IT stocks fall up to 5% on Cognizant's weak revenue guidance for 2016

IT stocks fell by up to 5% as Cognizant lowered its revenue projections for 2016. The company said it expects to grow at 9.9-14.3% in 2016, which is significantly lower than 21% growth it clocked in 2015. 

Shares of TCS fell by 4.7%, Infosys was down 4.79% and Wipro lost 2.24%.

Among others, HCL Tech slipped 5.21% and Tech Mahindra dipped by 4.81% on BSE.

The US-based IT services firm Cognizant posted a 16.7% rise in net profit at $423.4 million for the December quarter, from $362.9 million a year ago, helped by growth in healthcare and North America and Rest of World (RoW) geographies.

The company, which has a large part of its workforce based in India, met its revenue guidance at $3.23 billion in the
said quarter, up 17.9$ from $2.74 billion in October-December of 2014. 

However, the management expects a negligible change in January-March of 2016 from the preceding quarter and has
forecast revenues to be in the range of $3.18-3.24 billion. For the entire 2016, Cognizant expects to grow at 9.9-14.3%, translating into a revenue of $13.65-14.20 billion.

While this was in line with Indian IT industry body Nasscom's estimate of 10-12% growth for 2016-17, it
is lower than its own 21% growth it clocked in 2015.