Infosys Beats Earnings Expectations, Tata Consultancy Services Set for Worst Performance Since 2008

Tata Consultancy Services (TCS) has seen its market valuation erode by $43 billion this year, putting the stock on track for its worst performance since 2008. The drop has led TCS to cede its number three position to telecom major Bharti Airtel. Infosys has beaten earnings estimates for the third straight quarter, but investor enthusiasm remains muted due to weak discretionary spending and uncertainty around AI strategy.

Infosys, India's second-largest IT services provider, has raised the floor of its annual revenue forecast following a stronger-than-expected quarterly performance. The Bengaluru-based company narrowed its revenue growth forecast to 1% to 3% from a prior range of flat to 3%, aligning with analysts' expectations [1].

The company's financial services segment, bolstered by AI deals and market share gains, contributed to a 7.5% year-on-year increase in consolidated sales to 422.79 billion rupees ($4.9 billion) in the June quarter [1]. Analysts had expected revenue of 418.06 billion rupees, as per data compiled by LSEG. Infosys' net profit rose 8.7% to 69.21 billion rupees, primarily due to lower depreciation and communication expenses [1].

In contrast, Tata Consultancy Services (TCS) has seen its market valuation erode by $43 billion this year, leading to a drop in its stock value and ceding its number three position to telecom major Bharti Airtel [2]. The market downturn has been attributed to weak discretionary spending and uncertainty around AI strategy, despite TCS beating earnings estimates for the third straight quarter [2].

Wall Street analysts forecast that Infosys will report quarterly earnings of $0.19 per share, with revenues expected to reach $4.84 billion, a 2.6% increase from the year-ago quarter [2]. The consensus estimates suggest that Infosys' employee metrics and utilization rates are likely to remain stable or slightly improve compared to the previous year [2].

Despite the positive earnings reports, investor enthusiasm for Infosys remains muted due to macroeconomic uncertainties and the impact of global interest rate cuts on the IT industry [1]. Infosys' U.S.-listed shares were up 1.6% in pre-market trade following the earnings announcement [1].

References:
[1] https://finance.yahoo.com/news/indias-infosys-narrows-annual-forecast-103526077.html
[2] https://finance.yahoo.com/news/infosys-infy-q1-earnings-preview-131504907.html