A section of brokerages has remained cautious on Tata Consultancy Services (TCS) after the company’s Q2FY26 earnings, citing slower growth in key markets, limited margin upside, and execution challenges in its new initiatives. Firms including Citi, HSBC, Nomura, and Jefferies maintained either Sell, Hold, or Neutral ratings, with target prices ranging between ₹2,800 and ₹3,300 per share.
At the time of reporting, TCS shares traded at ₹3,060.20.
Citi retained its Sell rating with a target price of ₹2,800, saying Q2 results were in-line on revenue, partly supported by higher equipment and software sales. The brokerage noted that TCS’s expectation of over 0.7% YoY international business growth in FY26 appears difficult to achieve, adding that rising asset intensity could impact profitability going forward.
HSBC maintained a Hold rating with a target price of ₹3,260, highlighting that Q2 was a beat on both growth and margins, while deal wins were broadly in line. The brokerage termed TCS’s AI capacity expansion as a constructive step, strengthening its relationships with global hyperscalers, but maintained a neutral stance amid macro uncertainties.
Nomura kept a Neutral rating with a target of ₹3,300, noting a modest Q2 beat. The brokerage said the company’s data centre foray enhances its positioning in the AI ecosystem, but added that a significant margin improvement in FY26 is unlikely. It expects steady but moderate growth in major markets through the fiscal year.
Jefferies reiterated its Hold call with a target of ₹3,100, observing that growth in key markets remains subdued and a 3% sequential decline in headcount signals near-term softness. The brokerage said the intent to invest for growth is encouraging, but the data centre venture offers limited synergy with TCS’s core IT services. It cut its estimates by up to 1% and now projects a 4% EPS CAGR over FY26–28.
CMP: ₹3,060.20
Target Range (Sell / Hold / Neutral Brokerages): ₹2,800 – ₹3,300
Disclaimer: This article is based on brokerage research reports. It is for informational purposes only and does not constitute investment advice. Investors are advised to consult certified financial experts before making investment decisions.