Shares of Tata Consultancy Services declined on Friday after a rare annual revenue decline overshadowed strong deal wins and a quarterly earnings beat, raising concerns that a sustained growth recovery remains elusive amid weak discretionary spending and rising cost pressures.
It ended at ₹2,524.30, 2.5 per cent lower, hitting an intraday low of ₹2,501.10 compared to the previous close of ₹2,589. The decline reflects investor caution despite the company delivering better-than-expected earnings for the March quarter.
In Q4 FY26, TCS reported a net profit of ₹13,784 crore, marking a 12 per cent year-on-year increase driven by steady revenue growth and robust order bookings. On a sequential basis, net profit surged 28.5 per cent, aided by the absence of one-off expenses that had impacted the previous quarter. Follow our Q4 LIVE HERE
However, the positive earnings momentum was overshadowed by a rare dip in annual revenue, which dampened sentiment around the IT major’s near-term growth outlook. Analysts pointed to continued weakness in discretionary spending across key markets, along with margin pressures from rising costs, as factors likely to weigh on performance in the coming quarters.
The broader IT sector also witnessed selling pressure, with the Nifty IT index falling nearly 2 per cent to 31,030.60 . Peer stocks such as Infosys, Mphasis, Coforge, LTIMindtree and HCL Technologies were among the major laggards, while Wipro showed relative resilience.
Despite the sharp market reaction, several brokerages maintained a constructive stance on TCS, citing its strong deal pipeline and long-term growth fundamentals. Still, near-term headwinds in global IT spending continue to cloud visibility, keeping investors cautious about the pace of recovery.
Choice Institutional Equities’ analyst Dhanshree Jadhav said the Q4FY26 performance surpassed estimates on the back of solid execution and robust deal wins, which improve growth visibility despite a challenging macro environment.
The brokerage highlighted that artificial intelligence remains a key growth driver, with an annualised revenue run rate of USD 2.3 billion, and is expected to contribute incrementally as client engagements scale up from pilot stages to full deployments. It added that AI-led momentum is further supported by the company’s HyperVault business, which is progressing towards 1 GW infrastructure capacity through strategic partnerships with OpenAI and AMD.
While noting that the company’s 26 per cent EBIT margin target has been pushed out to the longer term, the brokerage said TCS’s strong profitability provides sufficient flexibility to reinvest in AI, data centres and other strategic growth initiatives.
Choice Institutional Equities maintained its buy rating on the stock with a target price of ₹3,350, reflecting confidence in sustained growth momentum over the long term.
Domestic brokerage Motilal Oswal expects TCS to deliver modest USD revenue and EPS CAGR of around 3.8 per cent and 7.0 per cent over FY26–28, with growth limited to select pockets and margins likely to stay flat, reiterating a buy with a target price of ₹3,000. Elara Capital maintained an accumulate rating with a higher target price of ₹2,780, citing steady international momentum and data centre traction, though it expects some margin pressure in FY27. JM Financial retained an add rating with a revised target price of ₹2,730, noting an in-line quarter and flagging that sector re-rating may remain constrained amid GenAI concerns, with rupee depreciation offering near-term margin support.
Among global brokerages, CLSA rated the stock outperform with a target price of ₹2,985, while JPMorgan maintained an overweight with a target price of ₹3,150, highlighting strong revenue performance and robust deal wins. Goldman Sachs kept a buy rating with a target price of ₹2,710, pointing to broad-based growth and improving stability in key accounts, and Nomura reiterated buy at ₹2,930, while HSBC maintained hold at ₹2,275.
In contrast, Jefferies remained cautious, reiterating underperform and cutting its target price to ₹2,275, citing subdued growth outlook, weak BFSI trends and potential AI-led revenue deflation, with margins expected to stay range-bound.
Published on April 10, 2026
