Tata Consultancy Services (TCS), India’s largest IT services firm, drew market attention after releasing its first quarter results for FY26 following market hours on July 10. The company reported a stronger-than-expected performance, sparking positive sentiment around the stock, which has the potential to test Rs 3,580 levels in the near term, according to analysts.
TCS posted a consolidated net profit of Rs 12,760 crore for the quarter ended June 30, 2025, reflecting a 5.98 percent year-on-year rise and a 4.38 percent increase on a sequential basis. This was significantly better than expectations. A consensus estimate from Bloomberg had forecast a muted 1.9 percent growth with net profits around Rs 12,263 crore. In dollar terms, the net profit rose 3.5 percent year-on-year to $1.49 billion. Revenue from operations reached Rs 63,437 crore, showing a modest 1.13 percent growth compared to Rs 62,613 crore a year ago. However, sequentially, revenue dipped 1.61 percent and also declined 3 percent on a constant currency basis.
A key positive in the Q1 results was the new deal signings worth $9.4 billion, indicating continued client confidence and demand in strategic areas. The company declared an interim dividend of Rs 11 per equity share for the financial year 2025–26. This follows a final dividend of Rs 30 declared for the previous year. In a regulatory filing, TCS confirmed that the dividend was approved by the board in its meeting on July 10, 2025.
Despite global macroeconomic uncertainty, TCS demonstrated operational resilience and profitability. According to analysts, the company achieved a net margin of 20.1 percent and improved its operating margin to 24.5 percent. This was particularly notable given the modest revenue performance and margin pressures in the broader IT industry. Key growth drivers during the quarter included its artificial intelligence and data offerings such as WisdomNext, digital experience services under TCS Interactive, and cybersecurity solutions including the Cyber Defence Suite.
From a sectoral standpoint, the company experienced a 2.8 percent year-on-year increase in the Energy and Utilities segment and 1.8 percent growth in Technology Services. However, not all sectors performed equally. Life Sciences saw a significant 9.6 percent decline, while the India market witnessed an even steeper contraction of 21.7 percent. Regionally, growth was led by the Middle East and Africa, Asia Pacific, and Latin America.
Market experts are now closely watching the stock’s technical setup. According to Anshul Jain, Head of Research at Lakshmishree Investment, TCS has been trading in a tight range between Rs 3,360 and Rs 3,580 for over two months. He noted that a sustained move above Rs 3,360 could lead the stock toward Rs 3,580, while a breakdown below Rs 3,360 may signal a deeper correction with potential downside toward Rs 3,250.
Brokerages offered a mixed response to the results. Nomura has retained a neutral rating on TCS, citing limited visibility for sustained growth through FY26. Despite management’s optimism about outperformance in FY26 relative to FY25, the brokerage revised its FY26–28 earnings per share estimates downward by 1–2 percent. It now sees reduced revenue growth and constrained margin expansion. As a result, Nomura trimmed its target price for the stock from Rs 3,820 to Rs 3,780.
HSBC also maintained a hold rating, keeping its target price at Rs 3,665. It pointed out that Q1 revenues were below expectations, largely due to weakness in the BSNL contract and softer demand from international clients. More concerning, according to the firm, was the pressure on profitability—an area where TCS usually shows strong consistency. Additionally, HSBC noted that the overall tone from TCS management on future demand was slightly more subdued than in previous quarters.
Despite mixed views from brokerages, the long-term growth outlook for TCS remains largely intact, particularly as the company continues to strengthen its offerings in AI, cloud services, and cybersecurity. These segments are expected to drive demand from both new and existing clients across the globe, especially as enterprises invest in digital transformation post-pandemic.
For investors, the stock’s near-term performance will depend on broader market sentiment, movement around the Rs 3,360 support level, and how quickly TCS is able to convert its strong pipeline of deals into consistent revenue growth. Given its stable fundamentals and commitment to shareholder returns through regular dividends, TCS remains a key player in India’s IT sector and a closely tracked stock on the Indian bourses.
