Nifty IT Falls Over 2% After TCS Q1 Results Disappoint Investors

IT Stocks: Information Technology (IT) stocks fell on July 11, 2025 after investors were disappointed by Tata Consultancy Services; (TCS) earnings report for the first quarter of the current financial year (Q1 FY26). The Nifty IT index, which captures the performance of the sector, cracked over 2 per cent in early trade.

TCS share price declined as much as 2.7 per cent, followed by Wipro, which fell up to 2.5 per cent. LTIMindtree, HCL Technologies, Oracle Financial Services Software, Coforge, Persistent Systems, and Mphasis also fell between 1 per cent and 2 per cent. Index heavyweight Infosys, which carries 28.8 per cent weight in the Nifty IT index, also fell up to 3.26 per cent. All the constituents were trading in the red, as of 11:30 AM.

TCS Q1 FY26 Results Highlights

TCS reported a consolidated net profit of Rs 12,760 crore for Q1 FY26, up nearly 6 per cent year-on-year (YoY) and 4.4 per cent quarter-on-quarter (QoQ). Revenue rose 1.3 per cent YoY to Rs 63,437 crore but declined 1.6 per cent QoQ.

The IT major maintained strong profitability with an operating margin of 24.5 per cent, up 30 basis points (bps) QoQ and net margin of 20.1 per cent, up 90 bps YoY. Net cash from operations stood at Rs 12,804 crore, or 100.3 per cent of net profit.

Deal momentum remained firm, with total contract value (TCV) coming in at $9.4 billion, led by large wins across BFSI, life sciences, telecom, manufacturing, and retail.

TCS’ board of directors also declared an interim dividend of Rs 11 per share for FY26. The record date is July 16 and payment is scheduled for August 4.

TCS added a net 6,071 employees over the past year, taking its workforce to 6.13 lakh. Attrition eased to 13.8 per cent over the last twelve months.

IT Sector Q1 Earnings Outlook

Kotak Securities expects a mixed performance from the IT sector this earnings season, with mid-tier firms likely to outshine their larger peers. In a recent note, the brokerage said, “We believe that the quarter will be a mixed one, with mid-tier IT services companies reporting strong growth, while large IT companies and ERD names will disappoint.”

 “Deal wins will be strong, although not necessarily net new for the industry,” it added.

The brokerage firm expects IT companies to report strong total contract value (TCV) this earnings season, however, it says that much of the deal activity is being driven by cost-cutting measures rather than new demand. In a recent note, the brokerage said, “We expect companies to report strong deal TCV. The deal activity is tilted toward cost takeout. This is being achieved through vendor consolidation and outsourcing.”

According to Kotak, many of these deals are part of vendor consolidation and don’t necessarily bring in fresh business for the sector. “Many vendor consolidation deals announced by companies are not net new for the IT industry,” the note said.

“Select large and mid-tier companies are gaining share as opposed to the usual narrative of large companies consolidating out smaller ones,” it added.