Tata Consultancy Services (TCS) share price continued to trade under pressure as the Street remained cautious on the IT bellwether's stock amid margin headwinds faced by the sector amid mixed brokerage stances. TCS' margins in the first quarter came in at 14-year lows.

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Global brokerage Macquarie has an 'outperform' rating on TCS shares, while JP Morgan has an 'underweight' stance.

Macquarie sees a little downside to revenue and margin estimates. However, JP Morgan is of the view that margin pressures for IT companies could lead to earnings decline.

At 12:26 pm, India's largest software exporter, TCS's shares were trading at Rs 3,260, down 0.7 percent from their previous close on the BSE. In the last five sessions, the stock has corrected 3 percent amid wider concerns in the sector over variable pay to employees.

Following reports that suggested TCS has deferred it's variable pay out, the company said it will pay 100 percent variable pay for the first quarter, and there is no delay in the process.

Variable pay is based on performance and is typically a small portion of cost-to-company (CTC).

"We have come across completely incorrect reports on our compensation. Variable pay is either paid in month one or month 2 as per the normal process and there is no delay in this process. 100 percent variable pay is being paid for Q1," TCS said in a statement.

Meanwhile, Infosys has scaled back its average variable payout of employees to about 70 percent for the June quarter amid margin squeeze and high employee costs. Wipro on the other hand held back the variable pay mainly due to pressure on margins, inefficiency in its talent supply chain and investment in technology.

These actions are being taken as IT companies struggle to protect their profits, which are being squeezed by rising staff costs and high turnover rates.

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(Edited by : Nishtha Pandey)

First Published:Aug 24, 2022 12:40 PM IST