IT Stocks Today: Indian IT stocks rallied on Friday, October 9, with the Nifty IT index rising as much as 3.26% to an intraday high of 28,641.20, after Tata Consultancy Services (TCS) reported September-quarter net profit and revenue above analyst estimates. Coforge, L&T Technology Services, Mphasis and Persistent Systems were among the other top gainers.
That said, TCS shares climbed as much as 4.72% to Rs 2,174, while Coforge advanced 3.79% to an intraday high of Rs 1,883. L&T Technology Services gained 3.71%, Mphasis rose 3.66%, and Persistent Systems added 3.44% at their respective intraday highs.
The rally came despite concerns over the US Department of Labor's suspension of Permanent Labor Certification (PERM) applications involving major technology companies, including TCS, Infosys, Wipro and HCL Technologies.
Investors appeared to draw some comfort from TCS's earnings performance, while brokerages expect the direct operational and financial impact of the PERM suspension on Indian IT companies to remain limited.
G Chokalingam, founder and head of research at Equinomics Research, said IT stocks may not face significant pressure from the latest US move.
"Firstly, TCS results (double-digit profit growth in rupee terms) may give some comfort. Secondly, already six large IT firms saw registrations for the US H-1B skilled worker visa falling by 92% so far in FY2027. Therefore, the latest move may not impact much," he said.
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IT Stocks Rally: TCS, Coforge, L&T Tech Among Top Gainers
TCS led the gains among the IT stocks tracked, touching an intraday high of Rs 2,163.20 against its previous close of Rs 2,076, translating into a gain of 4.20%.
Coforge rose 3.79% from its previous close of Rs 1,814.30 to an intraday high of Rs 1,883. L&T Technology Services advanced 3.71% to Rs 4,060.20, while Mphasis gained 3.66% to Rs 2,387.80. Persistent Systems climbed 3.44% to Rs 5,656.
The Nifty IT index rose 3.13% from its previous close of 27,736.60 to an intraday high of 28,604.75.
Among other constituents, Wipro gained 2.92% to an intraday high of Rs 163, HCL Technologies rose 2.90% to Rs 1,211, and Infosys advanced 2.83% to Rs 1,025.25. Tech Mahindra climbed 2.59% to Rs 1,534.90, while Oracle Financial Services Software gained 2.37% to Rs 10,646.
TCS Q2 Results: Net Profit, Revenue Beat Estimates
TCS reported a net profit of Rs 13,884 crore for the September quarter, compared with the analyst estimate of Rs 13,788 crore. Revenue stood at Rs 73,188 crore, ahead of the estimated Rs 73,026 crore.
However, operating performance was weaker than expected. Earnings before interest and taxes (EBIT) came in at Rs 17,553 crore, below the estimate of Rs 17,805 crore, while the EBIT margin stood at 24%, against the expected 24.38%.
Sequentially, net profit increased 4% from Rs 13,349 crore in the previous quarter, while revenue rose 1.3% from Rs 72,275 crore. EBIT grew 1.4% from Rs 17,317 crore, and the EBIT margin improved marginally from 23.95%.
TCS also announced an interim dividend of Rs 12 per share and fixed October 14 as the record date.
The results offered some support to investor sentiment, although modest revenue growth and the margin miss indicated that the company's operating environment remains challenging.
TCS reported constant-currency revenue growth of 0.5% quarter-on-quarter, at the lower end of the 0.5–0.8% range expected by analysts. Revenue in dollar terms increased 0.2% sequentially.
The company's total contract value (TCV) stood at $9.6 billion. Its IT services 12-month attrition rate was 13.3%, while headcount reached 5.98 lakh as of September 30. TCS added 4,258 employees sequentially, marking its third consecutive quarter of net headcount additions.
TCS Q2 Earnings Call: AI Revenue Crosses $3.1 Billion
TCS's artificial intelligence (AI) business was a key highlight of its September-quarter commentary. Annualised AI revenue crossed $3.1 billion in Q2, accounting for around 10% of the company's overall revenue, according to management.
Chief Executive Officer and Managing Director K Krithivasan said AI continues to gain traction as a structural shift, although the discretionary spending environment has not changed materially. He added that demand was improving across several areas but remained uneven across businesses and geographies.
Manufacturing and technology and services revenue each grew 3.1% quarter-on-quarter in constant-currency terms, while banking, financial services and insurance (BFSI) revenue increased 2.5%. International revenue rose 1.2%.
Consumer business declined, while the travel segment remained resilient and life sciences demand was stable. Regional markets continued to be volatile, with Indian revenue affected by project deferrals. Management indicated that the BSNL business could provide some support over the next couple of quarters.
TCS said it was mitigating headwinds through currency benefits and efficiency measures while accelerating investments in high-growth areas, including data centres and other emerging businesses. Pricing remained broadly stable across its portfolio, although revenue per employee saw a slight sequential decline.
Management also indicated that AI revenues were coming in at considerably higher margins than the company's overall revenue, making the business an important potential growth driver.
The challenge for TCS remains converting AI demand and investments into stronger company-wide revenue growth while protecting operating margins.
US Suspends PERM Applications For Major IT Companies
The US Department of Labor's suspension of PERM processing involving major technology companies has raised fresh concerns about immigration policy and the movement of skilled Indian professionals to the US.
Companies named in the action include Cognizant, Infosys, Tata Consultancy Services, Wipro, HCL Technologies and Capgemini. Microsoft and Adobe have also been named.
The PERM programme, or Permanent Labor Certification, allows eligible US employers to seek labour certification to sponsor certain foreign workers for employment-based green cards. The latest action follows investigations and allegations of fraud cited by US authorities.
The suspension concerns the PERM process and should not be confused with a direct suspension of the H-1B visa programme. It also does not, by itself, mean that existing green-card approvals have been withdrawn.
While the move introduces uncertainty, its immediate implications for Indian IT companies may be limited because PERM primarily relates to permanent residency rather than temporary work authorisation under the H-1B programme.
Nasscom Says Indian IT Firms Have Reduced Dependence On H-1B Visas
Industry body Nasscom said immigration policy and skilled talent mobility should be treated as distinct issues. It noted that Indian technology companies have reduced their dependence on H-1B visas over the years while expanding local hiring and building domestic workforces in the US.
Indian IT companies operate across more than 80 countries and remain committed to complying with local laws and regulatory requirements, Nasscom said.
The industry has also increasingly relied on local US hiring and offshore delivery models. Media reports have indicated that H-1B registrations by six large Indian IT firms fell 92% year-on-year so far in FY2027.
This trend could limit the direct operational impact of the PERM suspension, although the longer-term implications will depend on how the US administration's scrutiny of immigration and employment-based visas evolves.
Kotak Securities Sees Limited Impact From PERM Suspension
Kotak Securities described the PERM suspension as an event of limited impact for Indian IT companies.
The brokerage said the action reinforces an unfavourable immigration policy direction but has limited operational relevance because Indian IT firms have substantially localised their US workforces.
Employees affected by the suspension represent a small subset of the remaining visa-dependent workforce, according to Kotak Securities. The brokerage does not expect a meaningful impact on service delivery or earnings.
This assessment suggests that the latest development may generate near-term uncertainty without necessarily translating into a material downgrade to the sector's earnings outlook.
However, investors will continue to monitor whether the action is extended, whether additional restrictions are introduced and how the measures affect companies' ability to recruit, retain and relocate skilled employees.
Why Are IT Stocks Rising After TCS Q2 Results?
The rally in IT stocks follows TCS's better-than-expected net profit and revenue, which offered some support to sentiment despite a miss on operating profit and margins.
TCS's AI revenue crossing $3.1 billion on an annualised basis also highlighted a growing business opportunity, although the company's modest overall constant-currency growth indicates that AI momentum has yet to translate into a meaningful acceleration in aggregate revenue.
Meanwhile, the PERM suspension has not directly halted the H-1B visa programme. Indian IT companies have also reduced their dependence on these visas and expanded local hiring in the US, potentially limiting the immediate impact on service delivery and earnings.
Kotak Securities expects the direct financial impact to remain limited, while Chokalingam believes TCS's results and the sharp decline in H-1B registrations at large IT companies could help cushion sentiment.
The distinction between direct earnings exposure and broader policy risk remains important. Even if the PERM suspension has limited near-term financial implications, continuing uncertainty around US immigration rules could still affect investor sentiment and sector valuations.
For investors, the key factors to watch are whether TCS's results provide sustained support to broader IT sector sentiment, whether other companies demonstrate improving demand and margins, and whether the US administration introduces further restrictions on skilled foreign workers.
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