Infosys, TCS, Wipro, HCL Tech, TechM: Cues for Indian IT from Cognizant Q4 results

Cognizant's Q4 results were decent and met analyst estimates. The IT major has guided for 4-6.5 per cent year-on-year (YoY) growth in constant currency terns for FY26. This includes a 150 basis inorganic contribution. At the mid-point, the organic growth guidance is stable at 3.8 per cent YoY, which brokerages believe reflects offsetting of strong execution by macro uncertainties.

Nirmal Bang Institutional Equities said the increase in discretionary spending called out by Cognizant, especially in the BFSI vertical in North America is a strong positive for the Indian IT industry that has the highest exposure to this geography and vertical. Apart from this, Cognizant said AI was expanding the total addressable market, which analysts at Nirmal Bang said negated discussions around AI being deflationary.

"It has also subtly mentioned that new technology or plug-ins cannot immediately replace old technology debt and a bridge is needed which is provided by companies like Cognizant and peers which make up the Indian IT industry," Nirmal Bang said.

IT stocks namely TCS, Infosys Ltd, Wipro Ltd, HCL Tech Ltd and Tech Mahindra Ltd took a pause on Thursday, after falling sharply in the previous session on concerns over Anthropic AI tools that some analysts said was unwarranted. 

Nuvama Institutional Equities said Cognizant has delivered a performance that is on a par with or better than the Top-five Indian IT Services companies, as a result of its efforts of the last 2.5 years. It believes it is all set to traverse a growth trajectory in line with peers, especially with its strong deal-wins and investments in Gen AI. 

"Cognizant is smartly riding its transformation journey, but the near-term environment remains volatile for the company and the industry. We reckon the near-term volatility shall persist, driven by overall weak macro, tariff-led uncertainty and impact of Gen AI. However, we continue to forecast a recovery in tech spends in the medium term, as enterprises look to restart spends on modernising legacy IT systems," it said.

Cognizant's revenue grew 3.8 per cent constant currency (CC) YoY, or 4.9 per cent YoY, to $5,333 million, slightly above the Street’s estimate of $5,312 million. Te management anticipated 2026 revenue growth guidance of 4-6.5 per cent YoY in CC terms, including around 150 basis points of inorganic contribution, and an adjusted EBIT margin of 15.9-16.1 per cent. Bookings stood at $28.4 billion, up 4.8 per cent YoY, with the trailing twelve-month backlog at 1.3 times book-to-bill.

Cognizant noted that although the macroeconomic environment remains a bit challenging, cost pressures are driving the demand for optimisation, vendor consolidation and productivity-led deals, Nomura said while suggesting that Cognizant is firmly establishing itself in the winner’s circle.

"Discretionary demand has rose in financial services but remains constrained in tariff-impacted sectors of products," Nomura said.