TCS share price target cut by analysts after weak Q1, ‘hazy’ growth outlook

Brokerage firms Nomura and UBS have trimmed their price targets on shares of Tata Consultancy Services (TCS) Ltd. after the Tata Group giant reported soft June quarter numbers.A key highlight from the quarter was a 3.3% sequential drop in constant currency revenue. Deal wins remained within the company’s guided range but narrowed compared to the March quarter. US Dollar revenue declined against expectations of growth, while net profit was aided by higher other income.

TCS

has not yet decided on salary hikes for FY25 due to macroeconomic uncertainties and delayed deal closures. The company said an update on hikes will be provided once the situation improves.
Nomura has maintained its ‘Neutral’ rating on TCS but cut its price target to ₹3,780 from ₹3,820. It said growth visibility for FY26 remains hazy. While the management continues to maintain that FY26 will be better than FY25 for key markets, Nomura does not foresee a huge margin improvement in FY26.The brokerage has trimmed its FY26-28 EPS estimates by 1-2% to reflect changes in revenue and margins.

UBS has retained its ‘Buy’ rating but reduced its price target to ₹3,950 from ₹4,050.

TCS shares have underperformed their large Indian peers on a YTD, 1-year, 2-year, 3-year, and 5-year basis. This underperformance, according to UBS, is largely due to de-rating, as revenue conversion has been slow despite strong deal momentum.

The stock is down 21% from its recent January 2025 peak and is trading near its 10-year average PE. UBS believes the market will now assess TCS growth excluding the BSNL contract, implying the company can still deliver industry-average growth in FY26.

UBS added that it doesn’t see much scope for further de-rating. Current valuations offer comfort and suggest limited downside.HSBC has maintained a ‘Neutral’ stance with a price target of ₹3,665.

It said that Q1 was a miss on topline, driven mainly by BSNL, but also saw weakness in the international business. More concerningly, TCS appears to be struggling with profitability as well. The demand commentary, HSBC said, was slightly weaker than expected.

JPMorgan also retained its ‘Neutral’ rating, with a price target of ₹3,650.

The brokerage said that TCS began FY26 on a weak footing. Negative operating leverage from an unexpected demand shock drove ex-forex margins down by 10 bps, despite currency tailwinds and lower hardware costs.

JPMorgan expects overall FY26 revenue to decline and remain flat in international markets on a constant currency basis.

In reaction to TCS’ results, the US-listed shares of peers Infosys and Wipro closed with steep losses on Thursday. Infosys ADR fell 4%, while Wipro ADR dropped 5%. TCS does not have an ADR listing in the US.

Of the 50 analysts covering TCS, 34 still rate the stock a ‘Buy’, 12 suggest a ‘Hold’, and four recommend a ‘Sell’.

Shares of TCS closed 0.061% lower on Thursday at ₹3,382.30. The stock is down 18% so far in 2025.