are expected to remain largely stable in Q2. However:
- Infosys may see some benefit from:
- Completed wage hikes
- Ongoing cost-efficiency programs like Project Maximus
- Rupee depreciation
- TCS, Wipro, and HCL Tech margins are likely to be unchanged sequentially.
What Investors Will Watch in Q2 Earnings
As Indian IT firms gear up to report Q2FY26 earnings, investors and analysts will closely track:
- Management guidance for H2 and FY26
- Impact of H-1B fee hike on cost structure and pricing
- Client budgets and any delays in deal closures
- Attrition trends, wage pressures, and talent availability
- Updates on key programs like Project Maximus (Infosys) or operational synergies (TCS)
Smaller IT Firms Also Hit Hard
The market carnage wasn’t limited to the Tier-1 players. Mid-tier tech firms like Persistent Systems, Coforge, Hexaware, and Mphasis also suffered losses of ₹5,000 crore+ in market cap during the same week.
While these firms may continue to show strong revenue growth, their exposure to visa-dependent delivery models could impact margins and valuations.
