Cognizant numbers and narrative lift the mood at TCS, Infosys, and peers
Published on 02/05/2025 09:47 AM
Cognizant numbers and narrative lift the mood at TCS, Infosys, and peersBetter-than-expected earnings and sustained guidance from the Nasdaq-listed Cognizant gave hope to investors in Indian IT stocks at a time when tariffs and trade war threaten to push their biggest market, US, into recession.By Sriram Iyer May 2, 2025, 9:47:12 AM IST (Updated)2 Min ReadCognizant’s top-line growth of 4.2% year-on-year in constant currency terms was better than the street estimates. Chief Executive Officer Ravi Kumar reiterated the guidance, 3.5-6% revenue growth for the full year ending December 2025, and revealed a plan to hire 20,000 freshers when peers have cut back on hiring.
The return of optimism reflected in peer stocks like TCS, Infosys, HCLTech, Wipro and Tech Mahindra on May 2. Stocks data as at 9:17 am.
A rebound in healthcare and BFSI (Banking, Financial Services, and Insurance), after a two-year slump in the latter vertical, signals a meaningful shift for IT services players heavily exposed to the sector, according to analysts at CLSA, a multinational financial services firm, who also described Cognizant’s earnings as ‘excellent’.
MetricJan-March 2025Growth (YoY)Revenue$5.12 billion7.5%Profit$663 million21.4%Earnings per share$1.2310%
"Today, productivity, cost reduction, and resiliency are especially important, and we believe our differentiated AI and platform capabilities are helping clients navigate the near-term uncertainty while embarking on longer-term AI-led transformation," the CEO of Cognizant said in his statement to the Nasdaq.
The bleak outlook for the US economy, in the wake of Trump tariffs, led to risk aversion among investors in Indian IT services. Latest data showed that the American economy shrank between January and March for the first time since 2022, further fuelling fears of a recession triggered by the trade between the US and China.
The Nifty IT Index was still down nearly 17.5% in 2025 despite a 16% rally since April 7 when the index of Indian IT stocks hit a 52-week low of 30,918.
While Cognizant’s performance may signal improving prospects, CLSA analysts still advise caution. Rising competition may eat into the profit potential, they warned.
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