TCS gets ‘outperform’ rating from Macquarie: Expected 27% upside beats Infosys

Tata Consultancy Services (TCS) has recently received a strong endorsement from Macquarie, which has rated the stock as ‘outperform’ at a target price of ₹5,740 per share. This forecast suggests a potential 27% increase from its previous closing price. According to Macquarie, TCS is expected to outperform Infosys in both FY26 and FY27, making it a compelling option for those looking to buy shares online.

Macquarie's bullish outlook on TCS

Macquarie’s optimistic rating comes with a robust target price, anticipating significant gains for TCS. The firm highlighted that TCS is poised to benefit from an uptick in spending, particularly in cloud migration projects. These deals are expected to encompass both application and infrastructure services, an area where TCS is well-positioned compared to Infosys.

Recent stock performance

On Tuesday, 18 September, TCS’s share price ended flat at ₹4,511. Despite this, the stock has risen over 18% since the beginning of the year, slightly outperforming the NSE Nifty 50, which has climbed approximately 17% during the same timeframe.

In contrast, Infosys's stock price has surged more substantially, nearly 26% this year. Infosys shares ended flat at ₹1,950 on Tuesday, reflecting the stock's ongoing strong performance.

Challenges faced by Indian IT firms

Indian IT companies are currently grappling with sluggish client spending on IT infrastructure upgrades in the US. Many firms are hoping for a monetary policy easing from the US Federal Reserve to boost the economy and stimulate corporate spending.

TCS’s recent financial results

TCS’s financial performance for Q1 FY25 (April-June) exceeded analyst expectations, leading to several brokerage upgrades and revised target prices. The company reported a 5% increase in revenue from operations, reaching ₹62,613 crore compared to ₹59,381 crore in the same quarter last year. Net profit also saw a 9% rise, growing from ₹11,074 crore to ₹12,040 crore year-on-year.

Key takeaways

• Strong TCS outlook: Macquarie’s ‘outperform’ rating and 27% target price increase highlight TCS’s potential for significant gains. Investors looking to buy shares online should consider this positive forecast.
• Comparative performance: TCS has outperformed the NSE Nifty 50 this year, although Infosys has shown a higher percentage increase in its share price.
• Market challenges: Indian IT firms face challenges due to slow client spending and are awaiting economic stimulus from the US Federal Reserve.
• TCS’s robust results: The company’s recent financial results have beaten analyst expectations, contributing to a positive outlook from several brokerages.