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Informist, Friday, Jul. 10, 2026

 

By Eshitva Prakash

 

MUMBAI – Several brokerages have cut their target price for Tata Consultancy Services Ltd. after the company's June quarter earnings showed weakness across the company's key verticals. However, the company's revenue growth in constant currency terms matched the Street's view, its artificial intelligence contract value rose, and its management guided for a gradual recovery from the September quarter, which led to brokerages maintaining their recommendations.
 

For the June quarter, TCS reported consolidated net profit of INR 133.49 billion, slightly lower than consensus projection due to a one-time cost, and down 2.7% sequentially. Its revenue, however, was higher than the Street's view at INR 722.75 billion, up 2.2% sequentially. It reported an annualised artificial intelligence revenue of $2.6 billion for the three months, up 13.6% quarter-on-quarter. In constant currency terms, the company's consolidated revenue grew 0.4% sequentially. Its total contract value of $9.5 billion for the reporting quarter was also in line with the Street's expectations. At 1421 IST, shares of the company traded over 1% higher at INR 2,070.30 per share on the National Stock Exchange. 

 

Nomura has among the most positive outlooks on TCS after its June quarter earnings. The brokerage hiked its 2026–27(Apr-Mar) earnings estimate for the company by 0.3% and FY28 earnings view by 1%. It has raised the target price on the stock marginally to INR 2,590 from INR 2,570. Nomura noted that the information technology bellwether expects demand to improve in the September quarter, particularly in manufacturing and life sciences vertical. TCS is also optimistic about banking, financial services and insurance vertical, and technology services. The company expects the consumer business to recover once market sentiment improves. Artificial intelligence now forms around 8.5% of TCS' revenue and such transformation projects have now started moving from proof of concepts to large projects, Nomura said.  

 

Nuvama Institutional Equities, on the other hand, has cut its target price on the stock by nearly 12% to INR 3,350 per share. The brokerage noted that TCS net added 9,279 employees, with hiring focused on talent adept with digital, AI-native and next-generation technologies. "Growth continues to elude TCS, but its performance on margins and deal wins remain solid," the brokerage said. It expects growth to recover over the next few quarters as the company recovers lost ground due to the war in West Asia and gradually starts winning generative AI deals. It has a 'buy' recommendation on the stock.

 

Nirmal Bang Institutional Equities has one of the bleakest views on TCS and the IT sector. The brokerage trimmed its target price to INR 1,682 from INR 1,693 and reiterated its 'sell' recommendation. TCS's revenue and order book growth have remained a concern since the past four-five quarters as AI-led deflation has started to materialise and productivity gains are realised faster than additional work can replace the deflation, the brokerage said. "We believe that there is high uncertainty in revenue and profit growth in the short and medium term as AI adoption accelerates, and the deflation pressure starts to materialise across the board, with Tier 1 players set to be hit the hardest," the brokerage added. While Nirmal Bang noted that the company's revenue from AI has risen, it pointed to management commentary that AI revenue is not like traditional annuity revenue and projects are completed in three-six months, which is why the revenue trend will be volatile.

 

Systematix Shares and Stocks (India) Ltd. has maintained its cut target price on TCS by over 1% to 2,320 per share and maintained its 'hold' rating. The brokerage cut its FY27-FY29 EPS estimates by 1–3% to reflect the recent performance, high investments, and intensifying competition to win large-deals. The higher share of net-new deals and continued momentum in large AI-led transformation programmes would improve revenue visibility and support growth recovery in FY27, the brokerage said.

 

Prabhudas Lilladher Pvt. Ltd. slashed its target price on the company nearly 2% to INR 2,500 per share. It also slashed the FY28 revenue expectation for the company by 0.1% to INR 3.06 trillion. It now expects the company to report earnings before interest, tax, depreciation, and amortisation of INR 777 billion for FY27 and INR 832 billion for FY28, which is 1.9% and 1.5% lower than its previous projections, respectively. The brokerage also cut its FY27 EPS on the stock by 1.1% to INR 156.90 per share and FY28 EPS by 1.7% to INR 166.3 per share. 

 

JM Financial Institutional Securities Ltd. revised its FY27–29 EPS estimates marginally, but kept its target price on the stock unchanged at INR 2,205 and maintained an 'add' rating. The brokerage said TCS' earnings were largely in line with expectations. However, sector rerating is unlikely if the earnings downgrade continues. 

 

Motilal Oswal Financial Services said the market is pricing in anaemic growth for TCS over the next 12–18 months. The brokerage has modelled around 2.5% growth in constant revenue terms on an organic basis in FY27 and around 3.2% organic constant currency growth for FY28. It sees the current pace of AI-led deflation continuing going forward. "On these assumptions, we see a limited downside to the stock, for now," the brokerage said. While Motilal Oswal agrees with the company's management that the September quarter will be better, evidence of demand improvement is scant. The pent-up demand narrative has been around for some time, while geopolitics, tariff uncertainty, and cautious discretionary spending continue to weigh on decision-making. It expects FY27 demand to be muted. The brokerage kept its target price on the stock at INR 2,350 and retained its 'buy' rating.  End

 

US$1 = INR 95.34

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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