Synopsis:
TCS declared a second interim dividend of Rs. 11 per share after delivering steady Q2FY26 results with 2.4% YoY revenue growth, improved margins, and a 100% acquisition of ListEngage, while brokerages gave mixed ratings.
A leading IT services stock remained steady post its September quarter results as investors weighed improved operational margins against mixed growth signals. While revenue and profit beat expectations sequentially, headcount reduction and cautious client spending tempered optimism. Brokerages delivered divided ratings, with some seeing early signs of recovery and others urging restraint amid uncertain global demand.
Tata Consultancy Services Ltd (TCS) has a market capitalization of Rs. 11,04,746.84 crore. The stock opened at Rs. 3,064.90 against its previous close of Rs. 3,061.95 and hit an intraday high of Rs. 3,070.05, marking a marginal increase of 0.26 percent from the previous close.
Brokerage Views on TCS Post Q2FY26 Results
JP Morgan maintained its Overweight rating and raised the target price to Rs. 4,050 from Rs. 3,900, implying a potential upside of 32.3 percent from the previous close. The brokerage noted that underlying trends appear to be bottoming out and described TCS’ margin improvement as “heartening.” It added that the company has achieved underlying cost control post-restructuring, though it viewed the AI colocation business as an “unrelated distraction.”
CLSA maintained its Outperform rating and increased the target price slightly to Rs. 3,559 from Rs. 3,545, suggesting a potential upside of 16.2 percent from the previous close. It highlighted that TCS “beat on all fronts” in Q2 and commended the firm’s “big, bold and ambitious data centre plans” aimed at capturing India’s AI growth story. CLSA noted that the company has become more acquisitive to accelerate growth.
Avendus Spark upgraded TCS to a Buy from Add and lifted its target price to Rs. 3,700 from Rs. 3,690, reflecting a potential upside of 20.8 percent from the previous close. The brokerage said Q2 performance was “better than expected,” reversing several weak quarters.
However, it flagged the “massive decline in headcount” as a concern. It maintained that deal momentum remains strong, supporting visibility of revenue recovery through H2 and FY27.
The brokerage added that the upgrade also stems from near-term underperformance, which makes risk-reward attractive and limits downside. It also added that Deal extension from BSNL would augment revenue in the near term.
UBS maintained a Neutral stance, raising its target price to Rs. 3,435 from Rs. 3,400, implying an upside potential of 12.2 percent from the previous close. UBS cited a “margin beat” in Q2 and noted management commentary highlighting continued client caution, which is leading to tight discretionary budgets and project delays, albeit at lower levels than the previous quarter.
Nomura reiterated its Neutral rating with a target price of Rs. 3,300, translating to an upside of 7.8 percent from the previous close. The brokerage said TCS’ Q2FY26 results reflected a revenue beat, though PAT was impacted by restructuring costs.
It also pointed to the company’s foray into the data centre business, involving a capex of USD 6–6.5 billion over six years. Nomura said that while management expects FY26 to outperform FY25 in major markets, “significant margin improvement in FY26 is unlikely.” It lowered its FY26 EPS estimate by around 2 percent to factor in restructuring costs.
Citi maintained a Sell rating but raised its target price slightly to Rs. 2,800 from Rs. 2,790, indicating a downside potential of 8.5 percent from the previous close. The brokerage described Q2 as “inline” but cautioned that medium-term asset intensity would increase.
It noted that a 3 percent QoQ decline in headcount reflects a weak outlook and expressed concerns about heightened competitive intensity. Citi also warned that AI-led productivity gains could pose risks to existing business lines, adding that the GCC segment remains resilient while the macro setup is unchanged.
Jefferies maintained a Hold rating but cut its target price to Rs. 3,100 from Rs. 3,230, implying a slight downside of 2.0 percent from the previous close. The brokerage said that growth in key markets has yet to recover, and a 3 percent QoQ fall in headcount “does not bode well.”
It viewed the company’s data centre foray as having “limited synergies” despite its growth intent. Jefferies also cut its earnings estimates by up to 1 percent and now expects a modest 4 percent EPS CAGR through FY26.
Also Read: Smallcap stock in focus after securing ₹98 Cr order for infra project
TCS Acquires US-Based ListEngage
Tata Consultancy Services Ltd, a global leader in IT services, consulting, and business solutions, has acquired a 100 percent stake in ListEngage, a prominent Salesforce Summit partner. ListEngage specializes in Salesforce Marketing Cloud, CRM, Data Cloud, Agentforce, and AI advisory services for enterprise clients.
The acquisition, valued at up to USD 72.80 million excluding management incentives and costs, will add over 100 skilled professionals and more than 400 Salesforce certifications to TCS’ Enterprise Solutions unit in the United States.
This move strengthens TCS’ Salesforce capabilities and aligns with its broader strategy to pursue inorganic growth in high-potential areas such as AI, Cloud, Cybersecurity, Digital Engineering, and Enterprise Solutions.
Record Date for Dividend Payment Announced
The Board of Directors declared a second interim dividend of Rs. 11 per equity share of Rs. 1 each. The dividend will be paid on Tuesday, November 4, 2025, to shareholders whose names appear on the company’s Register of Members or in the records of depositories as beneficial owners as of Wednesday, October 15, 2025, which has been fixed as the record date.
Financial Snapshot – Q2FY26 Results
Quarter-on-Quarter (QoQ) performance showed moderate improvement in key metrics. Revenue increased from Rs. 63,437 crore in Q1FY26 to Rs. 65,799 crore in Q2FY26, up 3.7 percent. Operating profit rose from Rs. 16,875 crore to Rs. 17,978 crore, marking a 6.5 percent increase.
However, profit before tax (PBT) declined from Rs. 16,979 crore to Rs. 16,068 crore, down 5.4 percent, while net profit decreased from Rs. 12,819 crore to Rs. 12,131 crore, a 5.4 percent sequential decline.
On a Year-on-Year (YoY) basis, TCS reported steady growth. Revenue grew from Rs. 64,259 crore in Q2FY25 to Rs. 65,799 crore in Q2FY26, an increase of 2.4 percent. Operating profit rose from Rs. 16,731 crore to Rs. 17,978 crore, up 7.4 percent. PBT remained nearly flat, moving from Rs. 16,032 crore to Rs. 16,068 crore, up 0.2 percent, while net profit improved from Rs. 11,955 crore to Rs. 12,131 crore, a 1.5 percent increase over the previous year.
About the Company
Tata Consultancy Services is a global technology and consulting leader, helping enterprises worldwide navigate their digital transformation journeys. Established in 1968, TCS has earned a reputation for engineering excellence, innovation, and customer-centric service.
With a presence in 55 countries and 202 global delivery centers, TCS employs a highly skilled workforce and has been recognized among top employers across six continents. Its client relationships, many of which span decades, have evolved through every technological shift from mainframes to artificial intelligence, reflecting the company’s adaptability and long-term partnership philosophy.
Written By Manan Gangwar
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
