Tata Consultancy Services , India's largest IT services company, continues to attract bullish sentiment from analysts despite experiencing a significant stock correction over the past year. The company's December quarter results were in line with market expectations, though analyst opinions remain divided on the stock's near-term prospects.

Analyst Ratings and Price Targets

The analyst community shows strong confidence in TCS, with over two-thirds maintaining positive ratings despite the stock's 25% decline over the last 12 months. Current analyst coverage presents a comprehensive view of market sentiment:

Bullish Outlook and Growth Drivers

Macquarie leads the optimistic camp with the highest price target of ₹4,810, indicating a substantial upside potential of 48.2% from Monday's closing price of ₹3,243. The brokerage anticipates growth acceleration and margin improvements driving a price-to-earnings re-rating in financial year 2027.

Kotak Institutional Equities maintains its 'buy' rating with a price target of ₹3,675, highlighting TCS' strategic positioning. The brokerage emphasized that TCS is well-positioned to serve as a core partner to clients across cloud, data, and artificial intelligence services. However, they noted that while initial results appear encouraging, sustained execution, particularly in AI initiatives, will be crucial for any stock re-rating.

Cautious and Neutral Perspectives

Not all analysts share the same enthusiasm. Citi has maintained its 'sell' rating with a price target of ₹3,020, expressing concerns about the company's international business performance. The brokerage noted that muted growth in TCS' international operations could disappoint investors, especially given elevated expectations following positive management commentary at the end of Q2. Citi also observed that equipment and software businesses contributed nearly half of TCS' growth during the third quarter.

Nomura remains neutral with a price target of ₹3,300, believing that significant margin improvement for TCS remains unlikely in financial year 2027 without corresponding growth. Similarly, HSBC retained its 'hold' rating with a ₹3,450 price target, stating that the risk-reward profile appears balanced. While HSBC acknowledged largely positive demand commentary, they believe improvements are unlikely to exceed street expectations.

Market Performance and Outlook

TCS shares ended 1.1% higher on Monday at ₹3,243, ahead of the earnings announcement. The stock's recent performance reflects broader market sentiment and sector-specific challenges, though the majority of analysts remain confident in the company's long-term prospects. The wide range of price targets, from ₹3,020 to ₹4,810, demonstrates the varying perspectives on TCS' growth trajectory and market positioning in the evolving IT services landscape.

Tata Consultancy Services third quarter performance drew mixed responses from brokerages, with analysts broadly agreeing that while headline numbers were largely inline, underlying trends in international markets remain soft. However, optimism around fiscal 2027 exit momentum, stable margins, and scaling of AI-led opportunities continue to sustain long-term expectations.

Q3 Performance Highlights

TCS delivered a measured performance in the third quarter, with key metrics reflecting the ongoing cautious global IT spending environment.

EBIT margins remained stable at around 25.2% as wage hikes and higher marketing expenses were largely offset by workforce optimization and currency tailwinds. Order intake stood at $9.3 billion, remaining broadly flat on a trailing twelve-month basis, reflecting the still-cautious global IT spending environment.

Most brokerages noted that developed markets, particularly North America and BFSI sectors, performed weaker than expected, while regional markets and select verticals like CPG provided some support.

Brokerage Perspectives

Morgan Stanley: Overweight Rating Maintained

Morgan Stanley maintained an Overweight rating on TCS and raised its target price to ₹3,540.00 from ₹3,430.00. While acknowledging that underlying trends were softer than expected, particularly in international business growth, the brokerage highlighted management commentary pointing to momentum holding up into calendar year 2026.

Key positives identified by Morgan Stanley include:

• Stable margins near 25% with management confidence of moving towards 26%
• Expectations of fiscal 2026 exiting at better growth rate than previous year
• Early progress in AI journey with proof-of-concept projects moving into production
• AI revenues scaling up despite sector transition phase

The brokerage modestly increased financial year 2027-28 estimates and sees potential catalysts from data-center-related developments over the medium term.

Citi: Cautious Stance Continues

Citi maintained its Sell rating on TCS, trimming its target price marginally to ₹3,020.00. The brokerage characterized the December quarter as inline but highlighted that muted international business growth is likely to disappoint investors, especially following management's relatively positive tone after the second quarter.

Citi's concerns include:

• Equipment and software contributing nearly half of sequential growth
• Questions about sustainability of core services momentum
• High competitive intensity in the sector
• AI-led productivity risks
• Rise of global capability centres

Despite management confidence, Citi believes the business outlook remains challenged and continues to prefer peers like Infosys and HCLTech within large-cap IT.

Kotak Securities: Constructive Outlook

Kotak Securities maintained a Buy rating and increased its fair value to ₹3,675.00 from ₹3,550.00. While acknowledging muted revenue growth, the brokerage emphasized stable margins and improving execution indicators.

Kotak believes these steps could help TCS close the growth gap with peers in the next financial year. The brokerage sees TCS well-positioned as a core partner for clients across cloud, data, and AI journeys, despite near-term incumbency challenges during the revenue deflation phase of GenAI adoption.

Market Outlook

The mixed brokerage responses reflect the broader challenges facing the IT services sector, with companies navigating through a period of cautious client spending while positioning for future growth opportunities. TCS's stable margin performance and strategic focus on AI capabilities provide a foundation for long-term growth, though near-term revenue momentum remains constrained by global market conditions.