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TCS Shares Face Mixed Brokerage Views
9 Oct
Summary
- Brokerages show divided opinions on TCS stock performance.
- Margin pressure and macro uncertainties impact TCS's growth.
- AI services now constitute approximately 10% of TCS's revenue.
Analysts are presenting a divided outlook on TCS, with varying ratings and price targets reflecting concerns and optimism. Jefferies maintained an 'Underperform' rating, citing margin pressures and subdued earnings growth expectations, projecting a potential 17% downside. Nomura, however, retained its 'Buy' rating, lowering FY27 EPS estimates slightly due to margin considerations but seeing upside potential driven by AI service demand.
Ambit Capital recommends a 'Sell' rating, pointing to a lack of growth improvement and continued pressure on discretionary spending. Conversely, Motilal Oswal reiterated its 'Buy' rating, anticipating a recovery in regional markets and constructive client conversations. JM Financial remains mildly positive with an 'Add' recommendation, noting the international business's strength while emphasizing execution and potential margin risks.
TCS's Q2 FY27 results were largely in line with revenue expectations, though margins fell short. The company noted a flat year-over-year deal win trend, with ongoing scrutiny on discretionary spending. Despite a deferred project in India, TCS anticipates international momentum to continue, supported by a robust deal pipeline and client demand. AI services are a growing segment, now contributing around 10% to total revenues.
