From deal wins to margin expansion; here is how midcap IT companies outperformed large peers in Q1FY27

IT stocks are buzzing in trade for the third consecutive session on Tuesday as buoyancy around the earnings of mid and small IT companies boosted investor sentiment. Coforge Ltd, an erstwhile mid-cap IT firm, posted robust quarterly earnings for Q1FY27, outperforming all its mid- and large-cap peers in the sector. The outperformance has once again underlined the fact that mid-cap IT names have maintained their niche and continued their outperformance in earnings over the large peers. Meanwhile, large players continued to struggle with sectoral and macro headwinds.

Topline

The large cap IT names like TCS, Infosys, and Wipro have posted muted to subdued performance in Q1FY27, especially stagnant growth on a sequential basis, highlighting underlying challenging scenarios. On a sequential basis in constant currency terms, TCS Q1 revenue remained largely unchanged at 0.4% at ₹72,275 crore. Infosys’s Q1 revenue surged 1% to ₹48,211 crore. While HCL Technologies and Wipro saw a sequential decline in revenue of -0.5% and -1.2%, respectively.

On the other hand, Midcap IT names continued their outperformance by delivering robust sequential growth in constant currency terms. OFSS’s Q1FY27 revenue jumped 51% to ₹3,125 crore, and Coforge delivered 22% sequential growth at ₹5,527 crore. The growth was largely driven by strong renewals and robust deal pipelines. Meanwhile, top companies face deflationary headwinds led by AI-infused productivity efficiencies and poor bargaining power.

Margin

On the operating margins front, midcap names like Oracle Financial Services Software have delivered powerful operating margin expansion for the quarter. OFSS Q1FY27 operating margin soared from 45% in Q1FY26 to 60% in Q1FY27. Similarly, Coforge delivered a 285 bps operating margin expansion to 20.3% in Q1FY27. Sudhir Singh, CEO and Executive Director, Coforge said, “Our consolidated Q1 margins have come ahead of our annual margin guidance. The 414-bps YoY expansion in EBIT margin and 285 bps YoY expansion in EBITDA margin reflect the impact of AI infusion at scale in client delivery and internal operations”. Meanwhile, the top-tier IT names like TCS, Infosys, HCL Technologies and Wipro saw double-digit expansion, primarily affected by deflationary pressures. TCS maintained the leadership witha 24% EBIT margin, up 80 bps YoY and flat sequentially. Infosys Q1FY27 EBIT margin remained steady at 21%, and HCL Technologies EBIT margin also remained flat at 16.9%. While Wipro’s IT services margins dented at 16%, down 120 bps sequentially.

Deal wins

Despite the muted growth in the topline and operating margins. The deal wins remained largely strong across the board, barring a few. Among the top-tier IT names, TCS’s order intake stood at $9.5 billion, muted growth sequentially. HCL Technologies' Q1 deal wins grew to $2.4 billion, up from $1.9 billion in the previous quarter. Infosys’ TCV jumped from $3.2 billion in Q4FY26 to $3.6 billion in Q1FY27, again showing steady growth.

In the midcap space, Coforge’s total contract value intake for the quarter stood at $691 million, and the executable orderbook stands at $2.2 billion, up 27% QoQ. Persistent also secured a new deal with Nagarr, which will add $125 million in annual contracts and roughly $650 million over 6.5 years, giving strong demand visibility. While, LTM’s order inflow for the trailing twelve months stood at $6.6 billion, largely unchanged over the previous quarter.