Now Reading: Jefferies cuts TCS target to Rs 1,800, flags AI revenue risk
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Jefferies cuts TCS target to Rs 1,800, flags AI revenue risk
Jefferies has slashed its target price on Tata Consultancy Services to Rs 1,800 from Rs 2,275, its third cut this year, citing AI-led revenue deflation. The brokerage retained an 'underperform' rating, flagging…
The Story in Brief
Jefferies has slashed its target price on Tata Consultancy Services to Rs 1,800 from Rs 2,275, its third cut this year, citing AI-led revenue deflation. The brokerage retained an 'underperform' rating, flagging a 23% downside from the last close of Rs 2,339. It expects just 3.9% revenue growth over FY26-29, as TCS's managed services and BPO segments face the highest disruption risk from artificial intelligence. Jefferies also pointed to a flat order book and 3% headcount decline as signs of poor revenue visibility. The stock has underperformed the Nifty by over 55% in three years. Meanwhile, BofA maintained a 'neutral' rating at Rs 2,365, noting chairman N Chandrasekaran's close ties reduce near-term restructuring risks.
The Indian Opinion
The narrative that IT giants like TCS are safe from the AI storm is crumbling. Jefferies' third downgrade points to a concrete problem: revenue deflation in their core outsourcing businesses. For years, Indian IT relied on cheap labour for application management. Now clients want AI-driven efficiency, pricing is under pressure, and TCS's premium over Accenture looks absurd at 30% versus a historical 1%. The real test will be the next two quarterly order books. If they stay flat, the bear case is proven.
Source: ndtvprofit.com
This story was synthesised by AI from the source linked above.
