TCS Shares May Rally 36% Says Motilal Oswal After Q3 Results — Check Target Price

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Motilal Oswal Report

Motilal Oswal has maintained its Buy rating on Tata Consultancy Services Ltd. with a target price of Rs 4,400, implying an upside of ~36% from current levels.

The brokerage expects USD revenue and EPS to compound at ~3.6% and ~7.6% respectively over FY25–28, supported by steady growth in select demand pockets and reasonable deal visibility, despite continued volatility in deal closures.

Margins have remained stable as wage headwinds and one-offs subside, with further upside contingent on execution rather than pricing.

Motilal Oswal has kept its estimates largely unchanged, valuing TCS at 26x FY28E EPS.

TCS reported revenue of $7.5 billion in Q3 FY26, rising 0.8% QoQ in constant currency terms, above brokerage's estimate of 0.5%. Growth was led by regional market and others (up 4.6% QoQ CC). Consumer business/energy, resources, and utilities/life sciences and healthcare grew 1.3%/1.0%/0.9% QoQ CC.

Ebit margin was 25.2% (flat QoQ), above estimate of 24.9%. Adjusted PAT rose 6.4% QoQ/13.4% YoY stood at Rs 141 billion (above our estimate of Rs 131 billion). This excludes one-off restructuring and the statutory impact of new labor laws expenses of Rs 34 billion.

For 9MFY26, revenue/Ebit/adjusted net profit grew 2.9%/5.2%/10.1% in INR terms compared to 9M FY25. Motilal Oswal expect revenue/Ebit/Adj. PAT to grow 6.8%/10.8%/10.9% YoY in Q4 FY26.

TCS reported a deal TCV of $9.3 billion, down 8.8% YoY. The book-to-bill ratio was stable at 1.2x.

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