TCS posts weak Q1 earnings; brokerages divided, some slash target price

Brokerages on TCS after Q1 Results: TCS on expected lines posted weak April-June quarter earnings amid tariff uncertainty. For the quarter under review, the company’s consolidated net profit rose over 6 per cent to Rs 12,760 crore amid positive growth in the new services segment.

Revenue at the company inched higher by 1.3 per cent to Rs 63,.437 crore amid cautious client spending as well as tariff uncertainty. The company’s constant currency (CC) revenue declined 3.1 per cent on-year.

The IT company’s management commentary has not been so confident.

The company’s margin was at 24.5 per cent on the operational front.

Brokerages on TCS post Q1 earnings

JP Morgan has maintained neutral call with the target cut to Rs 3,650 from the earlier Rs 3,850. The brokerage said TCS began FY26 on a weak note and the company’s top management blamed unexpected weakness on uncertainty from US trade negotiations & geopolitics that impacted a range of industries secularly.

Now expect FY26 revenue to decline for overall business & stay flat on CC basis.

Citi, however, maintains a bearish view on the stock with the target cut to Rs 3,135 from the earlier Rs 3,220 per share. As per the brokerage, the company posted another weak quarter. Sequential decline in international business in a seasonally strong quarter was the key negative, it noted.

Still optimistic about FY26 being better year-on-year for the company’s international business. Sector growth outlook continues to be challenged as valuations remain high. 

HSBC has maintained its hold call on the stock with the target at Rs 3,665. The brokerage said that 1Q miss on top line was largely led by BSNL. Also the company missed in international business. It added that TCS seems to be struggling on profitability as well with demand commentary slightly weaker than expected. 

Meanwhile, Nomura has also continued with its neutral call on the stock with the target at Rs 3,780 per share. As per the brokerage, growth visibility for FY26 is still hazy. It added that the constant currency growth at the company was lower than the consensus estimate.

Also, it noted that any significant margin improvement in FY26 is highly unlikely, and considering these the brokerage has slashed FY26-28 EPS estimates by 1-2 per cent.