India IPO to make Cognizant 2nd largest listed local IT company More than three decades after it was founded, Cognizant Technology Solutions Corp. is weighing a debut on Indian stock exchanges, which would make it India’s second-largest listed IT services company, right behind Tata Consultancy Services (TCS). The Teaneck, New Jersey-headquartered company listed its shares on the US tech-heavy exchange Nasdaq 27 years ago.
“Cognizant’s board and management team regularly assess opportunities to enhance shareholder value. Towards this end, we have been assessing a potential primary offering and a secondary listing in India, with our legal and financial advisors,” chief financial officer Jatin Dalal told analysts in a post-earnings interaction.
The company, which ended last year with $19.74 billion in revenue, has over two-thirds, or 241,500, of its employees in India.
For now, a public listing in India is a long-term project.
“We view this as a long-term project. While no decision has been made and any offering and secondary listing would be subject to market and other factors, we continue to assess and review the idea, and are committed to acting in the best interest of our shareholders,” said Dalal.
For now, only Bengaluru-based IT titans Infosys Ltd and Wipro Ltd have their shares listed in both the US and India, and an India listing would make Cognizant the third.
At the heart of an American firm like Cognizant looking to list its shares in India despite all IT services firms getting over 90% of their business from outside India, is the better valuation in the country. Cognizant‘s current price-to-earnings ratio is about 13, while homegrown IT services firms like Tata Consultancy Services Ltd and Infosys Ltd trade at 22-23 times.
“India is always a very richly valued market compared to global markets, and similar companies and businesses in India trade at a far higher multiple than they do globally,” said Shankar Sharma, veteran market investor and founder of GQuant Investech, a wealth management firm. “So if you look at food delivery companies in the US or the UK and compare them to Zomato, you will understand, and the same goes for all the FMCG companies, also and for automotive companies. So, it is highly possible that Cognizant is looking at a valuation arbitrage,” Sharma added.
Cognizant’s potential India listing also follows the February 2025 public listing of Carlyle-backed Hexaware Technologies Ltd. Hexaware was the second IT services firm to do so after Ashok Soota-founded Happiest Minds Technologies Ltd, which listed on the bourses in September 2020.
Dalal’s comments came as Cognizant reported better-than-expected performance in the July-September period, with revenue growing at the fastest pace in four quarters, primarily due to faster growth in the IT products and platforms and energy resources business.
Cognizant, which follows a January-December calendar year, ended the third quarter with $5.42 billion in revenue, up 3.24% sequentially and 7.36% year over year. With this, the company beat analyst estimates, as a Bloomberg poll of 25 analysts expected Cognizant to report $5.32 billion in revenue for the third quarter.
The management sounded cautious about the demand environment, as visa-related uncertainties and changing tax laws in the US force clients to hold back on non-essential tech spending.
“With respect to the demand environment, trends in Q3 were consistent with the last quarter. Clients across industries are navigating elevated levels of uncertainty around trade policy and the resulting impact to their businesses,” said Dalal. “We are also seeing clients carefully evaluate technology investments, which is resulting in a lower pace of discretionary spending in certain areas, like products and resources,” he said.
Cognizant raised its full-year revenue guidance from the prior quarter. It now expects revenue of $21.05-$21.1 billion for the full year, translating to 6.6%- 6.9% annual growth, up from the earlier range of 4.7%–6.7%. This marks the third consecutive quarter that the company has raised its full-year guidance.
While growth is slowing in constant currency terms, Cognizant’s reliance on acquisitions has decreased, and its organic growth has consequently improved. Cognizant reported 8.2% year-on-year growth in the January–March period, 7.2% in the April–June quarter, and 6.5% last quarter. Constant currency does not account for currency fluctuations.