The outlook for Tata Consultancy Services stock has turned cautious to mixed following its Q3 FY26 results. Most brokerages have stopped short of a bullish stance, flagging limited growth visibility, muted international momentum, and constrained margin upside despite an operationally in-line quarter.

TCS shares had risen 1.10% on Monday to close at ₹3,243.00 on the NSE ahead of the earnings announcement. However, the stock remains down more than 24% over the past year, with investors closely watching whether growth momentum can revive in CY26.

Mixed Brokerage Reactions

Brokerage opinions on TCS stock varied significantly following the Q3 results:

Key Concerns Highlighted

Citi struck the most bearish note, issuing a 'Sell' call with concerns over weak forward indicators. The brokerage highlighted just 1.50% year-on-year growth in trailing twelve-month total contract value and a 4% year-on-year decline in headcount. Citi also noted that nearly half of the quarter-on-quarter revenue growth was driven by equipment and software rather than core services.

Nomura, while describing the quarter as a modest beat on revenue and margins, cautioned that meaningful margin expansion in FY27 appears unlikely without a stronger and broader-based growth recovery. HSBC characterized Q3 as a largely status quo quarter with no material change in growth trends.

Positive Outlook from CLSA

CLSA offered the most optimistic view with an 'Outperform' rating and target price of ₹3,593.00, implying approximately 11% upside potential. The brokerage highlighted several positive factors:

• Constant-currency sequential revenue growth of 0.80% in Q3 FY26
• Management's confidence in stronger CY26 growth
• Sharp rise in annualized AI revenue to $1.80 billion, up 17.30% quarter-on-quarter

However, CLSA noted that the order book declined 7% sequentially to $9.30 billion.

Financial Performance Overview

TCS's Q3 FY26 financial performance showed mixed results:

The company's EBIT margin expansion of 70 basis points year-on-year to 25.20% was particularly noteworthy, achieved despite wage hikes during the quarter. TCS also announced a dividend of ₹57.00 per share, which includes a special payout component.

Market Outlook

With the stock trading significantly below its historical highs and brokerages presenting mixed views, investor focus remains on whether TCS can demonstrate sustained growth momentum in the coming quarters. The company's AI revenue growth and management's optimism about CY26 performance provide some positive signals, though concerns about broader growth visibility persist across most analyst coverage.

Tata Consultancy Services has expressed strong confidence in its growth prospects for FY26, driven by positive client engagement, robust deal pipeline, and its established leadership in artificial intelligence capabilities.

Growth Strategy and Market Outlook

The IT services major is targeting enhanced growth in international markets for FY26, setting higher expectations compared to its FY25 performance. This ambitious target comes as the company enters the final quarter of the current fiscal year, positioning itself strategically for the upcoming financial year.

Key Growth Drivers

Several factors are contributing to TCS's optimistic outlook for the coming fiscal year:

• Strong client conversations indicating robust demand for services
• Healthy deal flow suggesting sustained business momentum
• Leadership position in AI providing competitive advantage in emerging technology segments
• International market focus targeting higher growth rates globally

Strategic Positioning

The company's confidence stems from its strong positioning in artificial intelligence, which has become a critical differentiator in the competitive IT services landscape. This technological leadership, combined with positive client feedback and a strong pipeline of potential deals, forms the foundation of TCS's growth strategy.

Market Performance Expectations

With international markets being a key focus area, TCS aims to outperform its FY25 growth rates in these regions during FY26. The company's strategic emphasis on global expansion reflects its commitment to diversifying revenue streams and capitalizing on emerging opportunities across different geographical markets.

The company's optimistic stance for FY26 reflects its confidence in market conditions, client relationships, and its ability to leverage technological capabilities to drive sustainable growth in the upcoming fiscal year.