JPMorgan said TCS has underperformed Nifty by 29% and Nifty IT by 6%, this year so far. This is due to successive earnings cuts from lower-than-expected growth and narrowing margins.
The brokerage said it does not think the company’s business model is broken and expects growth recovery from the second half of the financial year 2026.JPMorgan said it has moderated international constant currency and year-on-year growth to 0% and 5% respectively in FY26 and FY27. However, an increase in margin estimates by 55 basis points and 57 basis points in FY26 and FY27, respectively, would drive a 2% to 3% earnings-per-share (EPS) upgrade over the next three years, according to the brokerage.
The brokerage believes that TCS’ growth expectations have bottomed and the company should benefit from any recovery in business sentiment.
It said TCS shares are trading at 19.7x their two-year forward price-to-earnings multiple, which is two standard deviation below five-year average, while its one-year forward free cash flow is at 4.5%, with dividend yields is at 3.8%, respectively.Last month, TCS’ CEO and MD K Krithivasan and ED – President & COO Aarthi Subramanian acknowledged challenges because of deal deferrals and customer conservatism but remained confident in the company’s future trajectory.
K Krithivasan told CNBC-TV18 he remains optimistic about the medium to long-term outlook, supported by healthy client engagement and a strong order book.
TCS’ constant currency revenue for the June quarter declined by 3.3% sequentially. Its revenue declined 1.6% to ₹63,437 crore. In US dollar terms, its revenue was down 0.6% sequentially.
Of the 51 analysts that have coverage on the stock, 34 have “buy” ratings, 12 have “hold” ratings and five have “sell” ratings.
TCS shares were gained 2.6% to hit an intraday high ₹3,132.9 apiece around 9.55 am on Monday. It has declined 23.9% this year, so far.
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First Published: Aug 25, 2025 9:04 AM IS
