TCS emerges as HDFC Securities' top investment idea for September despite 30% fall in last 1 year

Tata Group stock Tata Consultancy Services (TCS), India’s largest IT services company, has been the weakest performer in the Nifty IT index over the past year and in 2025 year-to-date. The stock has fallen 30% in the last 12 months and is down 23% so far this year, compared to a 16% and 17% decline in the Nifty IT index during the same periods.

Despite the recent weakness, brokerage firm HDFC Securities has identified TCS as its ‘Investment Idea’ for September 2025, citing strong fundamentals, robust deal pipeline, and attractive valuations.

"We believe the base case fair value of the stock is ₹3423 (20.75x Sept’27E EPS) and the bull case fair value of the stock is ₹3630 (22x Sept’27E EPS) over the next two to three quarters. Investors can buy in ₹3085-3145 band and add further on dips in the ₹2775-2835 band (17x Sept’27E EPS)," it said.

According to HDFC Securities, TCS’s strong brand equity, healthy balance sheet, negative net debt position, and robust liquidity profile make it a compelling long-term bet, even in the face of near-term sectoral headwinds.

Deal Wins and Growth Outlook

As per HDFC Securities, TCS reported a total contract value (TCV) of $9.4 billion in Q1FY26, down 23% sequentially but up 13.2% year-on-year, signaling continued market share gains. The company emphasized that its large deal momentum remains healthy and that FY26 growth is likely to be stronger than FY25, especially in international markets.

HDFC Securities notes that TCS’s ability to structure and execute large-scale, complex projects globally has differentiated it from competitors, helping it consistently win transformational digital deals. Its strategic investments in training, upskilling, and emerging technologies such as Generative AI (GenAI) have positioned it well to capture future growth opportunities.

Opportunities and Competitive Edge

HDFC Securities believes TCS’s strong domain expertise, global delivery model, and ability to invest in cutting-edge technologies give it a competitive edge. The brokerage expects the company to benefit from rising demand in areas such as cloud adoption, cybersecurity, AI-driven solutions, and digital transformation.

With its healthy cash generation and capital allocation discipline, TCS is positioned to sustain growth through strategic acquisitions, partnerships, and product expansion.

About Tata Consultancy Services (TCS)

TCS is a global leader in IT services, consulting, and business solutions. For over 50 years, TCS has partnered with some of the world’s largest enterprises, guiding them through digital and business transformation initiatives.

The company operates in North America, Latin America, continental Europe, the UK, India, Asia-Pacific, West Asia, and Africa. Its service portfolio includes consulting and service integration, digital transformation solutions, cognitive business operations, engineering and assurance services, and platforms. TCS employs over 613,000 consultants across 55 countries, making it one of the largest IT employers globally.

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.