IT stocks traded higher following the latest June-quarter earnings, with investors favouring companies that delivered stronger growth and profitability. While Tech Mahindra gained after reporting better-than-expected results, Wipro came under pressure due to weaker margins and cautious guidance.
The Nifty IT index rose 1.33% in morning trade, with Tech Mahindra, HCLTech, Infosys, TCS and Persistent Systems trading in the green, while Wipro slipped after its quarterly earnings announcement.
Tech Mahindra Impresses On Growth And Margins
Tech Mahindra reported a 28.4% year-on-year increase in consolidated net profit to Rs 1,465 crore for the June quarter. The company also posted 2.6% sequential constant currency revenue growth and an EBIT margin of 14.4%, exceeding market expectations.
Brokerage firm JM Financial retained its ‘Add’ rating and raised its target price from Rs 1,525 to Rs 1,670, citing:
- Strong revenue growth
- Healthy order pipeline
- Consistent deal wins
- Improving earnings visibility
Motilal Oswal maintained its ‘Buy’ rating with a target price of Rs 1,900, highlighting improving growth momentum and confidence in the company’s ability to outperform the industry. Management also reiterated its target of achieving a 15% EBIT margin during FY27.
Wipro Faces Pressure After Weak Outlook
Wipro reported a 4.7% sequential decline in net profit for the June quarter. Although revenue broadly met estimates, its IT services EBIT margin of 16% fell short of analysts’ expectations due to wage hikes, AI investments and costs related to large deal execution.
The company also issued cautious guidance for the September quarter, projecting constant currency revenue growth between -1.5% and +0.5%, reflecting continued demand uncertainty.
Following the results:
- JM Financial retained a ‘Reduce’ rating with a target price of Rs 160.
- Motilal Oswal maintained a ‘Neutral’ rating and also kept its target price at Rs 160, while trimming FY27 earnings estimates.
Investors Reward Strong Execution
The contrasting market reaction highlights a broader trend in the IT sector, with investors rewarding companies demonstrating consistent revenue growth, improving margins and strong deal wins.
Analysts believe the recovery in global technology spending remains gradual, making execution quality, diversified client portfolios and AI-led digital transformation projects key differentiators for IT companies in the coming quarters.