Sonata, Coforge, Oracle Fin Services Lead Q1 FY26 IT Growth

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Indian IT sector reported mixed Q1 FY26 results, with BFSI and Telecom driving growth via strong deal wins

By S JHA

MUMBAI, August 16, 2025 — The Indian IT sector posted a cautious Q1 FY26 performance amid muted global demand, with growth largely supported by the Banking, Financial Services & Insurance (BFSI) and Telecom verticals. Deal momentum in these sectors offset weakness in Retail and Manufacturing.

Most of the IT companies have declared their June quarterly results. Stocks of IT firms have largely been trading at discounts. Very few of them positively reacted after unveiling of their respective Q1FY26 results.

But the IT stocks were shining in Thursday session, the last trading day of the week for the Indian equity markets. Shares of Wipro and Infosys among the largecaps led the rally on the bourses.

Among smallcap and midcap spaces, the likes of Sonata Software and Newgen Software were trending on the bourses. Both the IT firms delivered positive set of numbers in the Q1FY26 results.

Kolkata-based StockEdge in a post in its Telegram channel listed following leaders from the IT space for top QoQ growth: Sonata Software – +13.3% QoQ growth; Coforge – +8.2%; and Oracle Financial Services – +7.9%.

“Infosys, Persistent, Hexaware, and Zensar also posted steady growth, though at a slower pace,” said the Kolkata-based stock advisory firm. Analysts note that while large-cap IT firms continue to face pressure from discretionary spending cuts, mid-cap players are leveraging niche capabilities and digital transformation deals to maintain momentum.

“With deal pipelines remaining robust in BFSI and Telecom, the sector outlook for H2 FY26 hinges on revival in retail and manufacturing demand,” added StockEdge.

Analysts note that IT stocks while trading at heavy discounts from their peaks are attracting attentions of investors. Market participants state that the Indian mutual fund houses sitting on cash may soon begin looking at the markets favourably. Also, the foreign institutional investors (FIIs) could begin buying into Indian equities once tariff-led disruptions subside.

Market participants also argue that the Indian IT firms have resorted to cutting flabs on basis of skill set mismatch, which may make them more competitive in the near future. IT behemoth TCS hogged limelight recently for laying off 2% of the staff strength for skill set mismatch. Yet some of the IT firms have announced salary hikes. Market participants will be looking at the scale of hiring in the IT sector to consider investing in their stocks once the conditions stabilise.

(Disclaimer: This article makes no recommendation for buy or sell of shares of any company)