As Tata Consultancy Services (TCS), India's largest IT services exporter, prepares to announce its Q1 FY26 earnings on July 10, 2025, investors are keenly watching whether to buy, sell, or hold the stock. Several factors are influencing this decision, including the expected Q1 performance, dividend announcements, and overall market trends.
Q1 FY26 Earnings Expectations
Brokerage estimates suggest a modest start to the financial year for TCS. Net profit for the quarter is expected to grow between 1% and 3%, with estimates ranging from Rs 12,040 crore to Rs 12,416 crore. Revenue is projected to increase by 2.7% to 3.8%, reaching between Rs 62,613 crore and Rs 64,993 crore. However, some analysts anticipate a slight dip in constant currency (CC) revenue due to the scaling down of a BSNL contract and weak demand in global markets.
Nirmal Bang Institutional Equities expects deal wins of $7–8 billion, but foresees EBIT margin dropping 40 basis points QoQ to 23.8%. Axis Securities projects a net profit of Rs 12,352 crore and revenue of Rs 64,301 crore, with an EBIT margin of 24.8%. Equirus Securities anticipates revenue at Rs 65,061 crore, up 3.9% YoY, and PAT at Rs 12,368 crore, a 2.7% YoY increase. Kotak Institutional Equities forecasts a 0.4% decline in CC revenue, mainly due to a $57 million sequential drop in BSNL revenues.
Dividend Prospects
TCS has a strong history of rewarding shareholders through dividends. In FY25, the company declared a total dividend of Rs 126 per share, including three interim dividends of Rs 10 each, a special dividend of Rs 66, and a final dividend of Rs 30. The company's consistent capital return policy involves distributing 80-100% of free cash flows to shareholders. The board will consider an interim dividend proposal at its meeting. If declared, the dividend will be paid to shareholders whose names appear on the company's register as of Wednesday, July 16, 2025.
Analyst Recommendations and Target Prices
Currently, there are 36 'Buy' calls, 11 'Hold' recommendations, and three 'Sell' recommendations on TCS. InCred Equities has an 'ADD' rating on the stock, valuing TCS at 23 times FY27F EPS to arrive at a target price of Rs 3,589. Other brokerage firms have varying target prices, ranging from Rs 3,220 to Rs 4,400. Goldman Sachs has a 'buy' rating with a price target of Rs 4,040. JPMorgan maintained a 'neutral' rating and a target price of Rs 3,850.
Stock Performance and Valuation
Tata Consultancy Services Ltd's shares are currently trading at ₹3,388.15, following a 0.09% increase. The IT giant has been under consistent pressure, with the stock slipping nearly 4% over the past five trading sessions. On a monthly basis, the decline stands at 2%, and over the past six months, the stock has lost 22%. The year-to-date (YTD) performance shows an 18% fall in 2025.
Despite recent declines, TCS has a strong history of long-term growth. Over a 10-year period, the earnings growth of Tata Consultancy Services is 9.01% per year. For the current fiscal year, analysts expect an earnings growth of 6.9%. The fair value of the Tata Consultancy Services stock is INR 3,406.24, making the stock appear fairly valued.
Factors to Consider
Disclaimer: It is important to note that these are analyst estimates and projections, and the actual results may vary. Investors should consider their own risk tolerance and investment objectives before making any decisions.
