CLSA has expressed optimism on Indian IT stocks, citing improving valuations and fading tariff-related overhang, even as Cognizant’s stronger-than-expected Q1CY25 results hint at rising competition in managed services deals.
Cognizant reported an organic constant currency revenue growth of 4.2% YoY, which came in above the top end of its guidance, driven by strong performance in the healthcare and BFSI segments. This marks a notable turnaround, with CLSA pointing out that two years of subdued demand in BFSI now appears to be ending — a trend that could reshape deal momentum across the industry.
For the full year, Cognizant retained its CY25 constant currency revenue growth guidance of 3.5–6%, while guiding for 1.2% QoQ growth in Q2, suggesting stability in the global IT services market.
While Cognizant’s performance reaffirms broad-based recovery across verticals, CLSA noted that Indian IT firms may face heightened competition, especially in managed services engagements where cost and delivery flexibility are under focus.
Still, CLSA remains constructive on Indian IT, underlining that current valuations are attractive, and the tariff-related macro risks are beginning to ease, which could provide support to stock performance over the coming quarters.
Disclaimer: The above views are those of the brokerage and not the publication. Investors are advised to consult a certified financial advisor before making investment decisions.
