BSE IT index climbs over 1,700 points post Infosys, TCS Q3 results; here’s what analysts say

The BSE Information Technology index surged nearly 5 per cent in Friday’s afternoon trade led by a sharp rally in Tata Consultancy Services (TCS) and Infosys shares after the two firms released their December quarter results on Thursday. Shares of the former traded 4.18 per cent higher at Rs 3,892.45 at around 1 pm (IST), while the latter was up 7.55 per cent at Rs 1,607. Positive commentary from brokerages post the results fuelled market sentiment. 

The BSE IT index traded 1,708 points higher at 37,040. On the other hand, the 30-share Sensex was up 744 points at 72,465 at around the same time.  

IT major TCS on Thursday reported about a 2 per cent year-on-year (YoY) growth in the net profit at Rs 11,058 crore in Q3FY24. Consolidated revenue grew 4 per cent YoY to Rs 60,583 crore. On the other hand, Infosys posted a 7.3 per cent YoY drop in profit at Rs 6,106 crore in Q3FY24. On the other hand, Infosys’ consolidated revenue for the quarter came in at Rs 38,821 crore, up 1.3 per cent YoY. 

Post the December quarter results, brokerage Sharekhan said TCS’s Q3 earnings beat estimates in a seasonally soft quarter. “We believe the company with its strong domain capabilities, contextual knowledge is well-positioned to grab cost optimisation and transformational opportunities as sector headwinds recede and see a strong pick-up in growth momentum. Hence, we maintain a ‘Buy’ on TCS with an unchanged price target of Rs 4,200.” 

On the other hand, YES Securities sees Infosys at Rs 1,870 post Q3 results, indicating a potential upside of over 16 per cent against the current market price. “Infosys reported broadly in line performance for the quarter. The revenue growth was above estimates, while EBIT margin was in line with expectation. Employee attrition continues to decline and should support operating margin going ahead.” 

HCL Technologies, Tech Mahindra and Wipro were up 2.82 per cent, 4.46 per cent and 3.89 per cent, respectively. HCL Technologies and Wipro are slated to announce their results on January 12. Accelya Solutions India, eMudhra, Sonata Software and Datamatics Global advanced over 5 per cent in the afternoon trade. 

According to ICICI Securities, TCS has reported beat on both revenue and margin fronts despite headwinds from BSNL deal ramp-up in Q3FY24. Management mentioned that the demand environment remains unchanged with clients still cutting down on discretionary spends and focusing on cost optimisation. However, there were a couple of statements indicating optimism for future demand such as TCS is gaining market share in the UK, green shoots in Europe and pent-up demand in some verticals may aid growth as and when client sentiment improves, though the timing of the same is still uncertain. 

Also Read: TCS, Infosys make investors richer by Rs 1 lakh crore after Q3 earnings