TCS Shares Rise After JPMorgan Upgrade, Brokerage Sees 24% Upside
TCS shares rose after JPMorgan upgraded the stock to “overweight,” setting a new target of ₹3,800. Analysts expect margins to recover and growth to pick up in FY26.
TCS Shares Gain After Upgrade
TCS shares rose nearly 3% on Monday, August 25, after JPMorgan upgraded the stock to “overweight” from “neutral.” The brokerage also raised its target price by 4%, setting it at ₹3,800 per share from the earlier ₹3,650. This new target signals a potential 24.4% upside from Friday’s close of ₹3,054.7 apiece.
Why JPMorgan Upgraded TCS
According to JPMorgan, TCS shares have underperformed the Nifty by 29% and the Nifty IT index by 6% so far this year. This lag came after multiple earnings downgrades due to weaker growth and tighter margins. However, the firm does not believe TCS’ business model is broken. Instead, it expects growth recovery to begin in the second half of FY26.
Earnings Outlook and Margin Growth
JPMorgan has moderated its international constant currency growth expectations to 0% for FY26 and 5% for FY27. Even so, it expects margin improvements of 55 basis points in FY26 and 57 basis points in FY27. These gains could drive a 2%–3% earnings-per-share (EPS) upgrade over the next three years.
The brokerage added that TCS shares are trading at 19.7x two-year forward price-to-earnings (P/E), two standard deviations below the five-year average. At the same time, its one-year forward free cash flow yield stands at 4.5%, with dividend yields at 3.8%.
Analysts and Market Sentiment
Of the 51 analysts tracking TCS, 34 have “buy” ratings, 12 recommend “hold,” and only five advise “sell.” JPMorgan believes TCS’ growth expectations have bottomed out and the company is well-positioned to benefit when overall business sentiment improves.
Company Leadership Remains Optimistic
Last month, TCS CEO and MD K Krithivasan and COO Aarthi Subramanian admitted that deal deferrals and customer caution continue to weigh on results. However, both leaders expressed confidence in the company’s medium- to long-term growth, backed by a healthy order book and solid client engagement.
Krithivasan also told CNBC-TV18 that he remains optimistic about TCS’ recovery path.
Recent Performance
TCS reported a sequential 3.3% decline in constant currency revenue for the June quarter. Its total revenue slipped 1.6% to ₹63,437 crore, while revenue in US dollar terms fell 0.6% sequentially.
Despite the weak quarter, TCS shares rose 2.6% on Monday morning to hit an intraday high of ₹3,132.9 apiece around 9:55 am. However, the stock is still down 23.9% so far this year.
