TCS Q4 Review: Caught In Macroeconomic Flux, Underwhelming Result, Upbeat TCV— ICICI Securities, Maintains Add

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ICICI Securities Report

Tata Consultancy Services Ltd.’s Q4 FY25 performance was a miss with regards to muted growth and margin. Total contract value was the silver lining, though down 7.5% YoY. Macro uncertainty has hit enterprise spending and the upbeat management commentary (in Q3 FY25) has shifted to a more cautious tone now.

We believe Q4 earnings might be grimmer for rest of the IT peers given that TCS has lesser % of revenue as discretionary versus peers. Despite management commentary that FY26 revenue growth will be better than FY25, we see low FY26 discretionary demand, weighing down growth.

We believe TCS is better placed versus peers to weather the current macro storm, being the industry bellwether with best-in-class RoE and execution. We cut FY26-27E EPS slightly, reiterate Add with Mar’26E target price of Rs 3,680 on attractive valuations (currently trading close to 5-year average - 2SD).

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