TCS Share Price Falls Over 2% On Weak Q1 Results, Cautious Demand Outlook; Buy Or Sell?

Tata Consultancy Services (TCS) share price fell over 2% on Friday, July 11, after opening lower on the stock exchanges, a day after reporting weak first quarter results for the current fiscal (Q1FY26). India's largest information technology (IT) services giant's net profit rose 4% to Rs 12,760 crore in the April-June quarter of FY26, compared to Rs 12,224 crore in the preceding January-March quarter of FY25.

TCS share price opened at Rs 3,314 apiece on the BSE and dropped 2% intraday after leading brokerages lent a cautious outlook over the software services major's demand environment and growth in the coming quarters. "We expect the demand environment to stay challenging in the next one–two quarters due to macro uncertainty," analysts at Nuvama said in a note.

Citi expects slowing growth to put pressure on premium multiples and estimates TCS's earnings will grow at a 3% CAGR in three years. "The company's cost optimisation efforts have helped deliver relatively good margin performance," the brokerage said.

At 9:54 am, TCS shares traded 2.26% lower at Rs 3,306 apiece on the BSE. The NSE Nifty 50 benchmark was 0.22% lower at 25,299.50. The stock has fallen 15% in the last 12 months and 195 year-to-date (YTD) basis. The software services giant commands a market cap of Rs 11,95,416.12 crore.

TCS Q1 Results Key Highlights (Consolidated, QoQ)

• Revenue down 1.6% to Rs 63,437 crore versus Rs 64,479 crore. (Bloomberg estimate: Rs 64,655 crore).

• EBIT down 1% to Rs 15,514 crore versus Rs 15,601 crore (Bloomberg estimate: Rs 15,703 crore).

• EBIT Margin Margin at 24.5% versus 24.2% (Bloomberg estimate: 24.29%).

• Net profit up 4% to Rs 12,760 crore versus Rs 12,224 crore (Bloomberg estimate: Rs 12,253 crore)

The Total Contract Value stood at $9.4 billion in the three months ending June, down from $12.2 billion in the preceding quarter. "The continued global macro-economic and geo-political uncertainties caused a demand contraction," TCS Chief Executive Officer and Managing Director K Krithivasan said, adding that the software services provider's new services grew well and saw robust deal closures during this quarter.

As of June 30, TCS increased its headcount by 6,071, bringing the total to 6.13 lakh. The IT services attrition rate was 13.8% over the past twelve months, the highest in nearly two years. TCS also announced a dividend of Rs 11 per equity share for the June quarter. The company will distribute nearly Rs 4,000 crore to shareholders in the fourth quarter of this fiscal. The board has fixed July 16 as the record date for the purpose of dividend payment.