TCS shares get an upgrade from Avendus, but others remain cautiously optimistic

Shares of Tata Consultancy Services Ltd. (TCS) have been upgraded by brokerage firm Avendus Spark after its September quarter results on Friday, October 10. The stock will react to the results that were reported after market hours on Thursday.

Avendus Spark upgraded shares of TCS to "buy" from its earlier rating of "add", with a price target of ₹3,700 per share, compared to ₹3,690 earlier. The revised price target implies a potential upside of 20% from current levels.

The brokerage wrote in its note that the deal win momentum for TCS remains strong and provides visibility on revenue recovery through the second half of the current financial year.

Despite continued pressure on discretionary spends, the management tone on growth outlook is optimistic aided by vector consolidation deals, Avendus said.

On the AI data center announcements, the brokerage said that it carries significant potential, as well as risks. As a result, it has largely maintained its revenue and EBIT margin estimates for TCS for financial year 2026 and 2027.

Most of the other analysts covering TCS have either maintained their views or expressed caution with regards to the announcements made by the management.

Citi

Citi has maintained its "sell" rating on the stock with a price target of ₹2,800.

The brokerage said that its Earnings Per Share (EPS) estimates are largely unchanged. It added that the business outlook for the company is challenged and that the asset intensity in data centers will only increase as the years go by.

Out of the 51 analysts that have coverage on TCS, 33 have a "buy" rating, 13 say "hold", while five have a "sell" recommendation.

Shares of TCS have gained in three out of the four trading sessions this week, continuing their rebound from the 52-week low that the stock fell to on October 1. The stock ended near the day's high on Thursday as well ahead of the results announcement.

To be updated with more.