On Friday, Goldman Sachs adjusted the price target for Tata Consultancy Services Ltd. (NS:TCS:IN) to INR4,550 from the previous INR4,600, while maintaining a Buy rating on the stock. The firm's analyst cited a mixed performance in TCS's third-quarter results for the fiscal year 2025, with revenue growth falling short of expectations but earnings per share (EPS) meeting forecasts.
The analyst's commentary highlighted that the management's forward-looking statements were among the strongest in recent quarters.
TCS's quarterly results prompted Goldman Sachs to revise its revenue growth forecast for the company for the fiscal year 2026 to 4.2% year-over-year, a decrease from the earlier projection of 5%. This new forecast is slightly below the fiscal year 2025's growth rate of 4.4% and under the consensus estimate of 5.8% for fiscal year 2026. Despite this, Goldman Sachs believes the market is not fully recognizing the potential for margin improvement following the ramp-down of TCS's deal with BSNL and an anticipated better mix of deals.
According to the analyst, TCS has observed that deal cycles are becoming shorter and discretionary spending in sectors such as Banking, Financial Services and Insurance (BFSI) and retail/consumer packaged goods (CPG) is improving. TCS has reported broad-based deal wins and expects these factors to lead to strong growth in its core markets, with a more favorable outlook for fiscal year 2026 compared to fiscal year 2025.
Goldman Sachs also noted that its estimates for TCS's earnings before interest and taxes (EBIT) for fiscal years 2026 and 2027 are 1-3% higher than the consensus. This optimism is partly based on the company's belief that the changes in deal dynamics and sectoral spending patterns will translate into robust growth for TCS.
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