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India’s Nifty IT index rose 2.3% on Friday, emerging as the biggest gainer among sectoral indices. The rally came amid media reports that OpenAI’s annualized revenue stood at roughly $50 billion at September-end, around $20 billion lower than previously indicated.
With India seen as an anti-AI trade and Indian IT companies still catching up in the AI race, the development may have been received positively by investors, pushing stocks higher even as US visa concerns lingered. The benchmark Nifty 50 index rose over 1%.
Shares of Tata Consultancy Services Ltd (TCS), Infosys , Wipro and HCL Technologies rose up to 4% on Friday. TCS also reported its September-quarter (Q2 FY27) results, which threw up no major negative surprises. Sequential constant-currency revenue growth was 0.5%, marginally ahead of consensus estimates, led by manufacturing, hi-tech and banking, financial services and insurance (BFSI).
Regional markets and the consumer business were the weak spots. International business grew better than anticipated, at 1.2% sequentially. Management expects international markets to maintain their current momentum, supported by the deal pipeline. Conversely, deferrals of Indian projects dragged overall growth.
TCS’s Q2FY27 demand commentary indicated little meaningful change from the previous quarter, with clients continuing to make cautious decisions on discretionary programmes. Total contract value (TCV) of deal wins rose 1.1% sequentially to $9.6 billion but fell 4% year-on-year. The deal TCV excludes the five-year strategic partnership with Porsche AG and the Best Buy deal.
With the demand environment largely unchanged, concerns over muted revenue-growth visibility persist. Margin pressure is also building in H2FY27, potentially posing a risk to earnings.
TCS’s Q2FY27 Ebit margin was flat sequentially, amid higher subcontracting costs and strategic investments in AI capabilities. Management expects improvement in Q3 as some Q2 headwinds ease, but the usual seasonal furloughs and ongoing investments may constrain the recovery. Management also said the consolidation of MHP could pose a potential 50 bps downside risk, depending on when the acquisition closes. Subcontracting costs are likely to rise following the recent tightening of US immigration rules.
While TCS's sustained investments in talent, partnerships and high-growth areas would reap long-term benefits, near-term margin impact cannot be ruled out. JM Financial Institutional Securities noted that as TCS continues to prioritize growth over margins, execution will be key.
“Sector-wise margin trends are likely at risk given higher competition and investments unless rupee depreciation comes to the rescue,” added the JM report.
TCS has reiterated its long-term margin aspiration of 26-28%, to be backed by growth, cost optimization and operating leverage. But it has refrained from giving a timeline for this target. Nomura Global Markets Research expects TCS to report Ebit margin of 24.1-24.8% in FY27 versus adjusted Ebit margin of 25% achieved in FY26. Thus, Nomura has trimmed its FY27 earnings per share estimate by 2.6%.
Meanwhile, AI revenue grew 19.2% sequentially on an annualized basis, and formed 10% of total revenue. Seasonal recovery in consumer business and BSNL ramp-up could be near-term cushions, but AI-led revenue deflation has yet to fully play out, keeping hopes of meaningful organic revenue growth low.
To be sure, TCS shares remain about 34% lower so far in 2026, underperforming the Nifty IT index. Valuations have fallen to multi-year lows. Based on its FY28 price-to-earnings multiple, TCS trades at 14 times earnings, compared with its five-year average of 28, according to Bloomberg data.
Harsha Jethmalani is a Deputy Editor at Mint with over a decade of experience covering stock markets and corporate India. As a key member of the Mark to Market team, she specializes in delivering cutting-edge commentary on market trends, the economy, and corporate financial reports.<br><br>Born and raised in Mumbai, Harsha’s entry into business journalism was a serendipitous pivot. Graduating during the 2008–2009 financial crisis, her initial goal of becoming a research analyst at an MNC was rerouted. However, what began as a chance career move quickly became a conscious choice; she discovered that financial journalism is a powerful storytelling tool capable of influencing and empowering the financial decisions of a massive audience.<br><br>Harsha began her career in 2009 at IRIS Business Services (Myiris.com), tracking mutual funds and interviewing fund managers. In 2011, she joined the Network18 Group, writing extensively on equity market trends for Moneycontrol.com and hosting pre- and post-market audio updates. Following a stint covering personal finance at Dalal Times, she joined Mint in 2016 as a Content Producer, steadily rising through the ranks to her current editorial position.<br><br>A defining highlight of her tenure at Mint was her extensive coverage of India's historic Goods and Services Tax (GST) reform. She chronicled the massive indirect tax overhaul from its initial conceptual and execution hurdles to its eventual streamlining. Her impactful reporting earned official recognition when her article exposing a spike in gold smuggling ahead of the GST rollout was formally acknowledged by the Office of the Director General of Audit (Central), Kolkata. Currently, Harsha closely tracks the IT, cement, real estate, and paint sectors. Her sharp news sense and ability to spot emerging trends consistently bring fresh, actionable perspectives to market analysis.<br><br>She holds a postgraduate degree in financial markets from Indira Gandhi National Open University and a Bachelor of Management Studies from Vivekanand Education Society, Chembur, Mumbai.
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