IT Earnings Expected to Remain Muted; Management Commentary Key Focus Area
ICICI Direct's Pankaj Pandey expects muted IT sector earnings with tier-I companies delivering 0.3-2.2% QoQ growth, emphasizing management commentary over headline numbers. Insurance sector shows mixed trends with 12-14% growth from April-November despite margin pressure concerns. Real estate presents selective opportunities with companies trading below NAVs, though residential segment faces execution challenges while commercial remains robust.
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Market analyst Pankaj Pandey, Head of Research at ICICI Direct, has outlined a cautious outlook for upcoming earnings while identifying selective opportunities across key sectors. Speaking to ET Now, Pandey emphasized the importance of being discerning in the current market environment as various sectors navigate different growth trajectories.
IT Sector Earnings Outlook
Ahead of key earnings announcements from TCS and HCL Tech, Pandey has tempered expectations for significant surprises in the IT sector. The analyst projects modest growth for tier-I IT companies in the upcoming quarter.
| Performance Metric | Expected Range |
|---|---|
| Quarter-on-Quarter Growth | 0.3% to 2.2% |
| HCL Tech Position | Higher end of range |
| Key Driver | Seasonality in software products |
Pandey stressed that management commentary will carry more weight than headline numbers, with investors focusing on commentary regarding CY26 budgets, discretionary spending revival signs, and Gen-AI scaling progress. Among IT stocks, his preferences include LTIMindtree and KPIT, where growth visibility appears relatively stronger.
Insurance Sector Shows Mixed Trends
The life insurance sector has demonstrated uneven growth patterns throughout the year, with performance varying significantly across quarters.
| Period | Growth Rate | Industry Performance |
|---|---|---|
| Q1 FY26 | 5.5% | Soft performance |
| April-November | 12-14% | Improved numbers |
| FY27 Outlook | Normal year | Expected recovery |
Despite the improvement in recent months, margin pressures remain a significant concern. Distributor payouts are expected to be fully implemented by the fourth quarter, potentially weighing on profitability in the second half. Pandey maintains selectivity in this space, preferring companies focused on non-participating and unit-linked products, with HDFC Life as the preferred pick carrying a target price of ₹860.00.
Real Estate Sector Presents Selective Opportunities
The real estate sector faces a complex landscape with contrasting performance between residential and commercial segments. Pandey pushed back against broad-based slowdown concerns, noting the sector's strong 2024 performance of approximately 38% returns, despite being among the worst performers in 2025.
| Segment | Performance Outlook | Key Metrics |
|---|---|---|
| Commercial | Robust growth | Strong leasing activity |
| Residential | Soft patch expected | Execution challenges |
| Mall Consumption | 20% growth expected | Improving fundamentals |
| Leasing Improvement | 67% to 77% | Key Mumbai assets |
Pandey highlighted Phoenix Mills as a preferred investment, citing strong consumption growth in malls and improving leasing activity. The analyst remains constructive on players with balanced residential and commercial asset mix, particularly favoring DLF and Max Estates where commercial operations contribute meaningfully to overall performance.
Market Positioning and Strategy
The recent market correction has already priced in considerable risk across sectors, according to Pandey's analysis. Most real estate companies are currently trading below their Net Asset Values (NAVs), presenting potential opportunities for selective investors. However, execution timelines remain challenging, particularly on the residential side, with some companies potentially missing full-year pre-sales guidance.
Pandey emphasized that current interest rates remain at lifetime lows, supporting the fundamental case for real estate investments despite near-term headwinds. The analyst advocates for a selective approach rather than broad sector exposure, focusing on companies with strong execution capabilities and diversified revenue streams.
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