TCS share price declined over 2% in early trade on Friday after the IT major reported its Q4 results. TCS shares fell as much as 2.23% to ₹2,530 apiece on the BSE.
Tata Consultancy Services (TCS), the largest software service exporter in India, reported a largely in-line earnings for the fourth quarter of FY26, with revenue beating estimates and stable margins.
TCS’ net profit in Q4FY26 jumped 28.7% to ₹13,718 crore from ₹10,657 crore in the previous quarter. Revenue increased 5.4% quarter-on-quarter (QoQ) to 70,698 crore, while USD revenue rose 1.5% QoQ to $7,621 million.
At the operational level, EBIT grew 5.8% QoQ to ₹17,870 crore, while EBIT margin improved to 25.3% from 25.2%, QoQ.
For FY26, TCS’ revenue stood at ₹2,67,021 crore, up 4.6% YoY, while operating margin improved to 25%, an increase of 80 bps YoY, and net margin improved to 19.8%, marking the highest margin levels in the last four years.
The company’s deal wins remained robust, with Q4 TCV at $12 billion and FY26 TCV at $40.7 billion, providing strong revenue visibility and supporting forward earnings.
TCS also announced a final dividend of ₹31 per share.
“From a long-term perspective, TCS’ continued investment in AI/ML (270k+ skilled workforce) and strong deal pipeline position it well to capture future digital and transformation spending. While near-term growth remains muted due to macro headwinds and currency pressures, margin resilience and a strong order book underpin steady earnings visibility,” said Seema Srivastava, Senior Research Analyst at SMC Global Securities.
As highlighted by K Krithivasan, sustained client confidence in technology investments supports TCS’s long-term growth trajectory, she noted.
Should you buy, sell or hold TCS shares?
Motilal Oswal Financial Services expect TCS’ USD revenue and EPS to compound at ~3.8% and ~7.0% over FY26-28, reflecting gradual recovery, with growth continuing to come from select pockets rather than a broad-based pickup.
“Margins improved somewhat less with productivity gains and rupee tailwinds largely being reinvested or passed through and we expect margins to remain flat in FY27,” Motilal Oswal said.
The brokerage firm reiterated a ‘Buy’ call on TCS shares with a target price of ₹3,000, based on 18x FY28E EPS.
Equirus Securities believe that TCS’s growth prospects entering FY27E are improving. Despite ongoing investments and sluggish growth in the international market, EBIT margin performance of TCS remains stable in the recent past.
Considering this and TCS’ demanding valuations, its robust FCF generation and rich RoE, Equirus believes that risk-reward is turning favourable. Hence, the brokerage house upgrades its rating on TCS shares to ‘Long’ from ‘Add’.
It raised TCS share price target to ₹2,945 apiece from ₹3,355 earlier.
Dipeshkumar Mehta, Senior Research Analyst at Emkay Global Financial Services said that TCS’s Q4 operating performance was in line with expectation
“What we like: In-line revenue growth, improvement across client bucket, robust deal intake, healthy cash conversion. What we did not like: Softness in BFSI, CME, Latam, and APAC businesses,” said Mehta.
Emkay Global raised FY26-28E earnings marginally, factoring in Q4 performance. It retained ‘Add’ rating on TCS shares and raised target price by ~5% to ₹2,950 from ₹2,800 earlier, at 18x Mar-28E EPS.
At 9:33 AM, TCS share price was trading 2.04% lower at ₹2,535.00 apiece on the BSE.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
