Nifty IT Index Surges 4%, Reaching 52-Week High; Infosys and TCS Lead the Way with Impressive Gains

The Nifty IT Index witnessed a remarkable 4% surge and reached a 52-week high following the release of quarterly results by Infosys and Tata Consultancy Services (TCS). Both companies surpassed expectations, with Infosys witnessing a rise of 6% in its share price, and TCS recording a 3% increase. Despite ongoing challenges such as seasonality and modest deal wins, analysts maintain a positive outlook for the IT sector.

Earnings Performances Exceed Expectations

Infosys reported a consolidated net profit of ₹6,106 crore, representing a decline of over 7% compared to the previous year. However, its consolidated revenue grew by 1.3% to ₹38,821 crore. Analysts at Jefferies India Pvt Ltd stated that the revenues and margins exceeded expectations, while Infosys’ net profit performed better than anticipated. TCS reported a revenue of $7.3 billion, a 0.9% sequential increase, which largely aligned with Jefferies’ estimates.

Modest Deal Wins and Seasonal Impact

TCS experienced modest deal wins amounting to $8.1 billion, a decrease of 27.7% sequentially but a 3.8% year-on-year increase. Analysts attribute this decline mainly to seasonality. On the other hand, Infosys reported a total contract value (TCV) of $3.2 billion, a 57.8% decrease sequentially. However, analysts believe that the decline is partly due to higher furloughs and exceptional deal wins in the previous quarter.

Analysts Maintain Positive Outlook

Despite the challenges faced during the December quarter, both Infosys and TCS demonstrated resilience and exceeded expectations. Infosys has revised its FY24 revenue growth guidance from 1-2.5% to 1.5-2.0%. Jefferies analysts suggest that while the narrowed guidance implies a decline in sequential constant currency growth in Q4FY24, strong deal wins should support growth in FY25. They anticipate a 7.8% compound annual growth rate (CAGR) in revenue for Infosys over FY24-26. Similarly, for TCS, they expect a 10% EPS CAGR over the same period.


What were the earnings performances of Infosys and TCS? 

Infosys reported a consolidated net profit of ₹6,106 crore, down over 7% year-on-year, while TCS recorded a revenue of $7.3 billion, a 0.9% sequential increase.

How did the deal wins impact TCS and Infosys? 

TCS experienced modest deal wins, amounting to $8.1 billion, while Infosys reported a TCV of $3.2 billion, both influenced by seasonal factors.

What is the outlook for the IT sector? 

Despite challenges, analysts maintain a positive outlook for the IT sector, with expectations of strong growth in FY25 supported by strong deal wins.

How did Infosys and TCS perform relative to analyst expectations? 

Both companies exceeded analysts’ expectations, with Infosys’ revenues and margins beating estimates and TCS’s revenue and EBIT margin aligning with estimates.

What are the revised revenue growth guidance for Infosys and TCS? 

Infosys has revised its FY24 revenue growth guidance to 1.5-2.0%, while TCS maintained its revenue growth in line with estimates.

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