TCS reported Q2 FY27 revenue of Rs 73,188 crore, up 1.3% sequentially and 11.2% YoY. Constant-currency revenue grew 0.5% QoQ, while international markets expanded 1.2%, led by the UK. Growth also broadened across key verticals, with BFSI rising 2.5% sequentially and manufacturing and technology services growing 3.1% each.
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IDBI Capital Report
IDBI Capital has maintained its 'Buy' rating on Tata Consultancy Services Ltd. with a target price of Rs 2,400, implying around 16% upside from the brokerage's cited market price of Rs 2,075. The brokerage believes earnings risk has increasingly shifted towards margins rather than demand, with much of the near-term pressure already reflected in valuations.
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TCS reported Q2 FY27 revenue of Rs 73,188 crore, up 1.3% sequentially and 11.2% YoY. Constant-currency revenue grew 0.5% QoQ, while international markets expanded 1.2%, led by the UK. Growth also broadened across key verticals, with BFSI rising 2.5% sequentially and manufacturing and technology services growing 3.1% each.
Ebit margin held at 24.0%, but gross margin slipped on higher subcontractor costs and bench investment. The proposed MHP acquisition adds roughly 50 basis points of dilution in H2, and CFO called any further improvement an "uphill task" which makes 25% FY27 exit target as at risk.
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Management kept the 26-28% long-term aspiration unchanged, but offered no timeline. Offsetting this, demand quality is improving. TCV was $9.6 billion, excluding the Porsche and Best Buy wins, and win rate have also improved.
AI-led deflation, weak consumer demand, volatile regional markets and a delayed margin recovery are the key risk to the brokerage call.
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