Synopsis: Large-Cap shares dropped 3% despite strong Q4 FY26 results, with mixed brokerage views. Jefferies downgraded to ₹2,275, while Nomura and Nuvama raised targets to ₹2,930 and ₹3,350, and Citi maintained a ₹2,250 “Sell.”
The shares of the Large-Cap Giant, specializing in IT services, digital transformation, consulting, and business solutions, are in focus as they have declined by 3 percent in the day’s trade. In this article lets explore the reason for the day’s fall.
With a market capitalization of Rs. 9,09,677.65 Crores on the Day’s Trade, the shares of Tata Consultancy Services Ltd fell by 3.2 percent, reaching a low of Rs. 2503.45 compared to its previous close of Rs. 2587.75.
What happened
Tata Consultancy Services Ltd is in the spotlight during today’s trading session, with its stock dropping by approximately 3 percent, despite reporting results yesterday that met expectations. The decline is being attributed to mixed commentary from brokerage firms, which has resulted in cautious investor sentiment, even after the earnings announcement.
Q4 Results Highlights
QoQ Highlights
The revenue from operations grew by 5.3 percent YoY to Rs 70,698 crore in Q4 FY26 from Rs 67,087 crore in Q3 FY26. Accompanied by a net profit that grew by 28 percent QoQ to Rs 13,784 crore in Q4 FY26 from Rs 10,720 crore in Q3 FY26, and EPS grew by 28.7 percent to Rs 37.92 per share in Q4 FY26 from Rs 29.45 per share in Q3 FY26.
YoY Highlights
The revenue from operations grew by 9.45 percent YoY to Rs 70,698 crore in Q4 FY26 from Rs 64,479 crore in Q4 FY25. Accompanied by a net profit that grew by 12.12 percent to Rs 13,784 crore in Q4 FY26 from Rs 12,293 crore in Q4 FY25, and EPS grew by 12.22 percent to Rs 37.92 per share in Q4 FY26 from Rs 33.79 per share in Q4 FY25. The company has proposed a final dividend of Rs 31 per share, equivalent to 3,100 percent of its Rs 1 face value, pending approval at the Annual General Meeting.
Actual estimates
The company’s revenue grew by 5%, reaching Rs. 70,698 crore, exceeding poll estimate of Rs. 69,370 crore. Earnings Before Interest and Tax (EBIT) stood at Rs. 17,870 crore, surpassing the poll estimate of Rs. 17,603 crore, marking a 6% sequential growth from Rs. 16,889 crore.
The EBIT margin for the quarter was 25.3%, slightly higher than both the December margin of 25.2% and the projected 25.2% in the CNBC-TV18 poll. This solid performance highlights TCS’s resilience in maintaining strong profitability and operational efficiency.
Brokerage views on TCS Post Result
Jefferies on TCS
The Global Brokerage firm Jefferies has maintained an Underperform rating on TCS, stating that there is “nothing to cheer.” It has set a target price of Rs 2,275, implying a 12 percent downside from the previous close of Rs. 2587.75, and highlighted that there are limited indications of a meaningful recovery in demand.
While they have increased their FY27 and FY28 EPS estimates by 2% to reflect rupee depreciation, it continues to project a modest 5.5% recurring EPS CAGR over FY26–FY28E, the lowest among the top three Indian IT companies.
Jefferies also noted that TCS is trading at a 26% premium to Accenture compared with its 10-year average of 0%, and added that weak growth visibility, along with this valuation gap, could pressure the stock’s performance.
Nomura on TCS
Nomura has reiterated its Buy rating and raised the target price to Rs 2,930 from Rs 2,840, implying a 13.2 percent upside from the previous close price of Rs 2,587.75.
The brokerage expects TCS to reinvest gains from currency movements and cost efficiencies into AI capabilities and ecosystem partnerships. It has also raised its FY27–FY28 EBIT margin estimates by 20 basis points to 25.2% and increased EPS estimates by 2–3%, reflecting an improved growth and margin outlook.
Nuvama Wealth Management on TCS
Nuvama has maintained a “Buy” rating and increased its target price to Rs. 3,350, implying an upside of about 29.4 percent from the previous close price of Rs 2,587.75, citing more attractive valuations after the recent stock correction.
It says that although FY26 saw weak revenue growth, margins stayed robust and deal wins remained steady. The brokerage anticipates a recovery in growth over the coming quarters, driven by a better macroeconomic environment and increasing opportunities in generative AI.
Citi on TCS
Global brokerage firm Citi has maintained a ‘Sell’ rating with a target price of Rs. 2,250, implying a downside potential of 13.05 percent from the previous close of Rs. 2,587.75.
Citi expects low single-digit revenue growth, with continued pressure from high competitive intensity and AI-driven productivity improvements. It prefers Infosys and HCL Technologies among large-cap IT stocks.
Orderbook Overview & Others
TCS reported a total contract value (TCV) of $40.7 billion for FY26, up from $39.4 billion in FY25. For Q4, TCV stood at $12 billion, slightly lower than $12.2 billion in the same quarter last year. The company secured three mega deals during the quarter and five for the full year, reflecting strong client engagement and successful execution of large-scale projects.
Client growth remained strong across revenue segments, with 66 clients generating over $100 million, 139 clients over $50 million, and 1,397 clients exceeding $1 million in revenue, all showing year-on-year improvement.
FY26 also saw margin expansion, with operating margin rising by 70 basis points to 25% and net margin increasing by 80 basis points to 19.8%, both reaching their highest levels in the past four years.
Conclusion
TCS shares likely declined in today’s trade despite strong Q4 FY26 results that met estimates, due to mixed reactions from brokerages and AI pressure. Jefferies downgraded the stock, citing weak demand recovery and high valuation, while Citi maintained a ‘Sell’ rating. However, Nomura and Nuvama raised their target prices, highlighting growth potential. This divergence in analyst opinions led to cautious investor sentiment, driving the stock lower despite solid financial performance.
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