Tata Consultancy Services extended its post-results rally into a second straight session, with the stock climbing as much as 3-4% to hit an intraday high near Rs. 2,133, emerging as the top gainer on the Nifty 50. The move followed the IT major's June-quarter results, which beat Street expectations on both revenue and constant-currency growth, lifting the broader Nifty IT index by 3% and snapping a two-day losing streak across the sector.
TCS delivered revenues worth Rs. 72,275 crore in the quarter, beating estimates, along with a year-over-year growth of 4.61% in its bottom line. The constant-currency revenue growth beat estimates from analysts as well, whereas the operating margins stood at 24%, declining 130 basis points compared to the previous quarter due to rising wages.
What caught everyone’s attention was the figure for deal wins. TCS bagged total deals worth $9.5 billion in the quarter, including one mega deal, which easily beat even the management’s expectations. The artificial intelligence business of TCS grew to an annualized run rate of $2.6 billion, witnessing growth of nearly 14% quarter-over-quarter, and management expects improvements in demand from Q2 onwards, driven by ‘pent-up technology backlog’.
Most brokerages stayed constructive, though target prices vary widely. Nuvama retained 'Buy' with a steep Rs. 3,000 target, while Centrum Broking kept 'Buy' at Rs. 3,480, citing record deal wins and improving enterprise AI adoption. Motilal Oswal reiterated 'Buy' with a more conservative Rs. 2,350 target (15% upside), cautioning that while commentary was better than expected, hard evidence of demand recovery remains limited.
Goldman Sachs kept 'Buy' at Rs. 2,370, while Morgan Stanley took a neutral 'Equal Weight' stance at Rs. 2,200. Not everyone is convinced: Antique maintained 'Hold' at Rs. 2,385, and 360 One Capital also stuck with 'Hold' at Rs. 2,290, arguing the quarter was largely in line with modest expectations.
While the rebound helped to ease some fears, many factors were still noted to persist. The factors included rising wage increases, growing investments into AI infrastructure, and continuing price pressures that may impact future profit margins, AI-induced deflation and continued uncertainties within the geopolitics of the world, such as the West Asia crisis, may further postpone a general recovery in discretionary tech spending. The growth achieved within the quarter is largely attributed to India and the APAC region, with performances in developed nations remaining relatively subdued.
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With target prices ranging from Rs. 2,200 on the cautious end to Rs. 3,480 on the bullish end, the brokerage split reflects genuine uncertainty over how quickly demand recovery translates into sustained revenue growth. Existing holders may find the setup supportive given steady deal wins and improving AI monetisation. Those considering fresh entry might weigh the more conservative 'Hold' calls against the bulls, given how much still hinges on Q2 demand materialising as management has guided.