The share price of Tata Consultancy Services (TCS) continues to be in the spotlight. More than just the financials, the focus is on the company’s announcement on plans building a 1 GW data centre. While Analysts are concerned about the potential impact of the AI investment on the margins, several brokerages have maintained their Buy ratings on the stock, citing strategic growth moves and long-term potential.
Let’s take a look at what the brokerages are saying about this stock –
Motilal Oswal on TCS
TCS has been assigned a Buy rating by the brokerage firm Motilal Oswal. The brokerage has set a target price of Rs 3,500, implying a potential upside of 15%.
The brokerage noted, “While management expects FY26 growth to be better than FY25, we believe this guidance is somewhat fuzzy. Regarding the data center announcement, we await clarity on the capital structure, capex schedule, and other details such as potential rentals and signed MOUs.”
Currently, the brokerage does not factor in the data center investments into its financial forecasts. Motilal Oswal also highlighted, “Valuations are undemanding, and we reiterate our Buy rating on TCS with a target price of Rs 3,500, implying a 15% potential upside.”
JM Financial on TCS
According to JM Financial, TCS continues to demonstrate operational strength despite modest revenue growth.
The brokerage assigned a Buy rating with a target price of Rs 3,520. This translates to an upside potential of 15% from the current market price.
As per the brokerage report, “TCS’ Q2 operational performance exceeded expectations. Revenues grew 0.8% cc QoQ, ahead of JMFe (0.2%). EBIT margin expanded 70bps (JMFe: +20bps). Deal wins improved 16% YoY to $10 billion, with an LTM book-to-bill of 1.4x.”
JM Financial also highlighted the significance of TCS AI initiative, noting that the planned 1GW co-location AI data center in India represents a strategic pivot.
They added, “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.”
Nomura on TCS
Nomura maintained a Buy rating but projected a more moderate upside, setting a target price of Rs 3,300, around 8% from the current levels.
The brokerage observed that the 70bps quarter-on-quarter improvement in EBIT margin was largely driven by currency tailwinds, offsetting salary increases.
Nomura further noted, “While TCS did not indicate any incremental cost of retrenchment, we believe if there is additional 1% staff restructuring, it would lead to similar restructuring cost in H2.” The firm also adjusted its FY26 EPS forecast downward by around 2% to account for these costs.
Nuvama on TCS
Nuvama retained its Buy rating on TCS with a target price of Rs 3,650.
According to the brokerage report, “TCS posted decent Q2FY26 results. Revenue grew +0.8% CC QoQ (-3.3% CC YoY), exceeding our/Street’s estimate of +0.2%/+0.4% CC QoQ. Adjusted EBIT margin expanded 70bp QoQ to 25.2%, excluding one-off expense, above our estimate. PAT 129bn, in line with estimates. TCV was solid at $10 billion (+6.4% QoQ/+16% YoY).”
Nuvama noted that the AI data center investment puts TCS at an “interesting crossroad,” reflecting the potential for strategic growth over the medium term.
