TCS Q1 Results Pressure IT Shares, Nifty IT Index Down 2% as Demand Contraction Hits North America and UK

IT shares under pressure after Tata Consultancy Services reported mixed Q1 numbers, with a weak revenue decline due to global macroeconomic uncertainties. Nifty IT index falls 2%. TCS, Infosys, and Wipro down 2% each, while LTIMindtree, Tech Mahindra, HCL Technologies, and Persistent Systems down 1% each. Brokerages expect pipeline conversion and execution to be key monitorables for growth.

Title: IT Shares Under Pressure After TCS Reports Mixed Q1 Numbers

July 2, 2025 - Tata Consultancy Services (TCS) reported mixed Q1 financial results today, which have put pressure on IT shares across the board. The Nifty IT index fell by 2% following the announcement, with TCS, Infosys, and Wipro each down by 2% [2]. Other major players in the sector, such as LTIMindtree, Tech Mahindra, HCL Technologies, and Persistent Systems, also saw their shares drop by 1% each.

TCS reported a 3.1% year-over-year (YoY) decline in revenue from operations in constant currency terms, attributed to global macroeconomic uncertainties and the wind-down of the BSNL project [1]. The company's CEO, K Krithivasan, acknowledged continued global macro-economic and geo-political uncertainties, which led to a demand contraction [2]. However, TCS reported a 6% growth in its Q1FY26 consolidated net profit at Rs 12,760 crore, beating street estimates [2].

Brokerages expect pipeline conversion and execution to be key monitorables for growth in the coming quarters. Kotak Institutional Equities expects a 0.4% quarter-on-quarter revenue decline in constant currency terms, while BNP Paribas forecasts a steeper 1.3% decline in constant currency but a 1.3% growth in USD terms [1]. Despite these expectations, TCS shares traded flat ahead of the results announcement, reflecting the market's cautious stance.

The Q1 Total Contract Value (TCV) stood at $9.4 billion, indicating robust order book and operational resilience [2]. However, the company's EBIT margins are expected to contract due to lower utilization levels, higher visa costs, and talent investments [1].

The earnings announcement has sparked concerns across Indian IT stocks, with Wipro and Infosys ADRs declining by 6% and 4% respectively [2]. Investors will closely monitor TCS's ability to navigate the current challenging environment and maintain its market leadership position.

References
[1] https://economictimes.indiatimes.com/markets/stocks/earnings/tcs-to-announce-q1-results-today-what-to-expect-and-7-things-to-watch-out-for/articleshow/122357622.cms?from=mdr
[2] https://economictimes.indiatimes.com/markets/stocks/news/wipro-infosys-adrs-plunge-up-to-6-after-tcs-q1-earnings-announcement/articleshow/122369603.cms