- Shares of Infosys and Wipro fell over 2% in early U.S. trading following TCS results
- TCS reported a 2.7% sequential decline in June-quarter profit to Rs 13,349 crore
- TCS order book shrank to $9.5 billion from $12 billion in the previous quarter
Shares of Infosys Ltd. and Wipro Ltd. listed in the U.S. fell more than 2% at the opening bell on Thursday after Tata Consultancy Services (TCS) reported a decline in its June-quarter profit and a weaker order book, raising fresh concerns over demand trends for India's $280-billion IT services sector.
Infosys' American Depositary Receipts (ADRs), listed on the NYSE, were initially down over 2% in early trading before recovering some ground. As of 8:20 a.m. EDT in premarket trading, the stock was quoted at $10.87, down 0.57% from its previous close of $10.93, after having ended the previous session 3.02% lower. Premarket trading volume stood at 21,410 shares.
Wipro's NYSE-listed ADR also came under pressure at the open, dropping more than 2% before trimming losses. By 9:37 a.m. EDT, the stock was trading at $1.805, down 1.37% from its previous close of $1.83, reflecting a partial recovery from steeper declines seen immediately after the opening bell.
ALSO READ: TCS Q1 Results: AI Greenshoots, In-Line Profit And Lukewarm Dividend — Key Hits & Misses
The weakness followed TCS' closely watched first-quarter earnings for FY27. India's largest IT services exporter reported a consolidated net profit of Rs 13,349 crore, down 2.7% sequentially from Rs 13,718 crore. The decline was largely due to an exceptional charge of Rs 668 crore towards settlement of legal claims. Even so, the result was broadly in line with Bloomberg analysts' consensus estimate of Rs 13,504 crore.
Investors were more concerned by TCS' order book, which shrank to $9.5 billion from $12 billion in the previous quarter. Chief Executive Officer and Managing Director K. Krithivasan said the pipeline included a marquee AI-led transformation deal with SKF, helping the company's AI business scale to an annualised revenue run rate of $2.6 billion.
"As customers accelerate investments in AI, modernization, cybersecurity, sovereign cloud and platform simplification, our strong deal conversion, improving client mining and expanding ecosystem partnerships position TCS well to translate opportunity into sustained growth," Krithivasan said.
TCS also reported a voluntary attrition rate of 13.6%, above Bloomberg's estimate of 11.5%, although it improved marginally from 13.7% in the previous quarter. Headcount rose by more than 9,000 employees sequentially to 5,93,798.
The company declared an interim dividend of Rs 12 per share, below Bloomberg analysts' expectation of Rs 19 per share, adding to the muted market reaction.
With TCS setting the tone for the earnings season, investors will closely watch upcoming results from Infosys, Wipro and other Indian IT firms for signs of a recovery in technology spending and deal momentum.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.