&w=3840&q=100)
IT companies' valuation hits 5-year low amid selloff by investors
The combined market capitalisation of the country's top five IT firms that are part of the BSE Sensex is down 24 per cent since January and their valuation has slipped to lowest levels in the past five years.
The sector is trading at a discount to the BSE Sensex and trailing the price/earning (P/E) multiple for the first time in the past four years.
The trailing P/E of the top five IT companies has now declined to 22.3 times from 25.5 times at the end of December last year and a record high of 36 times in December 2021.
In comparison, the BSE Sensex is up 2.2 per cent since the end of last year. The index closed at 79,858 on Friday, up from 78,139 at the end of December.
Index valuation remained range-bound in the past three years unlike the valuation of IT services companies.
The combined market capitalisation of Tata Consultancy Services (TCS), Infosys, Wipro, HCL Technologies, and Tech Mahindra declined to ₹24.86 trillion on Friday from ₹32.67 trillion at the end of December.
Among individual companies, TCS, the industry leader, has been the biggest loser and its market capitalisation is down 26 per cent year-to-date (YTD) in 2025. It is followed by Infosys, which is down 24.3 per cent and HCL Technologies 23.1 per cent.
Tech Mahindra has been a relative out-performer and has lost just 13.2 per cent, while Wipro is down 20.7 per cent YTD.
Analysts attribute the decline in share prices and market capitalisation to an earnings slowdown besides sector rotation.
'The IT companies' revenue and earnings growth in April-June 2025 was below par with low single-digit growth in net sales and net profit. Investor sentiment was further dented by Tata Consultancy Services' admission about growth challenges facing the industry and headcount reduction,' said Dhananjay Sinha, co-head, research and equity strategy, Systematix Institutional Equity.
IT companies' stock prices took a hit from a selloff by foreign portfolio investors (FPIs).
'FPIs have been big sellers in recent weeks and they had a big exposure to top companies such as TCS, Infosys, and HCL Technologies,' added Sinha.
Others point to global growth uncertainties owing to American President Donald Trump's trade war leading to weak demand, which has led to underwhelming results across the sector. This softness has manifested in multiple ways — margin pressure, increased reliance on balance sheets to drive growth, and heightened aggression in cost take-out deals.
'Revenue performance was weak in Q1FY26 (April-June 2025) with four of the five large IT companies reporting revenue decline on Q-o-Q basis and three of the five on a Y-o-Y basis,' write Kawaljeet, Saluja Sathishkumar, and S Vamshi Krishna of Kotak Institutional Equity in their result review of the IT companies.
The combined net sales of the top five IT companies were up just 4 per cent in Q1FY26 to ₹1.71 trillion, growing at the slowest pace in the last four quarters.
Their combined net profits were up 5.6 per cent year-on-year (Y-o-Y) in Q1FY26 to ₹27,995 crore, down from 10 per cent Y-o-Y growth in Q1FY25 but an improvement from the 1.5 per cent increase in Q4FY25.
Analysts at Kotak Institutional Equity say the demand environment has taken a slight hit due to uncertainties over the Trump administration's tariff regime with a considerable impact on the retail, logistics, and manufacturing verticals.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Economic Times
2 minutes ago
- Economic Times
Small businesses brace for the punishing side effects of Trump's tariffs
Synopsis Small businesses across America are struggling to navigate economic challenges stemming from President Trump's tariff, tax, and budget policies. Rising costs for supplies and ingredients, coupled with unpredictable policy changes, are forcing owners like Katrina Golden of Lil Mama's Sweets & Treats to make difficult decisions. NYT News Service Katrina Golden at her coffee and cake shop, Lil Mama's Sweets & Treats, inside the Veterans Affairs Medical Center in Augusta, Ga., Aug. 8, 2025. Golden figures the cost of her supplies and ingredients is up 20 to 25 percent since January. Katrina Golden, the owner of Lil Mama's Sweets & Treats, got an email this past spring from the Chinese company that supplies her branded paper coffee cups. Tariffs were coming, it said. If she placed a bulk order right away, she could lock in the price at the time of $225 a case."I would have loved to," said Golden, whose coffee and cake shop operates out of a hospital in downtown Augusta, Georgia. But as a small-business owner, she didn't have that kind of extra cash. "My bottom line wouldn't allow me to."Across the country, American businesses, workers and families are trying to figure out how to navigate the economic waves stirred up by President Donald Trump's tariff, tax and budget policies. For large firms with big bank balances, workers ensconced in a job and households near the top of the income ladder, the drastic policy shifts will be easier to small-business owners like Golden as well as job seekers and households at the lower and middle rungs of the income ladder are in for a rougher firms, for instance, not only have fewer resources to weather unexpected costs, they also lack the bargaining power of megastores like Walmart to pressure suppliers to lower prices. They may also lack access to lines of credit available to bigger firms. Nor can they afford long-term contracts that can keep costs down. Doug and Betsy Scheffel, owners of ETM Manufacturing, a custom sheet-metal fabrication and machine shop in Littleton, Massachusetts, have to buy aluminium and steel on the spot market. Since 50% tariffs have been slapped on those imported metals, their costs have soared."I don't know how to put a business plan together that makes any sense to anyone," Scheffel said. Neither do many of his customers, who have delayed or reduced orders. Legrand Lindor, the owner of LMI Textiles, a small medical supply and manufacturing company in Milton, Massachusetts, said now not only did he have to handle the increase in prices, but his suppliers also expected him to handle the administration of customs, duty and taxes. Both he and Scheffel are members of Small Business for America's Future, a nonprofit membership group in Washington that has been complaining about unpredictable tariff policies. The group also worries about a ballooning national debt, cuts in health programs that small businesses and their families rely on and tax cuts that disproportionately benefit large corporations. Scheffel said he had trimmed his staff in anticipation of federal reductions in health care spending because they won't be able to afford either the insurance he offers or the public plan from costs are hitting Golden, too. Overall, she figures the cost of her supplies and ingredients -- flour, parchment paper, napkins, paper plates, forks, butter, sugar, cream cheese, spices, plastic wrap -- is up 20% to 25% since has about a 60-day supply of small coffee cups left, she said. She expects that the price of a case will rise to $300 or $400, from $225, for her next it's not just foreign-made items. The clam shell containers for single-serve pieces of cake come from an American company. In January, a box of 500 was $55; now it is $69. A 5-pound bag of coffee beans from a local roaster in Augusta is $63, up from $55. And with a new 50% tariff on Brazil, one of the largest coffee exporters, she expects prices to rise even costs and unpredictability are rippling through the labor market. "I would hire two more today if I knew that I could afford to keep them," said Golden, who employs four people. But with whipsaw policy changes, "how do you plan?"Companies, for the most part, aren't cutting jobs, but they aren't adding many either. And workers, even those fortunate enough to have secure positions, are cautious. Surveys show that more of them are choosing to stay put rather than take the risk of changing employers."Employers are kind of putting hiring on hold," said Daniel Hornung, a senior fellow at the Massachusetts Institute of Technology, who was an economic adviser to President Joe Biden. "There's not much churn in the job market."At the moment, consumers face an overall average effective tariff rate of 18.6%, according to the Yale Budget Lab, up from 2.4% in Sweet, chief economist at Oxford Economics, wrote in a newsletter that under the president's trade policies and budget priorities, high-income consumers are doing well but lower-income households are estimated that households in the bottom fifth of the income ladder will see their real disposable income decrease by 2.5% to 3% because of higher prices caused by tariffs and cuts to health and social programs. Juicy tax cuts for the richest Americans mean the income of the top fifth will increase by the same squeeze is playing out at Lil Mama's. Golden's weekly net revenue once averaged $2,500 to $3,000. Recently, she has been struggling to make $2,000. If something doesn't change within the next three months, she said, she will have to raise prices. Fifty cents to $1 more on a small $3 cup of coffee; $5 instead of $3 for a serving of red velvet cheesecake or banana pudding cake. "If we fail," Golden said, "that's it. There's no fallback."
&w=3840&q=100)
First Post
32 minutes ago
- First Post
'It's absolutely going to happen': UFC's first fight at White House confirmed by CEO Dana White
After Donald Trump said he wanted to stage a UFC match in White House, CEO Dana White has confirmed it will take place next year to celebrate 250 years of American independence. Donald Trump said last month he wanted to host a UFC match on the White House grounds to celebrate 250 years of American independence. Image: Reuters Hours after Paramount and UFC announced a billion-dollar rights deal, Dana White said he had yet to hear from his friend, President Donald Trump, on his thoughts about the fight company's new streaming home. That was fine with White. The UFC CEO was set to travel to Washington on Aug. 28 to meet with Trump and his daughter, Ivanka, to catch up and discuss logistics on the proposed Fourth of July fight card next year at the White House. STORY CONTINUES BELOW THIS AD UFC match in White House 'absolutely' happening Trump said last month he wanted to stage a UFC match on the White House grounds with upwards of 20,000 spectators to celebrate 250 years of American independence. 'It's absolutely going to happen," White told The Associated Press. 'Think about that, the 250th birthday of the United States of America, the UFC will be on the White House south lawn live on CBS.' The idea of cage fights at the White House would have seemed improbable when the Fertitta brothers purchased UFC for $2 million in 2001 and put White in charge of the fledging fight promotion. White helped steer the company into a $4 billion sale in 2016 and broadcast rights deals with Fox and ESPN before landing owner TKO Group's richest one yet — a seven-year deal with Paramount starting in 2026 worth an average of $1.1 billion a year, with all cards on its streaming platform Paramount+ and select numbered events also set to simulcast on CBS. ESPN, Amazon and Netflix and other traditional sports broadcast players seemed more in play for UFC rights — White had previously hinted fights could air across different platforms — but Paramount was a serious contender from the start of the negotiating window. The Paramount and UFC deal came just days after Skydance and Paramount officially closed their $8 billion merger — kicking off the reign of a new entertainment giant after a contentious endeavor to get the transaction over the finish line. White said he was impressed with the vision Skydance CEO David Ellison had for the global MMA leader early in contract talks and how those plans should blossom now that Ellison is chairman and CEO of Paramount. STORY CONTINUES BELOW THIS AD 'When you talk about Paramount, you talk about David Ellison, they're brilliant businessmen, very aggressive, risk takers,' White said. 'They're right up my alley. These are the kind of guys that I like to be in business with.' The $1.1 billion deals marks a notable jump from the roughly $550 million that ESPN paid each year for UFC coverage today. But UFC's new home on Paramount will simplify offerings for fans — with all content set to be available on Paramount+ (which currently costs between $7.99 and $12.99 a month), rather than various pay-per-view fees. Paramount also said it intends to explore UFC rights outside the U.S. 'as they become available in the future.' UFC matchmakers were set to meet this week to shape what White said would be a loaded debut Paramount card. The UFC boss noted it was still too early to discuss a potential main event for the White House fight night. STORY CONTINUES BELOW THIS AD 'This is a 1-of-1 event,' White said. There are still some moving parts to UFC broadcasts and other television programming it has its hands in as the company moves into the Paramount era. White said there are still moving parts to the deal and that includes potentially finding new homes for 'The Ultimate Fighter,' 'Road To UFC,' and 'Dana White's Contender Series.' It's not necessarily a given the traditional 10 p.m. start time for what were the pay-per-view events would stand, especially on nights cards will also air on CBS. 'We haven't figured that out yet but we will,' White said. And what about the sometimes-contentious issue of fighter pay? Some established fighters have clauses in their contracts that they earn more money the higher the buyrate on their cards. Again, most of those issues are to-be-determined as UFC and Paramount settle in to the new deal — with $1.1 billion headed the fight company's way. STORY CONTINUES BELOW THIS AD 'It will affect fighter pay, big time,' White said. 'From deal-to-deal, fighter pay has grown, too. Every time we win, everybody wins.' Boxer Jake Paul wrote on social media the dying PPV model — which was overpriced for fights as UFC saw a decline in buys because of missing star power in many main events — should give the fighters an increased idea of their worth. 'Every fighter in the UFC now has a clear picture of what the revenue is…no more PPV excuses,' Paul wrote. 'Get your worth boys and girls.' White also scoffed at the idea that the traditional PPV model is dead. There are still UFC cards on pay-per-view the rest of the year through the end of the ESPN contract and White and Saudi Arabia have teamed to launch a new boxing venture that starts next year and could use a PPV home. White, though, is part of the promotional team for the Canelo Álvarez and Terence Crawford fight in September in Las Vegas that airs on Netflix. STORY CONTINUES BELOW THIS AD 'It's definitely not run it's course,' White said. 'There were guys out there who were interested in pay-per-view and there were guys out there that weren't. Wherever we ended up, that's what we're going to roll with.' White said UFC archival footage 'kills it' in repeat views and those classic bouts also needed a new home once the ESPN deal expires. Just when it seems there's little left for UFC to conquer, White says, there's always more. Why stop at becoming the biggest fight game in the world? Why not rewrite the pecking order in popularity and riches and go for No. 1 in all sports? 'You have the NFL, the NBA, the UFC, and soccer globally,' White said. 'We're coming. We're coming for all of them.'
&w=3840&q=100)
Business Standard
32 minutes ago
- Business Standard
Bharat Dynamics soars 5% after Q1; buy, sell or hold? Analysts recommend
Bharat Dynamics share price today: Defence and aerospace company Bharat Dynamics share price rallied as much as 5.19 per cent to hit an intraday high of ₹1,563 on Wednesday, August 13, 2025. At 9:32 AM, the stock was trading 3.26 per cent higher at ₹1,534.25. In comparison, the BSE Sensex was up 0.19 per cent at 80,391.68. Bharat Dynamics Q1FY26 results In Q1FY26, Bharat Dynamics reported a net profit of ₹18.34 crore, a sharp increase of 154.37 per cent compared to ₹7.21 crore in the same quarter last year. Revenue from operations rose 29.69 per cent to ₹247.92 crore from ₹191.16 crore in Q1 FY25. Here's what brokerages said on Bharat Dynamics' Q1 results? Domestic brokerage Motilal Oswal noted that Bharat Dynamics delivered a 30 per cent Y-o-Y growth in execution during Q1FY26, aided by a strong order book and easing supply chain challenges. While Ebitda margins remained negative due to seasonal weakness and negative operating leverage, losses narrowed compared to the previous year. PAT came in ahead of consensus expectations. With an order book of approximately ₹23,300 crore, execution is expected to ramp up further in coming quarters, especially in projects like Akash, Astra Mk1, MRSAM, and other armaments. Motilal Oswal had initially rated the stock 'Neutral' in July 2025 due to high valuations of 52x/38x FY27E/FY28E EPS. Following a 25 per cent correction, the stock is now trading at more reasonable valuations of 39x/29x. The brokerage has therefore upgraded the stock to 'Buy' from 'Neutral' and maintained its target price of ₹1,900, based on 42x Sep'27E EPS. Nuvama highlighted that despite subdued profitability, Bharat Dynamics posted strong execution growth of 30 per cent year-on-year, reaching ₹250 crore during Q1FY26. The company's current order backlog of ₹22,800 crore, which is around seven times FY25 sales, and a strong ₹42,800 crore pipeline provide visibility for the next four to five years. Key catalysts include timely and profitable execution, rising exports to friendly nations, and the easing of supply constraints related to chips and warheads. Nuvama is projecting a 51 per cent revenue CAGR and a 66 per cent EPS CAGR from FY25 to FY28, along with operating margins in the 23 to 23.5 per cent range. The brokerage has maintained its 'Buy' rating and target price of ₹2,250, based on a 45x target PE on FY27E EPS of ₹50.1. About Bharat Dynamics Headquartered in Hyderabad, Bharat Dynamics was established on 16 July 1970 as a Public Sector Undertaking under the Ministry of Defence, Government of India. Conceived as the manufacturing hub for guided missile systems and allied equipment for the Indian Armed Forces, Bharat Dynamics has since evolved into a critical pillar of India's defence infrastructure. Over the decades, it has collaborated extensively with the Defence Research and Development Organisation (DRDO) and foreign Original Equipment Manufacturers (OEMs) to supply a wide range of missiles and associated systems. The company now stands among the few global players equipped with state-of-the-art facilities for the production of guided missiles, underwater weapons, airborne defence systems, and more. It also provides life cycle support, refurbishment, and life extension services for vintage missile systems. BDL has transitioned from a missile manufacturer to a comprehensive Weapon System Integrator, offering end-to-end solutions to the Indian Armed Forces. With four operational manufacturing units—three in Telangana (Hyderabad, Bhanur, and Ibrahimpatnam) and one in Visakhapatnam, Andhra Pradesh—the company is expanding its footprint with a new facility under development in Amravati, Maharashtra. In partnership with DRDO, BDL produces a variety of indigenous systems, including the Akash Surface-to-Air Missile and heavyweight and lightweight torpedoes, the latter of which are also being exported.
