IT Sector Preview, July 2 -- The Indian IT services sector is likely to post a subdued performance in Q1FY26 despite it being a typically strong quarter, according to Prabhudas Lilladher (PL). In its quarterly preview report, PL said that ongoing caution among global enterprises, weak demand in tariff-impacted verticals, and limited operating leverage could drag down earnings momentum across the board.

"We expect median revenue to decline by 1.2 percent quarter-on-quarter in constant currency (CC) terms, and grow only 0.5 percent QoQ in USD terms," PL said. This weak growth is attributed to sluggish demand recovery, particularly in tariff-sensitive segments, and the deferral of compensation hikes by most companies.

According to PL, cros...