TCS shares gain as JPMorgan upgrades stance on IT stock

Shares of Tata Consultancy Services (TCS) rose nearly 2.5% on Monday after global brokerage JPMorgan's upgraded the stock from "neutral" to "overweight. It raising the IT stock's target price to ₹3,800 per share from ₹3,650. This implies a potential upside of 24.4% from the previous close. TCS, despite facing challenges, retains strong client engagement and a robust order book, as noted by CEO K Krithivasan, who remains optimistic about the medium to long-term growth of the company. The stock gained 2.52% to Rs  3132.75 in early deals on Monday. Market cap of TCS rose to Rs 11.29 lakh crore. 

The IT stock has fallen 24.6% year-to-date, underperforming the Nifty by 29% and the Nifty IT index by 6%. The decline is attributed to earnings revisions amid deal deferrals and conservative client spending.

However, JPMorgan is optimistic about a growth recovery in the latter half of FY26. These recommendations highlight mixed expectations for TCS among analysts, indicating a cautious stance towards its stock performance. The company's ability to navigate market dynamics is being closely watched by investors.

JPMorgan has revised growth estimates, anticipating a 0% international constant currency growth in FY26, rising to 5% in FY27. The brokerage also foresees margin increases by 55 basis points in FY26 and 57 in FY27, potentially boosting earnings per share by 2% to 3% over the next three years.

TCS shares currently trade at a 19.7x two-year forward price-to-earnings multiple, which is below the five-year average. Despite current hurdles, the company is expected to benefit from positive shifts in business sentiment, aligning with TCS's optimistic outlook.