Source : INDIA TODAY NEWS
Shares of Tata Consultancy Services (TCS) fell nearly 3% on Friday, even after the company reported strong March quarter results, as concerns over long-term growth and weak client spending weighed on investor sentiment.
The stock was trading at around Rs 2,515.00, down 2.81% as of 10:15 am. It was also among the top losers on both the Nifty 50 and the IT index.
This came even as the broader market traded higher, showing a clear divergence between IT stocks and the rest of the market.
Q4 RESULTS STRONG, BUT NOT ENOUGH
TCS reported a solid performance for Q4 FY26. Revenue rose 5.4% quarter-on-quarter to Rs 70,698 crore, beating estimates. Net profit jumped 29% to Rs 13,718 crore.
Margins remained stable, and the company reported strong deal wins worth $12 billion.
Despite these positives, the results did not fully convince investors about the company’s growth outlook.
FULL-YEAR REVENUE DECLINE WORRIES MARKETS
The biggest concern came from the company’s full-year performance. TCS reported a 2.4% drop in its full-year dollar revenue, marking its first annual decline since listing.
Analysts said this signals continued caution among global clients, especially in technology spending.
Dolat Capital said that while there was some improvement during the quarter, the full-year decline shows that demand remains weak.
Jefferies also said the results did not show clear signs of a strong recovery in demand, which could lead to further underperformance in the stock.
IT SECTOR UNDER PRESSURE
The weakness was not limited to TCS alone. The Nifty IT index was down about 2.2%, even as the Nifty 50 was trading 0.9% higher.
Shares of Infosys and Wipro, which are also listed in the US, fell nearly 2% overnight, indicating broader pressure on the sector.
The fall in IT stocks shows that investors remain cautious about the sector’s near-term outlook.
While TCS margins improved slightly by 10 basis points during the quarter, analysts said gains may be limited going forward.
BOBCaps pointed to rising costs as a key concern. These include higher subcontracting costs, wage hikes and continued spending on AI platforms.
Such factors may limit margin expansion in the near term.
Artificial intelligence remains a key theme for the IT sector.
While AI offers long-term growth opportunities, it also brings risks such as pricing pressure and changes in traditional business models.
Brokerages said that investments in AI could weigh on margins in the short term, even as they create new opportunities over time.
TCS STOCK UNDERPERFORMS THIS YEAR
TCS shares have fallen about 20.5% so far this year. This is slightly worse than the 19% drop in the IT index.
In comparison, the benchmark Nifty 50 has declined 8.2% during the same period.
This shows that IT stocks have underperformed the broader market.
Brokerage views remain mixed on TCS.
HSBC maintained a Hold rating, expecting steady but moderate growth. Jefferies retained an Underperform rating, citing weak BFSI demand, flat deal momentum and margin risks.
At the same time, brokerages such as CLSA, JPMorgan, Nomura and Goldman Sachs remain positive. They highlighted strong deal wins, stable margins and AI-led growth opportunities.
However, even these brokerages noted that near-term growth remains modest, with organic expansion of about 0.8% quarter-on-quarter.
The fall in TCS shares shows that strong quarterly numbers alone are not enough to lift the stock when long-term concerns remain.
Investors are now focusing more on demand outlook, margin trends and how quickly the company can return to steady growth.
While the long-term story remains intact, the near-term outlook for TCS and the IT sector continues to stay cautious.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
– Ends
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SOURCE :- TIMES OF INDIA
