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Time of India
24-06-2025
- Business
- Time of India
Accenture guidance spooks D-Street, investors trim IT bets
Agencies Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Mumbai: Investors cut exposure to information technology (IT) stocks on Monday as Accenture's lower-than-expected revenue growth guidance and weak order flows dented sentiment. Analysts said although no major declines are expected, the outlook remains IT fell 1.5% against the 0.6% dip in Nifty. All 10 stocks in the index closed lower. Oracle Financial Services fell 2.7%, while Infosys and HCL Technologies dropped 2.3% each. Tata Consultancy Services and Wipro shed 1.3% and 1.1%, respectively. LTI Mindtree and Tech Mahindra fell almost 1%."While Accenture reported decent results amid a weak macro environment, the reduction in bookings implies a subdued discretionary demand that dragged the IT stocks lower," said Sushovon Nayak, research analyst, Anand Rathi Institutional revised its revenue growth from 5-7% to 6-7% on a year-on-year basis after its third quarter results. The company's results and guidance are closely watched by investors because they serve as a proxy for global IT spending trends."Accenture revised the lower end of the guidance instead of the upper end, which is not optimistic as this is typically done by the IT major at the end of the year," said Dharmesh Kant, head of research, Cholamandalam on the guidance, the growth is not expected to come back in the next 6-10 months at least, said NSE IT index is up 4.7% in the past three months but is down 11.4% in 2025 so far amid uncertainty over the discretionary IT spending in the US. "Investors were anticipating the discretionary demand outlook to improve this year, however, this has been pushed further," said Sumit Pokharna, vice-president, Kotak Securities. "While the second half of the year could see lower risks, it is typically a muted period for IT companies and no meaningful orders are expected."Gen AI bookings witnessed good growth, but the momentum slowed significantly, which implies deceleration in Gen AI revenue growth in the next few quarters, he extent of interest rate cuts in the US will likely be a key trigger for IT stocks. "An interest rate cut by the US Fed could be a positive trigger for IT stocks but, investors are advised to remain watchful and only buy value-based plays," said Pokharna. "Infosys, TCS and Tech Mahindra remain reasonably valued."Nayak said mid-cap IT companies that have higher BFSI exposure should deliver on growth and justify the valuations since the commentary was good for this vertical, while large-cap companies are mostly fairly valued with flattish growth prospects.
News18
15-05-2025
- Business
- News18
TCS Shares Falling Behind Peers, Tata Group Stocks: What's Dragging Down The IT Bellwether?
Last Updated: TCS underperformed in the past year, with its shares falling 10%, trailing key IT peers like Infosys, HCL Tech, and Wipro; Here's why Tata Consultancy Services Share Price: For years, Tata Consultancy Services (TCS) has stood as the flagship performer of the Tata Group—widely regarded as a symbol of stability, consistent earnings growth, and long-term value creation. However, the IT major has seen its shine dim over the past year. TCS shares have declined 10%, significantly underperforming not only key IT peers such as Infosys (up 12%), HCL Tech (up 24%), and Wipro (up 11%), but also most other Tata Group companies. In contrast, the Nifty IT index has risen over 15% during the same period. Within the Tata stable, TCS now finds itself trailing most group stocks, with only Tata Motors, Tata Elxsi, and Tata Technologies posting weaker performance. TCS's performance over the past year, though positive, has been overshadowed by the exceptional gains of other Tata Group companies. Factors such as global economic uncertainties and sector-specific challenges have impacted its growth trajectory. TCS's recent underperformance stems from a combination of external pressures and internal hurdles. Globally, the tech sector has been navigating uncertainty, with economic slowdowns in key markets like the US and Europe — TCS's primary revenue sources — curbing client spending. Inflation, elevated interest rates, and geopolitical tensions have further dampened discretionary and transformational IT investments. On the internal front, TCS has faced client-specific setbacks. The high-profile BSNL contract, once a major revenue driver, is now being scaled down, impacting the company's top line. Additionally, slower deal conversions and delays in decision-making across sectors such as retail, manufacturing, and healthcare have further weighed on revenue growth. From Leader to Laggard: Why Is TCS Falling Behind Its Peers? TCS has reported slower deal conversions and prolonged decision-making cycles across key sectors like retail, manufacturing, and healthcare, putting further pressure on revenue growth. Sumit Pokharna, VP–Fundamental Research (IT) at Kotak Securities, pointed out that TCS's management has acknowledged challenges in client spending, particularly in retail, manufacturing, and insurance. 'IT services spending growth is likely to fall below our base-case assumption of 4–5% in FY26, with delays in project executions," he noted. While TCS has struggled with growth headwinds, its peers have shown stronger momentum. HCL Tech's strategic focus on high-growth areas such as digital transformation and cloud services has delivered tangible results. Infosys continues to maintain robust deal wins, and Wipro's aggressive M&A strategy has helped broaden its client base and geographical reach. Sushovon Nayak, Research Analyst at Anand Rathi Institutional Equities, told News18: 'Deferrals in client spending—especially in the retail and manufacturing sectors—amid tariff uncertainties, as highlighted in TCS's Q4 FY25 commentary, along with client-specific challenges such as the BSNL ramp-down, have significantly weighed on the company's growth trajectory. These factors have collectively contributed to the stock's underperformance." He added: 'However, if the US-China trade deal progresses positively, we could witness a revival in discretionary IT spending, which may support improved growth prospects for TCS going forward." Light At The End Of The Tunnel For TCS? Following TCS's Q4 FY25 results, analysts at HSBC Securities and Capital Markets (India) noted that US tariffs and Jaguar Land Rover's (JLR) ageing portfolio are likely to weigh on growth in FY26. They warned that margins may disappoint as well. In the domestic automotive segment, Tata Motors — a key part of the Tata Group — faces continued competitive pressure in the passenger vehicle (PV) market, while the recovery in the commercial vehicle (CV) cycle remains sluggish. With limited near-term catalysts, HSBC downgraded Tata Motors to a 'Hold" rating (from 'Buy"), even as it raised the target price to Rs 770 from Rs 700. Jefferies India echoed similar concerns, noting that Tata Motors is headed for a challenging year. While Q4 EBITDA declined, it still came in 4% above Jefferies' estimates. The dip was attributed primarily to weaker JLR margins. 'JLR is expected to face headwinds in the coming year due to US tariffs, intensifying competition in China, and rising customer acquisition costs. India's CV demand has also slowed, while the electric PV segment is seeing increasing competition," Jefferies said. As a result, Jefferies has cut its FY26–27 EBITDA estimates for Tata Motors by 8%, though it raised earnings per share projections by 3–4%. The brokerage retained its 'Underperform' rating, with a revised target price of Rs 630. Disclaimer:Disclaimer: The views and investment tips by experts in this report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions. Stay updated with all the latest news on the Stock Market, including market trends, Sensex and Nifty updates, top gainers and losers, and expert analysis. Get real-time insights, financial reports, and investment strategies—only on News18. First Published:
Economic Times
28-04-2025
- Business
- Economic Times
Rs 2.3 lakh crore comeback: IT stocks roar to life, but are they running on low battery?
Indian IT stocks have seen a significant comeback, adding Rs 2.32 lakh crore in market value. The Nifty IT index has increased substantially. This surge occurs despite ongoing uncertainties in demand. Analysts suggest caution, viewing the rebound as technical rather than fundamentally driven. Attractive valuations and long-term opportunities exist. Focus is on monitoring global markets and demand for sustained momentum. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads In a market where tech stocks have long been buried under bearish sentiment, Indian IT stocks have staged a dramatic comeback, adding a staggering Rs 2.32 lakh crore in market value over just nine trading sessions. The Nifty IT index has surged over 9% since April 9, far outpacing the broader market and hinting at a possible turnaround for the sector. But is this rally built on solid ground or just a fleeting spark in a volatile market?This sudden surge comes even as most IT stocks remain trapped in a bear grip amid an uncertain demand environment. Yet, signs of de-escalation in global trade tensions and a recovery in US markets have helped propel the sector higher, with investors flocking to IT as a defensive play amid escalating geopolitical tensions between India and Pakistan after the attack in Kashmir's stock prices have been on fire, analysts remain cautious about calling it a full-fledged recovery. Sushovon Nayak, IT Research Analyst at Anand Rathi Institutional Equities, emphasized that despite the strong performance, "this rebound appears largely technical and sentiment-driven rather than fundamentally supported." He added that recent quarterly results from leading IT firms were mixed, with many issuing cautious John, Senior Research Analyst at Geojit Investments, echoed a similar sentiment, stating the March quarter results reaffirmed a cautious outlook, with most largecap IT firms reporting mixed performance.'Near-term performance may remain subdued due to US tariff uncertainties and geopolitical stress, affecting discretionary spending in key markets. Inflationary pressures have led to decision-making delays in retail, manufacturing, and insurance verticals, though the deal pipeline remains strong,' John told he said IT remains a contra bet opportunity after the recent correction as renewed hopes of easing trade tensions between the US and China have boosted investor sentiment, reflecting broader global the near-term headwinds, both analysts pointed to attractive valuations and long-term structural opportunities in the sector. John observed that "large-cap IT stocks have undergone significant corrections over the past year and are now trading near to their long-term average, making the stocks attractive for long-term investors." He added that healthy order inflows in Q4 and sustained momentum into FY26 "provide optimism for recovery," driven by continued demand for cost optimization, vendor consolidation, and AI and cloud recent rally has seen mid-cap names like Mphasis and Persistent rally up to 20%, while tier-I players such as Tech Mahindra and HCL Technologies have notched double-digit gains. This is despite IT companies delivering disappointing Q4FY25 results, weighed down by inflationary pressures and decision-making delays in key verticals like retail, manufacturing, and insurance."While selective stock-specific opportunities may emerge during this correction, we remain structurally positive on the sector overall," said Nayak. He pointed to Anand Rathi's recent sector note from April 15, which highlighted that although results for Q4FY25 and Q1FY26 are expected to remain muted, "discretionary demand and structural opportunities in AI — particularly in data and legacy infrastructure modernization — will support IT spending from the second half of FY26, with potentially stronger tailwinds in FY27."Valuations have become a focal point for investors seeking value in large-cap names. "While Q4 numbers have been weak for the large-cap IT names, we draw comfort from the valuations, which are closer to their 10-year averages, in addition to their FCF and dividend yields between 4-5% and 2-3% respectively," Nayak said. He noted that while TCS and Infosys continue to be resilient from a valuation standpoint, growth concerns persist. Wipro has guided for -2.5% growth at the midpoint for Q1, while Tech Mahindra is rebuilding its BFSI segment and making a renewed push into LTIMindtree stands out as a potential outlier among large-caps. "Under the new CEO, Mr. Venu Lambu, LTIM is poised for higher growth in FY26, with the company being the only outlier in large-cap IT to mention that Q1FY26 will be better, with retail and manufacturing segments continuing to remain stable," Nayak cautioned that while inflationary pressures have delayed decision-making in several verticals, "the deal pipeline remains strong," offering hope for sustained growth into FY26. He added that a stable inflation trajectory could give the US Federal Reserve room to ease interest rates, potentially spurring more client now, the Rs 2.32 lakh crore rally has breathed life into a battered sector, but analysts agree that fundamentals will need to catch up with sentiment for the momentum to sustain. As global markets stabilize and demand visibility improves, investors will be watching closely to see if this rebound is a precursor to a lasting recovery or just a short-lived respite in an otherwise challenging environment.(Data: Ritesh Presswala): Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of The Economic Times)
Time of India
28-04-2025
- Business
- Time of India
Rs 2.3 lakh crore comeback: IT stocks roar to life, but are they running on low battery?
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel In a market where tech stocks have long been buried under bearish sentiment, Indian IT stocks have staged a dramatic comeback, adding a staggering Rs 2.32 lakh crore in market value over just nine trading sessions. The Nifty IT index has surged over 9% since April 9, far outpacing the broader market and hinting at a possible turnaround for the sector. But is this rally built on solid ground or just a fleeting spark in a volatile market?This sudden surge comes even as most IT stocks remain trapped in a bear grip amid an uncertain demand environment. Yet, signs of de-escalation in global trade tensions and a recovery in US markets have helped propel the sector higher, with investors flocking to IT as a defensive play amid escalating geopolitical tensions between India and Pakistan after the attack in Kashmir's stock prices have been on fire, analysts remain cautious about calling it a full-fledged recovery. Sushovon Nayak, IT Research Analyst at Anand Rathi Institutional Equities, emphasized that despite the strong performance, "this rebound appears largely technical and sentiment-driven rather than fundamentally supported." He added that recent quarterly results from leading IT firms were mixed, with many issuing cautious John, Senior Research Analyst at Geojit Investments, echoed a similar sentiment, stating the March quarter results reaffirmed a cautious outlook, with most largecap IT firms reporting mixed performance.'Near-term performance may remain subdued due to US tariff uncertainties and geopolitical stress, affecting discretionary spending in key markets. Inflationary pressures have led to decision-making delays in retail, manufacturing, and insurance verticals, though the deal pipeline remains strong,' John told he said IT remains a contra bet opportunity after the recent correction as renewed hopes of easing trade tensions between the US and China have boosted investor sentiment, reflecting broader global the near-term headwinds, both analysts pointed to attractive valuations and long-term structural opportunities in the sector. John observed that "large-cap IT stocks have undergone significant corrections over the past year and are now trading near to their long-term average, making the stocks attractive for long-term investors." He added that healthy order inflows in Q4 and sustained momentum into FY26 "provide optimism for recovery," driven by continued demand for cost optimization, vendor consolidation, and AI and cloud recent rally has seen mid-cap names like Mphasis and Persistent rally up to 20%, while tier-I players such as Tech Mahindra and HCL Technologies have notched double-digit gains. This is despite IT companies delivering disappointing Q4FY25 results, weighed down by inflationary pressures and decision-making delays in key verticals like retail, manufacturing, and insurance."While selective stock-specific opportunities may emerge during this correction, we remain structurally positive on the sector overall," said Nayak. He pointed to Anand Rathi's recent sector note from April 15, which highlighted that although results for Q4FY25 and Q1FY26 are expected to remain muted, "discretionary demand and structural opportunities in AI — particularly in data and legacy infrastructure modernization — will support IT spending from the second half of FY26, with potentially stronger tailwinds in FY27."Valuations have become a focal point for investors seeking value in large-cap names. "While Q4 numbers have been weak for the large-cap IT names, we draw comfort from the valuations, which are closer to their 10-year averages, in addition to their FCF and dividend yields between 4-5% and 2-3% respectively," Nayak said. He noted that while TCS and Infosys continue to be resilient from a valuation standpoint, growth concerns persist. Wipro has guided for -2.5% growth at the midpoint for Q1, while Tech Mahindra is rebuilding its BFSI segment and making a renewed push into LTIMindtree stands out as a potential outlier among large-caps. "Under the new CEO, Mr. Venu Lambu, LTIM is poised for higher growth in FY26, with the company being the only outlier in large-cap IT to mention that Q1FY26 will be better, with retail and manufacturing segments continuing to remain stable," Nayak cautioned that while inflationary pressures have delayed decision-making in several verticals, "the deal pipeline remains strong," offering hope for sustained growth into FY26. He added that a stable inflation trajectory could give the US Federal Reserve room to ease interest rates, potentially spurring more client now, the Rs 2.32 lakh crore rally has breathed life into a battered sector, but analysts agree that fundamentals will need to catch up with sentiment for the momentum to sustain. As global markets stabilize and demand visibility improves, investors will be watching closely to see if this rebound is a precursor to a lasting recovery or just a short-lived respite in an otherwise challenging environment.(Data: Ritesh Presswala): Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of The Economic Times)
