TCS share price falls after Q2 results. Should you buy or sell the large-cap IT stock?

TCS share price: Shares of IT major Tata Consultancy Services (TCS) fell over 1% in early trade on Friday after it reported its Q2 results. TCS shares declined as much as 1.53% to ₹3015.00 apiece on the BSE.

TCS, the largest IT services exporter in India, reported a net profit of ₹12,075 crore in Q1FY26, registering a fall of 3.8% from ₹12,760 crore in the previous quarter. The company’s revenue rose 3.7% QoQ to ₹65,799 crore, with CC revenue growth at 0.8%.

At the operational level, EBIT increased 6.8% to ₹16,565 crore, while EBIT margin improved by 70 bps to 25.2%, QoQ.

TCS board of directors declared a dividend of ₹11 per share.

The IT major also announced strategic investments, including a new business entity to build world-class AI infrastructure with a 1 GW capacity AI datacenter in India and the acquisition of a 100% stake in ListEngage.

Analysts remain bullish on the stock as TCS Q2 results modestly beat Street estimates. Brokerages have raised TCS share price target after the Q2 results. Here’s what they opined on TCS' share price outlook:

Should you buy TCS shares after Q2 results?

While TCS management expects FY26 growth to be better than FY25, brokerage firm Motilal Oswal Financial Services (MOFSL) believes this guidance is somewhat fuzzy.

“Even assuming a 1% CQGR in H2, we estimate FY26 international growth at ~2.5% in USD terms. This indicates no incremental growth over FY25. We have maintained our estimates for FY26, FY27 and FY28, as we do not forecast revenue or investments from the DC business until we get further clarity,” MOFSL said.

Over FY26-28, it expects TCS to report a CAGR of ~4.2% in USD revenue and ~4.9% in INR EPS.

MOFSL reiterated its ‘Buy’ rating and raised TCS share price target to ₹3,500 apiece, implying 23x Jun’27EPS, as it believes valuations are undemanding.

TCS announced 1GW of co-lo AI Data Center capacity in India over the next 5-7 years, with a total investment of $7 billion, and also indicated its renewed emphasis on inorganic growth, in areas such as AI, Cloud, Cybersecurity etc.

JM Financial finds TCS’ co-lo foray value accretive, though it sees limited synergies with its Services business at this stage.

“TCS Q2 operational performance exceeded expectations. Importantly however, TCS’ willingness to put its balance sheet to use, a significant deviation from its earlier conservative approach, is a welcome change in the current dynamic environment,” JM Financial said.

A 3% reduction in headcount with 1% ahead signals a durable reset in cost base, resulting in 43-74 bps increase to the brokerage firm’s margin estimates. This drives EPS upgrades of 2% over FY26-28E.

JM Financial maintains a ‘Buy’ call and continues to value TCS share price at 21x, and increased the target price to ₹3,520 from ₹3,410 earlier.

TCS Share Price: Technical outlook

TCS share price is holding above its major support zone of ₹3,018 post muted-to-positive quarterly results, which it briefly breached to trap short-term bears, noted Anshul Jain, Head of Research at Lakshmishree Investments.

“This price action suggests strength and the possibility of a technical rebound. TCS stock price now appears poised to fill the gap between ₹3,106 – ₹3,144, with volumes trading around the 50-day average, indicating steady participation and muted-to-positive activity. As long as the TCS share price sustains above ₹3,018, the structure remains constructive for further upside,” said Jain.

According to him, a breakout above ₹3,144 will strengthen the trend and open the path for higher targets in the coming sessions.

TCS share price has fallen by over 2% in one month and more than 10% in three months. The large-cap IT stock has declined 6% in six months and has dropped over 26% on a year-to-date (YTD) basis. Over the past one year, TCS share price has fallen 28% and it has declined 16% in two years.

At 9:25 AM, TCS share price was trading 0.71% lower at ₹3,040.15 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.