Jefferies cuts TCS target for third time, sees 23% downside

Jefferies has slashed its target price on Tata Consultancy Services to Rs 1,800 from Rs 2,275, its third cut this year, warning of AI-led revenue deflation. The brokerage retained an 'underperform' rating on the stock, implying a 23% downside from Wednesday's close of Rs 2,339.

Jefferies expects TCS to deliver a muted 4% to 5% CAGR in constant currency revenue and EPS over FY26-29, citing high exposure to application-managed services and BPO. It flagged a flat order book year-on-year in the June quarter and a 3% headcount decline. The brokerage noted TCS trades at a ~30% premium to Accenture, against a 10-year average of 1%, and said the premium is unjustified by growth outlook.

In contrast, BofA has a 'neutral' rating on TCS with a Rs 2,365 target. It said Chandrasekaran's familiarity with the company aids strategic planning but sees little risk of restructuring before 2028. Meanwhile, Business Today reports that Choice Broking has a 'Reduce' rating on TCS with a Rs 2,320 target, preferring Tech Mahindra in the Tier-I space and Coforge, Persistent Systems among mid-caps.