Tata Consultancy Services (TCS) shares are expected to be in focus on Friday after the company reported a strong set of March quarter results, beating market expectations on both profit and revenue.
The results come at a time when IT stocks have been under pressure, and investors are closely watching whether can lead a recovery in the sector.
for Q4 FY26, marking a sharp rise of nearly 29% from the previous quarter. Revenue from operations increased 5.4% quarter-on-quarter to Rs 70,698 crore, ahead of estimates that had projected about 3.4% growth.
Global brokerages largely maintained a positive view on the stock, though some flagged risks around growth and margins.
CLSA retained an Outperform rating with a target price of Rs 2,985. It said the quarter was broadly in line on revenue and margins, with sequential improvement in order bookings. However, it noted that bookings declined on a year-on-year basis due to seasonal renewals.
The brokerage highlighted GenAI as a key growth driver, with annualised revenue of about $2.3 billion, contributing 7.5% of total revenue. It also pointed to a free cash flow yield of around 6% and attractive valuations compared to peers.
Goldman Sachs maintained a Buy rating with a target price of Rs 2,710. It noted steady growth across segments and strong deal wins, including three large deals.
However, it flagged that overall growth remains modest at about 0.8% quarter-on-quarter for the third straight quarter and said margins may remain under pressure due to continued investments in AI.
JPMorgan retained an Overweight rating with a target price of Rs 3,150, calling the quarter strong with a clear revenue beat and stable margins.
It highlighted strong deal wins worth $12 billion and said demand is showing early signs of improvement across key sectors.
The brokerage also noted that AI revenue grew 28% sequentially and now contributes 7.5% of total revenue.
of its cash to shareholders, with 80-100% of free cash flow distributed through dividends and buybacks.
Nomura also maintained a Buy rating with a target price of Rs 2,930. It expects FY27 to be better than FY26, especially in international markets.
The brokerage has raised its earnings estimates for FY27 and FY28 by 2-3% and expects stronger growth in the first half of FY27. It now forecasts dollar revenue growth of 3.8% for FY27 and 4.5% for FY28.
Not all brokerages are equally bullish.
HSBC maintained a Hold rating with a target price of Rs 2,755. It described the quarter as decent and said the demand outlook is improving, but expects only mid- to low single-digit growth over the longer term.
Jefferies took a more cautious stance, maintaining an Underperform rating with a target price of Rs 2,275.
It said margins were below expectations and flagged weak growth in the BFSI segment and flat deal bookings as concerns.
The brokerage also warned that AI could lead to pricing pressure and expects margins to remain in a narrow range. It estimates earnings growth of around 5.5% annually between FY26 and FY29.
The overall view from brokerages suggests that while TCS remains a stable company with strong deal wins and growing AI exposure, near-term growth may remain modest.
There is clear optimism around long-term opportunities, especially in AI and digital services. However, concerns remain around global demand, pricing pressure and margin growth.
For investors, this means TCS may not be a quick-return stock in the short term, but it continues to be seen as a steady long-term play within the IT sector.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)