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.