Tata Consultancy Services Ltd.'s first-quarter results have left brokerages divided, with price targets ranging from Rs 1,800 to Rs 2,500 as analysts weigh hopes of a demand recovery against sluggish growth and pressure on margins.
Jefferies maintained its ‘Underperform' rating and cut its target price to Rs 1,800 from Rs 2,275. While results were largely in line, the brokerage flagged subdued revenue growth, soft bookings despite a mega deal win and elevated hiring that could keep margins under pressure. It expects TCS to deliver a subdued 4% EPS CAGR over FY27-FY29.
Citi also maintained its ‘Sell' rating and lowered its target to Rs 1,825 from Rs 1,965. It expects low-single-digit revenue growth to continue and said sluggish growth could weigh on valuations, although demand may improve sometime in the second quarter.
Bullish brokerages, however, see early signs of a recovery. Axis Capital maintained ‘Buy' and cut its target marginally to Rs 2,500, citing strong hiring and a revival in BFSI growth. Goldman Sachs retained ‘Buy' with a Rs 2,370 target, while JPMorgan maintained ‘Overweight' with a target of Rs 2,400. Kotak Securities retained its ‘Buy' rating and Rs 2,450 target, calling TCS a solid operator navigating a difficult transition.
Management remains optimistic that demand will resume in Q2, with manufacturing and life sciences expected to improve. However, AI-linked deflation, geopolitical uncertainty and broader macroeconomic headwinds remain key risks to the pace of recovery.
Brokerages on TCS
Jefferies
- Maintain Underperform; Cut target price to Rs 1,800 from Rs 2,275.
- Results were largely in line, but revenue growth remained subdued.
- Bookings were soft despite a mega deal win.
- Elevated hiring could keep margins under pressure.
- Cuts estimates by up to 1% and expects a subdued ~4% EPS CAGR over FY27-29.
Citi
- Maintain Sell; Cut target price to Rs 1,825 from Rs 1,965.
- Q1 was in line, with international revenue flattish QoQ.
- Expects demand to improve sometime in Q2, given the pent-up technology backlog.
- FY27/28 EBITDA estimates remain unchanged.
- Expects low-single-digit revenue growth to continue.
- The key debate remains the fair valuation for the stock.
- Continued sluggish growth is likely to weigh on valuations.
Goldman Sachs
- Maintain Buy; Cut target price to Rs 2,370 from Rs 2,410.
- The quarter was subdued but in line with expectations.
- TCS believes demand could improve from the September 2026 quarter.
- Management remained upbeat about the forward outlook.
- Headcount additions suggest no material AI-driven impact on the business model yet.
JPMorgan
- Maintain Overweight; Target Price: Rs 2,400.
- Q1 was in line, with some hope of a recovery in Q2.
- Revenue saw a minor beat led by India, while margins were in line.
- TCS remains optimistic about demand recovering in Q2.
Kotak Securities
- Maintain Buy; Target Price: Rs 2,450.
- TCS remains a solid operator navigating a difficult transition.
- The quarter was muted but marginally ahead of expectations.
- Order bookings remained steady YoY and included a mega deal.
- AI-linked deflation and macro headwinds will limit the near-term recovery.
- TCS is executing well but continues to face significant external headwinds.
Axis Capital
- Maintain Buy; Cut target price to Rs 2,500 from Rs 2,520.
- Q1 offered a glimmer of hope, with strong hiring and a revival in BFSI growth.
- Strong growth in BFSI and Hi-Tech was offset by a sharp decline in the Consumer vertical.
- Management commentary suggests a broad-based improvement in Q2FY27.
- Hiring and wage hikes are the strongest since FY23, indicating a likely growth pickup.
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