TCS Share Price Falls After Q2 Results. Should You Buy, Sell, or Hold the IT Giant?

Shares of Tata Consultancy Services (TCS) slipped more than 1% in early trade on Friday, following the company’s second-quarter (Q2 FY26) earnings announcement. The stock dropped as much as 1.53% to Rs. 3,015 on the BSE, extending its month-long downward trend.

Over the past month, TCS has fallen 2%, while it has declined 10% in three months and nearly 26% year-to-date (YTD).

TCS Q2 Results Overview

For the second quarter of the fiscal year 2026 (Q2 FY26), TCS reported a net profit of Rs. 12,075 crore, a drop of 3.8% compared to the previous quarter’s profit of Rs. 12,760 crore. The company’s operating revenue was up 3.7% QoQ to Rs. 65,799 crore.

On the operational side, EBIT increased by 6.8% to Rs. 16,565 crore, and the EBIT margins also improved by 70 basis points to 25.2%. The company announced a second interim dividend of Rs. 11 per share, totaling an approximate payout of Rs. 3,979 crore.

Furthermore, TCS disclosed its plans to build a 1GW data center in India as a part of its $7 billion investment over the next 5-7 years.

Analyst Reactions and Brokerage Calls

Despite the decline in profit, analysts viewed TCS’s performance as resilient and slightly better than forecasts.

Motilal Oswal Financial Services kept a 'Buy' rating and increased its target to Rs. 3,500, valuing the stock at 23x the EPS of FY27. The brokerage predicts 4.9% EPS CAGR for TCS in FY26-28 due to less demanding valuations and a strong balance sheet.

JM Financial echoed this optimistic view, referring to TCS's transformation towards strategic investments as a "welcome change" from its usual conservative capital allocation approach.

The brokerage not only increased its target from Rs. 3,410 to Rs. 3,520 but also valued TCS at 21x the forward earnings,  citing margin expansion and EPS upgrades of 2% for FY26-28.

Technical Outlook

TCS's stock price has maintained its strength above the key support of Rs. 3,018. A break above Rs. 3,144 could open doors for a higher target in the short term, while a decline below Rs. 3,018 would weaken the structure.

TCS shares showed moderate trading activity, and the RSI was hovering around 61, suggesting mild momentum.

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Should You Buy or Sell TCS?

Analysts remain optimistic about TCS’s future, despite the short-term volatility due to its AI investments, strong deal wins, and a rebound in global tech spending.

Of the 51 analysts covered by Bloomberg, 33 recommend ‘Buy’, 13 support ‘Hold’, and five are for ‘Sell’, with an average 12-month price target of Rs. 3,517, implying a possible 15% gain from current levels.

While near-term headwinds may keep the stock range-bound, the company’s robust fundamentals, better margins, and the strategic move towards AI and cloud infrastructure could turn TCS into a long-term buy for patient investors.