Four Midcap IT stocks that will react to earnings today

Four midcap IT stocks, Coforge, Mphasis, Zensar Technologies and Cigniti Technologies, will be in focus on Friday, January 23, as investors react to their December quarter (Q3FY26) earnings and management commentary.

Coforge

Coforge reported a revenue beat, with constant currency revenue growth of 4.4%, ahead of estimates of 3.5%. The order book grew 30% year-on-year.

EBIT margin was largely in line with expectations at 13.4% versus an estimated 13.2%.

However, profit after tax declined sharply to ₹250.2 crore from ₹376 crore in the previous quarter, impacted by an exceptional loss of ₹147.6 crore.

This was primarily due to higher labour wage costs of ₹117.9 crore, cybersecurity-related expenses of ₹16.2 crore and acquisition-related costs of ₹13.5 crore related to the Encora deal.

Mphasis

Mphasis delivered a largely in-line performance for the quarter, with CC revenue growth of 1.5%, matching estimates. EBIT margin stood at 15.2%, marginally ahead of expectations.

New deal total contract value came in at $428 million, down about 19% sequentially but up 22% year-on-year, while trailing twelve-month deal wins doubled from a year ago.

Growth was led by the BFSI segment, which expanded 3.7% sequentially, with insurance growing 8.3%. In contrast, TMT, logistics and other verticals saw a decline.

Geographically, India and EMEA led growth, while the Americas posted modest gains.

Management said the March quarter is expected to be the strongest sequentially, led by deal ramp-ups, and reiterated that FY26 growth will be meaningfully better than FY25, with momentum likely to continue into FY27.

Brokerage firm Nomura has maintained a 'Neutral' rating on Mphasis with a price target of ₹2,970, citing stable margins and a strong AI-driven deal pipeline.

HSBC has reiterated its 'Buy' rating with a price target of ₹3,350. The brokerage said that while deal wins moderated marginally in Q3, the pipeline remains robust and overall revenue momentum is intact.

Supported by steady deal inflows and a favourable banking sector backdrop, HSBC expects Mphasis to deliver nearly double-digit revenue growth over the next two years, adding that valuations remain relatively undemanding with an attractive risk-reward profile.

Jefferies also has a 'Buy' rating, with a price target of ₹3,410. The brokerage said Mphasis' Q3 revenues were in line, while margins and normalised profits were slightly ahead.

Jefferies expects growth to accelerate to a 10% YoY CC CAGR over FY26-28, driven by strong deal wins, a large pipeline and healthy growth prospects in the BFSI segment.

It has trimmed FY26-28 earnings estimates by up to 1.5% to factor in higher interest costs, while forecasting a 14% EPS CAGR over the same period.

Zensar Technologies

Zensar Technologies reported a margin-led beat, even as revenue growth remained weak. Constant currency revenue declined 1.3% sequentially, reflecting softness in demand. However, EBITDA margin expanded sharply to around 17.4% from 15.5% in the previous quarter, aided by higher offshore mix and operational efficiencies. The company said nearly 20% of its current order book is AI-influenced, signalling its transition towards an AI-native services model.

Cigniti Technologies

Cigniti Technologies delivered a strong operational performance in the December quarter, with growth across revenue, profitability and margins. Consolidated net profit rose to ₹80 crore from ₹63.6 crore a year ago, while revenue increased to ₹580 crore from ₹510 crore.

EBITDA climbed to ₹115 crore from ₹90.3 crore, with margins improving to nearly 20%, reflecting better cost control and operating leverage.