NIFTY IT Q3FY26: Structural Demand Intact as Margins Recover and Growth Stabilises

Nifty IT Q3FY26 Results: Stable Growth with Margin Recovery

The Nifty IT Q3FY26 results reflect steady sector performance, supported by structural demand drivers and improving profitability. Aggregate revenue reached a record ₹2.09 lakh crore, continuing the gradual upward trajectory seen over recent quarters.

Growth was primarily driven by:

• Steady deal ramp-ups
• Improved project execution
• Sustained enterprise demand for cloud modernisation
• Accelerated AI integration and automation initiatives

Despite selective discretionary spending, companies reported strong deal pipelines and healthy order books, improving medium-term demand visibility.

Revenue Trends: Growth Stabilises

The IT sector revenue growth remained resilient amid global macro uncertainties. Large-cap IT firms maintained stable growth through:

• Diversified global client bases
• Strong delivery capabilities
• Long-term digital transformation contracts

Meanwhile, mid-tier IT companies continued to outperform due to:

• Faster deal conversion cycles
• Specialised domain capabilities
• Higher agility in emerging technologies

This balanced growth across segments indicates structural demand remains intact.

Margin Recovery: Profitability Improves in Q3FY26

One of the key highlights of the Nifty IT Q3FY26 earnings season was the recovery in profitability.

• PAT Margins improved to 14.63%
• Recovery from earlier compression caused by wage hikes and furlough impact
• Improved employee utilisation rates
• Operating leverage benefits
• Early contribution from higher-margin AI-led projects

The margin expansion signals that cost pressures are easing while revenue quality improves.

AI, Cloud & Digital Transformation Drive Structural Demand

The Indian IT sector appears to be transitioning into a gradual recovery phase after the recent slowdown. Key long-term growth drivers include:

• Enterprise AI adoption
• Generative AI implementation
• Cloud migration and infrastructure modernisation
• Automation and digital transformation initiatives
• Cybersecurity and data engineering investments

These structural themes continue to support sustained earnings visibility despite short-term macro headwinds.

Near-Term Outlook for Nifty IT

While global economic uncertainty may keep near-term growth moderate, the sector’s improving deal momentum and stabilising margins suggest:

• Stronger earnings trajectory over the medium term
• Better operating leverage in FY27
• Margin stability as wage cost pressures normalise
• Continued focus on high-value AI and digital contracts

Overall, Nifty IT Q3FY26 performance reflects resilience, improving profitability, and structural growth intact.

Key Takeaways

• Record quarterly revenue of ₹2.09 lakh crore
• PAT margins rebound to 14.63%
• AI and cloud demand driving deal momentum
• Mid-cap IT firms outperforming on agility

Structural recovery underway