Shares in Tata Consultancy Services decreased by almost 3% on Friday, as an uncommon yearly revenue reduction overshadowed robust contract acquisitions and better-than-expected quarterly profits. This indicated that a consistent rebound in growth might still be out of reach due to restrained client expenditures and increasing expenses.
The stock was heading toward its poorest performance in almost a month, ending a streak of six consecutive gains.
It ranked as the third-largest loser on both the IT sector index and the main Nifty 50 benchmark.
The IT index fell 2.2%, while the Nifty 50 rose 0.9% in trading.
Although the company exceeded expectations for fourth-quarter profits and secured $12 billion in new contracts, experts expressed concern over a 2.4% decrease in full-year revenue measured in dollars—the first such drop since the firm went public.
Even with progress from the previous quarter, the annual revenue fall highlighted ongoing hesitancy in clients’ technology investments, according to Dolat Capital.
Analysts at Jefferies shared similar concerns, noting that the outcomes provided scant signs of significant demand improvement and that an unclear growth forecast might lead to the stock lagging behind.
Overnight, U.S.-traded shares of competitors Infosys and Wipro, which are smaller than TCS, each declined by about 2%.
TCS saw a slight 10 basis point increase in margins for the quarter, but observers warned that further gains could be restricted.
BOBCaps indicated that elevated subcontracting expenses, salary increases, and ongoing funding for artificial intelligence systems might limit short-term margin growth.
