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TCS Shares Slip as JM Financial Reviews Growth and Margins
TCS shares fell on Tuesday after JM Financial discussed the company’s outlook with its management.
TCS expects business conditions in FY27 to be better than in FY26.
Customers are mainly spending on improving productivity, updating older technology and reducing the number of vendors they use.
TCS’s AI services revenue has grown beyond $2.6 billion on an annualised basis.
Banking and technology businesses are performing well, while consumer products and healthcare may remain weaker for a while.
Manufacturing could benefit from an $800 million SKF project.
TCS expects its profit margin to improve during the next three quarters.
The company is also considering dividends and a possible share buyback.
Its BSNL project is awaiting a final order and may take six to nine months to fully ramp up.
TCS shares fell 1.18% to Rs 2,244.50 on Tuesday, compared with the previous close of Rs 2,271.40.
JM Financial said TCS expects FY27 to be better than FY26, with spending focused on productivity, modernisation and vendor consolidation.
TCS's annualised AI services revenue exceeded $2.6 billion in Q1FY27, while legacy-modernisation engagements continued to increase.
Management is targeting an exit EBIT margin of at least 25% in FY27, though BSNL's ramp-up and MHP integration could affect margins.
TCS remains eligible for a buyback, while the final BSNL purchase order is still pending and could take six to nine months to ramp up fully.
- Who
- Tata Consultancy Services and JM Financial.
- What
- JM Financial reported on TCS management's outlook for demand, AI services, margins, BSNL and a possible buyback.
- Where
- TCS shares traded on the BSE.
- When
- The shares fell on Tuesday; the management comments covered FY27 and Q1FY27.
- Why
- The update focused on TCS's expected business improvement, margin plans, AI-services growth and major project developments.
Key facts
- Tuesday share price
- Rs 2,244.50, down 1.18% from the previous close.
- 52-week trading range
- Rs 1,976 to Rs 3,336.70.
- FY27 outlook
- Management expects FY27 to be better than FY26.
- AI services revenue
- Annualised revenue crossed $2.6 billion in Q1FY27.
- Margin target
- TCS is targeting an exit EBIT margin of 25% or more in FY27.
- SKF deal
- The $800 million manufacturing deal has a five-year tenure.
- BSNL ramp-up
- Some revenue could begin in Q2, with full ramp-up expected to take six to nine months.
Sources
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