HSBC, MOSL, CLSA, and Nuvama offer mixed views on TCS after Q2FY26 — most see long-term AI and data center growth potential, though near-term demand remains soft.
Why Are Brokerages Divided on TCS After Its Q2FY26 Earnings?
About the Q2 Performance
Tata Consultancy Services (TCS) delivered an overall solid Q2FY26 performance with a revenue and margin beat, driven by strong deal momentum.
💡
While top-line growth improved sequentially, the street remains split on the company’s near-term earnings visibility amid global IT spending constraints.
🎯
Most brokerages agree that the company’s large-scale data center and AI expansion could be a long-term differentiator in the digital infrastructure space.
Traders watching index-linked IT movements can align their setups using our Nifty Tip built for volatility-linked derivative strategies in large-cap tech.
HSBC: Steady Quarter with Neutral View
HSBC maintained a Hold rating with a target price of ₹3,260.
📈
The brokerage called Q2 a “steady beat” on both growth and margin, highlighting order wins in line with guidance. HSBC believes that TCS’s incremental AI capacity addition enhances its positioning with hyperscaler partners, although macroeconomic uncertainty may weigh on short-term visibility.
MOSL: Confident on Long-Term Growth
Motilal Oswal (MOSL) reiterated a Buy rating and increased its target to ₹3,500 from ₹3,350.
💡
MOSL noted that TCS’s 1 GW AI data center plan represents a long-term strategic shift, though its financial impact will be visible only in FY27–FY28. It forecasts revenue, EBIT, and PAT growth of 5.8%, 7.8%, and 7.5% YoY, respectively, for FY26.
CLSA: Strong Execution and Order Book
CLSA maintained an Outperform rating with a target price of ₹3,559, citing strong execution and higher-than-expected order booking.
📊
The firm expects H2FY26 demand to exceed H1 levels as enterprise digital transformation projects accelerate. It also commended TCS’s proactive restructuring around AI readiness and its employee upskilling efforts in generative AI tools.
Investors focusing on event-driven IT trading setups can balance risk exposure via our Nifty Option Tip and BankNifty Option Tip, curated for post-results volatility management.
Nuvama: Optimistic but Cautious
Nuvama Institutional Equities kept its Buy rating but cut its EPS estimates for FY26E and FY27E by ~2% each.
⚠️
The brokerage rolled forward its valuation to 23x FY27–28E PE and reduced its target to ₹3,650 (from ₹3,950). It believes the 1 GW AI data center foray is a strategic growth driver, but near-term volatility from project ramp-ups and margin normalization may keep price movements range-bound.
Consensus View and Sector Context
Most brokerages remain structurally positive on TCS given its superior execution, diversified vertical exposure, and early-mover advantage in enterprise AI.
📈
The broader IT sector, however, continues to face cyclical headwinds from delayed client decision-making, especially in BFSI and manufacturing verticals. Analysts expect demand recovery to gather pace in the second half of FY26.
Investor Takeaway
Indian-Share-Tips.com IT Sector Expert Gulshan Khera, CFP®, who is also a SEBI Registered Investment Adviser, highlights that TCS’s multi-year AI investments signal a structural pivot toward higher-margin, data-driven services. He believes that short-term consolidation could provide an attractive entry point for long-term investors.
Related Queries
How Could AI Infrastructure Boost TCS’s Long-Term Growth?
Which IT Stocks May Benefit from TCS’s AI and Data Center Ecosystem?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
TCS Q2FY26 Broker Views, HSBC TCS Analysis, MOSL TCS Rating, CLSA TCS Report, Nuvama TCS Outlook, AI Data Center Expansion, IT Sector India, Nifty Option Tip, BankNifty Option Tip, Nifty SEBI Regd Tip, BankNifty SEBI Regd Tip, Indian-Share-Tips.com, SEBI Registered Investment Adviser
