Shares of IT behemoth Tata Consultancy Services Ltd. are trading lower ahead of its Q1 earnings scheduled to be announced later in the day.
The stock opened 0.16% lower at Rs 2,055 apiece, and later slumped further to 1.97% lower at Rs 2,018 apiece.
TCS currently has 32 buy calls, 11 hold calls, and six sell calls, as per Bloomberg data. It has an average target price of Rs 2,655.47 with an implied upside of 29.1%.
According to Harshal Dasani, Business Head at INVAsset PMS, TCS opening nearly 2% lower ahead of its Q1 results does not automatically make the stock a buy-on-dips opportunity. The fundamental setup still warrants caution, with the June quarter expected to remain muted amid weak demand conversion and a lack of meaningful recovery in discretionary technology spending.
“The issue is not only valuation or sentiment. It is earnings visibility,” Dasani said, adding that a hold-type stance appears more balanced than an aggressive fresh entry before the results. While TCS remains a high-quality franchise, weak growth momentum means investors are still waiting for evidence of a revival.
According to Bloomberg estimates, the broader sector faces another challenging earnings season. The June quarter is unlikely to offer a meaningful relief for IT stocks, as weak discretionary spending continues to weigh on demand, while AI-led efficiency gains are putting pressure on growth and pricing.
Dasani said the key variables to watch will be deal conversion, margin defence, commentary on the BFSI segment and the US market, and whether artificial intelligence is beginning to contribute to revenue rather than merely driving productivity savings. “A clean print may stabilise the stock, but a durable re-rating needs evidence that revenue growth is bottoming,” he said. Until then, buying the dip ahead of the results remains “more of an event bet than a fundamental call”.
TCS Q1 Preview
There might be a few snags in India's largest software exporter growth in the quarter under review. The tata-group company is expected to report modest revenue growth in the June quarter, while margin and profit are likely to come under pressure from the full-quarter impact of wage hikes amid an uncertain demand environment.
Bloomberg estimates point to a 1% quarter-on-quarter increase in revenue, while operating profit is expected to decline 3% and net profit 2%. Revenue in constant currency terms is projected to grow 3.58% year-on-year, while employee attrition is seen rising to 11.5%.
TCS Q1FY27 Bloomberg Estimates (Consolidated, QoQ)
- Revenue seen 1% higher at Rs 71,743 crore versus Rs 70,698 crore
- EBIT seen 3% lower at Rs 17,284 crore versus Rs 17,870
- EBIT Margin seen at 24.19% versus 25.27%
- Profit seen 2% lower at Rs 13,485 crore versus Rs 13,718 crore
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