Indian IT stocks surged on May 2 after Nasdaq-listed Cognizant Technology Solutions reported better-than-expected first-quarter earnings and reaffirmed its full-year revenue guidance, signalling steady global tech demand amid an AI-led pivot.
The Nifty IT index gained around 1 per cent, with frontline names like Infosys, TCS, Wipro and HCL Technologies rising up to 1.5 per cent intraday. This comes even as the index remains nearly 17.5 per cent down year-to-date, but it has seen a sharp 11 per cent recovery since April 9.
Cognizant Q1 beats estimates, guides for steady FY25 growth
Cognizant reported a Q1 revenue of 5.1 billion dollars, up 7.5 per cent year-on-year and 8.2 per cent in constant currency terms—surpassing Wall Street expectations. Net profit also rose 21 per cent to 663 million dollars for the March-ended quarter. The company follows a calendar financial year unlike its Indian peers.
It retained its full-year constant currency revenue growth guidance at 3.5 to 6 per cent. However, Q2 guidance was softer, with sequential growth seen at 5 to 6.5 per cent. The firm also indicated no major macro headwinds or client pullbacks in Q1, though some softness may emerge in Q2.
BFSI, healthcare verticals rebound; large deals lag
Analysts noted a rebound in key verticals such as BFSI and healthcare, particularly after a prolonged slowdown in the former. Cognizant’s bookings rose 3 per cent year-on-year to 26.7 billion dollars, with a book-to-bill ratio of around 1.3x. However, new large deals (100 million dollars or more) fell to four from ten in the previous quarter.
Sector outlook improves, but valuation concerns persist
Brokerages expect Indian IT players to benefit from the global sentiment shift. The resilience in BFSI and the uptick in AI-related demand are seen as key tailwinds. However, margin pressures and tight discretionary tech budgets remain an overhang, especially for mid-tier firms.
With Q4 results from Indian IT majors now largely behind, the street will closely watch deal wins and FY26 guidance to gauge sustained momentum.
