Infosys, HCL Tech to TCS Share Prices: Is the IT Sector Poised for a Better H2CY25?

India’s IT sector, long considered the bellwether of the country’s service economy, has seen a mixed bag of performance in the first half of calendar year 2025 (H1CY25). With key players like Infosys, TCS, and HCL Technologies reporting steady—though not spectacular—growth, the question dominating market sentiment is whether H2CY25 could mark the beginning of a sustained recovery for the sector.

Let’s examine the current scenario, recent stock performance, expert insights, and what investors can expect in the months ahead.

Stock Performance Snapshot: TCS, Infosys, and HCL Tech

The big three IT giants have posted modest gains in H1CY25:

• TCS (NSE: TCS): The stock has risen 7.3% year-to-date, underpinned by large deal wins and a resilient BFSI (banking, financial services, and insurance) segment.

• Infosys (NSE: INFY): Shares are up 4.8%, recovering from a weak March quarter amid hopes of improved discretionary spending by clients in North America.

• HCL Technologies (NSE: HCLTECH): The best performer among the three, HCL Tech has gained nearly 9.1%, driven by its strong product engineering pipeline and digital services traction.

Despite these upticks, IT stocks have lagged behind broader indices like the Nifty 50, which has surged nearly 11% over the same period, largely propelled by auto, capital goods, and banking sectors.

Tailwinds Gathering for H2CY25

Analysts are cautiously optimistic about the second half of 2025, pointing to macroeconomic stability, cooling inflation in the US, and a clearer Fed rate trajectory as potential drivers of renewed IT spending.

“Global clients are slowly resuming discretionary IT budgets after nearly 18 months of tight spending. We expect deal conversions and pipeline discussions to accelerate in Q3 and Q4,” said Ruchit Jain, Research Head at 5paisa Capital.

Several Tier-I IT firms have hinted at deal pipeline improvements and better revenue visibility in their Q1FY26 guidance. Importantly, companies are increasingly betting on AI, cloud modernization, and cybersecurity as growth verticals to offset traditional application development slowdowns.

Key Themes to Watch

1. AI-Led Transformation Deals

TCS and Infosys have both announced large multi-year AI-driven contracts with US and European clients. Infosys recently signed a $500 million generative AI consulting agreement with a global retailer, while TCS is piloting large language model (LLM) deployments across several Fortune 100 enterprises.

“We believe AI and GenAI are no longer buzzwords. They are real revenue-generating themes, especially in verticals like retail, healthcare, and banking,” noted Neha Khanna, IT Sector Analyst at Motilal Oswal.

2. Improved Hiring and Utilization

Attrition rates, which were a major concern in 2022-23, have significantly eased. Infosys reported an attrition rate of just 12.4% in the latest quarter, compared to 27% at the peak of the post-COVID hiring frenzy.

Moreover, companies are optimizing bench strength, leading to improved utilization levels, a positive signal for operating margins.

3. Currency Tailwinds

A weaker rupee, hovering around ₹84.10 per USD, is expected to benefit IT exporters in H2CY25. Most large players earn over 80% of their revenues in foreign currencies, primarily USD and EUR.

Challenges Still Linger

Despite the emerging positives, concerns around delayed decision-making, pricing pressure, and legacy business slowdown remain.

“The recovery will be uneven. Not all verticals or geographies are showing consistent demand patterns. Europe, for instance, is still cautious,” said Ankur Agarwal, Lead Analyst at ICICI Securities.

Additionally, mid-tier IT companies continue to face margin stress due to wage hikes and slower client ramp-ups.

Investor Outlook: Selective Optimism

Market participants are adopting a stock-specific approach rather than chasing the sector as a whole.

• TCS remains a defensive play with strong dividend history and relatively stable revenue flow from BFSI and retail.

• Infosys could benefit more from discretionary spending recovery and digital transformation deals in North America.

• HCL Tech, with its product-focused strategy and engineering strengths, might outperform in an AI-led investment cycle.

For long-term investors, analysts recommend staggered buying and a focus on companies with strong order books, high ROCE, and diversified client portfolios.

“We see 10-15% upside in select IT stocks over the next 6-9 months, provided macro conditions remain supportive,” projected Vikram Sinha, CIO at Nuvama Wealth.

Conclusion: Rebound on the Horizon, But Not Uniform

As H2CY25 begins, India's IT sector is positioned for a mild-to-moderate recovery, led by a combination of AI adoption, easing client caution, and currency tailwinds. However, the path ahead is likely to be gradual, not a sharp V-shaped rebound.

For investors, the next six months could be an opportunity to accumulate fundamentally strong IT stocks, with a focus on long-term digital transformation narratives.