TCS shares tumble 3.5% after Q1 earnings fail to impress markets; drag down all IT stocks
TCS reported a 6% rise in Q1 net profit to Rs 12,760 crore, beating expectations. The company’s revenue from operations meanwhile rose 1.3% to Rs 63,437 crore during the quarter under review.
Shares of Tata Consultancy Services (TCS) tumbled 3.5 percent on July 11 as the company's results for the first quarter of the financial year 2026 failed to impress markets. The shares of the company closed at Rs 3,264 apiece, the lowest level seen by the stock in nearly three months.
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TCS released its results in the post market hours of June 10. The company reported a net profit of Rs 12,760 crore for the first quarter of the financial year 2026, beating expectations. This marks an on-year increase of nearly 6 percent from the Rs 12,040 crore net profit reported in Q1 FY25. The company’s revenue from operations meanwhile rose 1.3 percent to Rs 63,437 crore during the quarter under review.
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Along with the Q1 results, TCS announced a dividend of Rs 11 per share. It had already announced that July 16 will be the record date to determine the eligibility of shareholders set to receive the payment.
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"The continued global macro-economic and geo-political uncertainties caused a demand contraction. On the positive side, all the new services grew well. We saw robust deal closures during this quarter. We remain closely connected to our customers to help them navigate the challenges impacting their business, through cost optimization, vendor consolidation and AI-led business transformation," says TCS CEO and MD K Krithivasan.
TCS CEO K Krithivasan said that sequential growth decline stood at 3.3%. Out of this, 0.5% should be attributed to international business & 2.8% decline was due to the ramp down of BSNL deal, he added. The CEO of the IT major noted that delay in deal closures trend intensified in this quarter
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Nomura retained its 'neutral' call, trimming its target price to Rs 3,780. from Rs 3,820 per share, as the growth visibility for FY26 still remains hazy. UBS, too, cut its target on the IT services player's share price to Rs 3,950, down from Rs 4,050, while keeping its 'buy' call intact. According to UBS, the market will look at TCS' growth ex-BSNL, as the Q1 revenue miss was largely due to the ramp-down of the BSNL deal.
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HSBC reaffirmed its 'hold' call, with a price target of Rs 3,665 per share. The first quarter earnings show was a miss on the topline, largely led by BSNL and also the international business arm. JPMorgan remained 'neutral', issuing a price target of Rs 3.650 per share. The firm sees TCS' FY26 CC revenue to decline for the overall business, while staying flat for the international business.
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Along with TCS, all other IT stocks tumbled today. The sharp fall in the share prices pushed the Nifty IT index down nearly 2 percent to close at 37,693.25. While TCS was the top loser, LTI MindTree and Wipro shares dropped nearly 3 percent. Persistent Systems and HCL Tech shares fell around 2 percent each, while Coforge, Infosys and Mphasis shares were down over 1 percent each.
