TCS’s share price has crashed by over 14% in February so far amid concerns over AI-led disruptions and their impact on the IT service providers. For the week ended February 20, the stock slipped by 0.20%, extending losses for the fifth consecutive week.
On Monday, February 23, the IT stock dropped by 1% in intraday trade, despite positive market sentiment.
Uncertainties surrounding the impact of AI on IT companies and elevated interest rates in the US are keeping the stock under pressure even as the company’s Q3 results were largely in line with expectations.
TCS reported a nearly 14% year-on-year (YoY) fall in its consolidated profit at ₹10,657 crore for the December quarter. Revenue from operations for the quarter, however, rose nearly 5% YoY to ₹67,087 crore. Annualized AI services revenue stood at $1.8 billion, rising 17.3% QoQ in constant currency.
Is it the right time to buy TCS shares?
Experts appear largely positive about the stock for the long term.
Nandish Shah, AVP-PCG Research and Advisory, (Fundamental) Wealth Management, Motilal Oswal Financial Services, has a buy recommendation with a target price of ₹4,400.
Shah highlighted that TCS had a mega deal, which is likely to support near-term visibility. Based on client conversations and strong momentum in AI leadership, the company is confident about a good CY26.
Shah expects USD revenue and EPS to compound at nearly 3.6% and nearly 7.6%, respectively, over FY25–28, reflecting steady growth from select demand pockets and supported by reasonable deal visibility, albeit with continued volatility in deal closures.
Margins have remained stable as wage headwinds and one-offs subside, with further upside dependent on execution rather than pricing.
“We have done an analysis based on reverse DCF (discounted cash flows), which implies that at current prices, the market is discounting an average 10-year free cash flow (FCF) CAGR of 7% with a terminal growth rate of 3%, weighted average cost of capital of 10%, against an FCF CAGR (FY23-26) of 5%. Based on FCF yield moving closer to past crisis highs seen during GFC and Covid sell-offs,” said Shah.
On the other hand, Vinit Bolinjkar, the head of research at Ventura, has a hold view on the stock with a target price of ₹3,250.
Bolinjkar pointed out that the stock is trading near its 52-week low, offering a strong “yield cushion” with recent special dividends.
“While the short-term trend is bearish, its market leadership and AI training initiatives provide long-term stability,” Bolinjkar said.
“TCS is currently navigating a complex AI-led shift in the IT sector. While traditional headcount-based billing models are facing revenue deflation concerns due to AI automation, TCS is leading the pivot,” said Bolinjkar.
Bolinjkar underlined that the company recently reported annualized AI services revenue of $1.8 billion, showing it can monetize the disruption. However, the stock has faced pressure due to a higher-for-longer interest rate environment in the US, which has tightened discretionary tech spending.
Technical experts also appear positive about the stock but suggest waiting for the stock to close above the ₹2,800 level for initiating fresh buys.
According to Jigar S. Patel, Senior Manager of Equity Technical Research at Anand Rathi Share and Stock Brokers, TCS has recently taken support near its annual S1 level, as indicated on the chart.
Patel underlined that this support zone coincides closely with the flat Ichimoku cloud base, making the ₹2,600–2,800 range a critical demand area. Such a confluence of technical levels often strengthens the probability of price stabilization.
Patel added that momentum indicators are currently in the oversold zone, suggesting that selling pressure may be nearing exhaustion. However, despite the presence of support and oversold readings, a strong confirmation is still required before initiating fresh long positions.
For a fresh buy, Patel recommends traders should wait for a decisive monthly close above ₹2,800, which would indicate renewed strength and potential trend reversal.
Until such confirmation is observed, the prudent approach would be to maintain a wait-and-watch stance and avoid aggressive positioning, said Patel.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
