Indian IT stocks surged on May 2 after Cognizant Technology Solutions posted stronger-than-expected Q1 results and raised its annual revenue forecast, signaling improving global demand for IT and AI-driven services.
Cognizant’s Strong Q1 Results Lift Market Sentiment
The Nasdaq-listed Cognizant reported a Q1 revenue of $5.1 billion, marking a 7.5% year-on-year growth (8.2% in constant currency), which beat both the top end of its guidance and Wall Street expectations of $5.07 billion.
Net profit jumped 21% to $663 million for the quarter ended March 31, 2025. The company follows the calendar year for its financial reporting, unlike Indian IT firms.
The company also maintained its full-year constant currency revenue growth guidance at 3.5% to 6%, but projected a relatively weaker Q2 with guidance for 5% to 6.5% growth.
Indian IT Stocks Respond Positively
Following this upbeat performance, shares of top Indian IT companies like TCS, Infosys, Wipro, and HCL Technologies rose by up to 1.5%, outperforming the Nifty IT index, which itself gained around 1%.
The rally in IT stocks comes as a much-needed boost, especially as the Nifty IT index had been down nearly 17.5% year-to-date, before rebounding around 11% since April 9.
The recent upswing in the index began after US President Donald Trump’s announcement to pause reciprocal tariffs for 90 days, which had brought some relief to global tech markets.
No Major Disruptions in Q1, Says Cognizant CFO
Cognizant CFO Jatin Dalal confirmed that the company faced no significant macro-related disruptions or client cancellations during the first quarter. Any visible impact, he noted, is expected to be limited to the second quarter. He also highlighted that demand from the financial services segment remained strong.
Deal Bookings Show Mixed Trends
Cognizant’s total bookings rose 3% year-over-year to $26.7 billion, with a healthy book-to-bill ratio of around 1.3x. However, Q1 bookings were down 7% compared to the same period last year. The company managed to sign four large deals worth $100 million or more, a drop from ten such deals in the previous quarter.
Following the earnings release, Cognizant shares edged up by half a percent in after-hours trading on the Nasdaq.
Sector Outlook Brightens With Recovery in BFSI and Healthcare
Analysts at CLSA noted that a rebound in healthcare and BFSI (Banking, Financial Services, and Insurance) segments is a positive signal for IT firms, especially those with high exposure to these sectors. BFSI, in particular, is witnessing a recovery after a prolonged two-year slump.
The renewed strength in BFSI and healthcare could drive long-term momentum for Indian IT giants like TCS and Infosys.
