TCS share price jumps 4%, adds Rs 26,720 crore in m-cap after Q1 results; target prices

Shares of Tata Consultancy Services Ltd (TCS) climbed nearly 4 per cent in Friday's trade, with the company adding Rs 26,720 crore to its market capitalisation (m-cap), thanks to positive management commentary on the September quarter. Analysts said TCS did acknowledge AI-led deflation on its book of business but also mentioned that this is being mitigated through allocation of more business from clients, resulting in positive revenue growth.

TCS, said Elara Securities expects gradual recovery in margins from Q2 and expects to exit FY27 at 25 per cent margin. The brokerage maintained 'Accumulate' on the stock with a lower target price of Rs 2,300 from Rs 2,780.

Also read: TCS target prices by 30 brokerages

Following the results, TCS shares rose 3.03 per cent to open at Rs 2,109.95 on BSE. The stock added to its opening gains and was up 3.83 per cent at Rs 2,126.10 crore, commanding an m-cap of Rs 7,67,613.45 crore.

SBI Securities said Q1 was a mixed quarter for TCS, with healthy deal wins and improving demand offset by margin pressure from wage hikes. The management commentary remained constructive, highlighting strong AI adoption, a healthy deal pipeline and improving demand trends. AI is increasingly becoming a core part of large transformation programs rather than a standalone offering, it said.

"This is helping TCS win larger contracts, expand deal sizes and accelerate project execution. We believe downside risk is limited at current levels and the stock can be accumulated gradually from a long-term investment perspective. We maintain a 12–18-month fair value of Rs 2,700-2,800 per share," SBI Securities said.

Choice Broking sees near-term pressure, but said TCS' long-term story stayed intact. This brokerage suggested 'Buy' and a target of Rs 2,320 on TCS.

Nuvama said TCS appears to be well set for recovery in FY27, given its commentary and strong hiring in Q1. Deal wins have been decent, margins solid and AI revenue is growing strong, it said.

"We minutely tweak our FY27/28 EPS estimates. Retain ‘BUY’ with a target of R s,000 (earlier Rs 3,350) valuing the stock at 18x FY28PE (earlier 20x). Valuations (13x FY27E PE), post-recent correction, are highly attractive," it said.

Deal bookings gave reasonable growth visibility, Nomura India said as it revised upward its target to Rs 2,590 from Rs 2,570 earlier. "Like previous years, we believe TCS will endeavour to recoup the margin dip through the year and exit 4QFY27F with 25 per cent-plus EBIT margin," the foreign brokerage said.

Among global brokerages, Goldman Sachs maintained 'Buy' on the stock with a revised target of Rs 2,370 from Rs 2,410 earlier. Morgan Stanley suggested Equal Weight on the stock with a target of Rs 2,200.