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The country's second largest IT exporter has lost 9% on bourses over the past three months. Its trailing price-earnings multiple at 14 is at a significant discount to the long-term average of above 25, reflecting the uncertainty over the growth outlook amid geopolitical tensions and the disruptive impact of the artificial intelligence (AI) technology on traditional project deployment models. Given the moderation in the revenue guidance, the stock is expected to remain under pressure in the short term despite cheaper valuation.
A common thread that binds the performance of the top five IT companies is the sustained order flow. However, the sequential revenue growth in dollar terms remained weak with the excpetion of Tech Mahindra, which ranks fifth in the pecking order. It reported a 2.2% sequential growth in revenue at $1.7 billion for the June quarter. Others including Tata Consultancy Services (TCS), Infosys, HCL Technologies (HCLTech) and Wipro in the order of their revenue size either reported a drop or under 1% growth.
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While slower execution due to delayed decision making by clients amid geopolitical tensions has affected the overall revenue growth, the sample companies reported traction in AI driven sales though on a small base. For Infosys, AI revenue accounted for 8.2% of the total revenue in the June quarter from under 5% a year ago. TCS too reported a similar share of 8.5% of AI revenue for the latest June quarter.
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(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today.
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price