US visa curbs, weak demand lead to decline in IT stocks

BENGALURU: Some Indian IT stocks took a hit on BSE after US President Donald Trump 's latest proclamation on the H-1B visa , deepening concerns in an already fragile demand environment. TCS and Tech Mahindra led the losses among the top five IT firms, each falling more than 3%. HCLTech saw the least decline at 1.8%. Among the mid-caps, LTIMindtree dropped 4.5%, Mphasis 4.6%, Persistent 4.1% and Coforge 4.3%.

Equirus Securities, in a note, said most Indian IT companies still have a considerable dependence on H-1B visas as a percentage of their US employee base. However, this proportion has been reducing over the last 6-8 years, now forming around 25-35% for most large caps and 30-60% for others. "However, it can impact sales growth in the second half of FY26 to some extent/marginally given this pivoting requires proper planning/approvals, which in turn can impact the US-centric project start and ramp-up in many cases and likely delay client decision-making in awarding deals."

A report by Kotak Institutional Equities showed that four of the five large IT companies posted sequential revenue declines in the June quarter, with EBIT margins contracting year-on-year for the top three players despite aggressive cost control measures. "The levers to protect profitability - such as utilization and subcontractor optimisation-are largely exhausted after three years of subdued demand," the brokerage noted. Vertical-wise, BFSI remained the lone bright spot.

Manufacturing, retail and healthcare verticals underperformed due to tariff-related uncertainty, discretionary spending cuts and pressure on payers.