TCS Share Price Soars! JPMorgan Sees 24% Upside – Should You Buy Now?

Tata Consultancy Services (TCS) share price gained nearly 3% on Monday, August 25, 2025, after global brokerage firm JPMorgan upgraded the IT services giant to an “overweight” rating from “neutral”. The brokerage also revised its target price for TCS to ₹3,800 per share, up 4% from the earlier target of ₹3,650. This implies a potential upside of 24.4% from Friday’s closing level of ₹3,054.7 apiece.

The upgrade comes at a crucial time when TCS has significantly underperformed the broader market. According to JPMorgan, the stock has lagged behind the Nifty 50 index by 29% and the Nifty IT index by 6% so far in 2025. The underperformance has been largely attributed to weaker-than-expected earnings, slower revenue growth, and margin pressures. However, analysts at JPMorgan believe that the worst may be over for India’s largest IT exporter.

Why Did JPMorgan Upgrade TCS?

JPMorgan’s bullish stance on TCS stock price is driven by multiple factors that indicate potential growth recovery in the medium to long term.

• Growth Recovery Expected in FY26
  The brokerage said that it expects TCS to witness a gradual recovery in growth from the second half of FY26, supported by improving business sentiment and client demand.

• Margins Set to Improve
  JPMorgan has revised its margin estimates higher by 55 basis points (bps) for FY26 and 57 bps for FY27, which could drive 2–3% EPS (earnings per share) upgrades over the next three years.

• Attractive Valuations
  TCS shares are currently trading at 19.7x two-year forward price-to-earnings (P/E) multiple, which is two standard deviations below the five-year average. This indicates that valuations are attractive compared to historical levels.

• Strong Cash Flow and Dividend Yield
  The company’s one-year forward free cash flow yield is at 4.5%, while dividend yield stands at 3.8%, making TCS a compelling bet for long-term investors seeking both growth and income.

TCS Financial Performance: Recent Challenges

Despite the long-term optimism, TCS has faced several challenges in recent quarters.

• Revenue Decline: In the June 2025 quarter, TCS reported a sequential revenue decline of 3.3% in constant currency terms. Revenue fell 1.6% to ₹63,437 crore, while in US dollar terms, revenue dipped 0.6% sequentially.

• Deal Deferrals and Customer Conservatism: TCS CEO K Krithivasan and COO Aarthi Subramanian acknowledged that deal closures were being delayed due to customer conservatism, especially in key markets such as the US and Europe.

• Underperformance in 2025: The stock has already declined 23.9% this year, significantly underperforming broader indices.

However, management has maintained confidence in the company’s medium-to-long-term growth trajectory, citing strong client engagement, robust order book, and long-term demand for digital transformation services.

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Brokerages and Analyst Ratings on TCS

TCS continues to be one of the most widely tracked stocks on Dalal Street. As of now:

• Out of 51 analysts covering the stock:

  • 34 recommend “buy”,

  • 12 suggest “hold”, and

  • 5 maintain “sell” ratings.

The consensus view remains positive, though near-term earnings volatility is expected due to muted demand.

Key Triggers for TCS Going Forward

1. Global IT Spending Recovery
   As macroeconomic conditions stabilize, especially in the US and European markets, enterprises are expected to revive IT spending on cloud migration, AI, automation, and digital transformation projects. This will directly benefit TCS revenue growth.

2. Margins and Cost Optimization
   TCS has been focusing on cost optimization, automation-led efficiency, and better utilization of workforce. Any meaningful improvement in operating margins would provide a strong earnings boost.

3. Robust Order Book
   Despite short-term weakness, TCS continues to win large deals across banking, financial services, insurance (BFSI), retail, and healthcare verticals. These deals will act as revenue visibility drivers in FY26 and beyond.

4. Attractive Valuations
   With the stock trading below historical valuation multiples and offering strong dividend yield, TCS is well-positioned for a re-rating once demand picks up.

What Investors Should Watch Out For

While JPMorgan’s upgrade has boosted investor sentiment, market participants must keep an eye on the following risks:

• Persistent Client Conservatism: If large clients continue to delay IT spending decisions, revenue growth may remain muted for longer than expected.

• Currency Volatility: Fluctuations in the Indian Rupee against the US Dollar can impact reported revenues.

• Global Macroeconomic Uncertainty: Rising interest rates, inflation, or geopolitical concerns may affect discretionary IT spending globally.

TCS Stock Outlook: Expert Views

• Short-Term View: Analysts expect volatility in TCS share price to continue in the near term due to weak quarterly performance and global uncertainties.

• Medium-to-Long-Term View: With improving margins, strong balance sheet, and global leadership in IT services, TCS remains a preferred pick for long-term investors.

• JPMorgan’s Revised Price Target: At ₹3,800, the brokerage expects a potential upside of 24.4%, indicating strong growth opportunities over the next 12–18 months.

Conclusion

The TCS share price rally on August 25 following JPMorgan’s upgrade reflects renewed investor confidence in India’s largest IT services exporter. While the company faces near-term headwinds like revenue slowdown and deal deferrals, its strong fundamentals, attractive valuations, and robust dividend yield make it a solid long-term investment candidate.

If growth recovery plays out as expected from the second half of FY26, TCS could once again emerge as a leader in the Indian IT sector’s growth cycle. Investors with a medium-to-long-term horizon may find the current levels attractive, especially given the potential upside of over 24% as highlighted by JPMorgan.