Tata Consultancy Services (TCS) is set to attract attention on Friday following its impressive performance in the March quarter. The company exceeded market forecasts in both profit and revenue figures, amid a challenging period for IT stocks. Investors are keen on TCS’s potential to drive a sector-wide recovery.
In Q4 FY26, TCS reported a consolidated net profit of Rs 13,718 crore, a substantial 29% increase from the previous quarter. Its revenue from operations also saw a robust 5.4% quarter-on-quarter growth, reaching Rs 70,698 crore, surpassing the estimated 3.4% growth.
Various global brokerages have maintained a positive outlook on TCS, although some have cautioned about potential risks related to growth and margins. CLSA, for instance, upheld an Outperform rating with a target price of Rs 2,985, noting consistent revenue and margin performance, along with improved order bookings. The brokerage highlighted GenAI as a significant growth driver, contributing 7.5% of total revenue.
Goldman Sachs reiterated a Buy rating with a target price of Rs 2,710, emphasizing steady segment growth and substantial deal wins. However, it highlighted modest overall growth and margin pressures due to ongoing investments in AI.
JPMorgan remained optimistic, maintaining an Overweight rating with a target price of Rs 3,150. The brokerage praised TCS’s strong deal wins and highlighted the growth in AI revenue, now accounting for 7.5% of total revenue.
Nomura also sustained a Buy rating with a target price of Rs 2,930, anticipating a better performance in FY27, particularly in international markets. The brokerage raised its earnings estimates for FY27 and FY28, projecting a stronger revenue growth trend.
In contrast, HSBC maintained a Hold rating with a target price of Rs 2,755, foreseeing moderate long-term growth despite an improving demand outlook. Jefferies adopted a more cautious stance, maintaining an Underperform rating with a target price of Rs 2,275, citing concerns over margins and growth in specific segments.
Overall, while TCS continues to secure significant deals and enhance its AI capabilities, short-term growth prospects may be moderate. The long-term potential in AI and digital services is evident, but challenges related to global demand and margins persist. TCS remains a stable investment option for long-term gains within the IT sector, despite potential short-term fluctuations.