How to trade TCS shares before Q1 results? Key levels and 5 things to watch out for

Tata Consultancy Services shares head into the June-quarter results with weak technical momentum and low expectations on earnings growth, making the management commentary as important as the reported numbers. India’s largest IT services company is expected to report 13% year-on-year revenue growth and 4% year-on-year profit growth in Q1FY27, based on an average of estimates from six brokerages. Sequential growth, however, is likely to be almost flat, showing that demand recovery remains weak for large-cap IT companies.

The stock has already had a difficult year. Morgan Stanley said TCS has corrected 35% year-to-date, against a 9% fall in the Sensex, and has underperformed some peers such as Wipro and HCL Tech. Despite the fall, the brokerage believes the stock’s risk-reward has become less favourable compared with Infosys.

Technical analysts say the stock is still in a downtrend, but a few levels could decide the near-term move.


"TCS has been trading under its 20-day SMA for most days since February, confirming a persisting downtrend. However, the rate of decline has slowed down since June, with prices gravitating back to the 20-day SMA, above which a free move of 7% till the next major resistance is possible," said Anand James, chief market strategist, Geojit Investments.

He said this shows improved risk appetite and suggests that while the broader trend is still weak, some investors are waiting for positive triggers.

Virat Jagad, senior technical research analyst at Bonanza, said TCS remains under pressure before its Q1 results as the stock is trading below key moving averages.

"Investors should closely watch the 1,985-2,000 zone, which is acting as a crucial support. A decisive break below this level could trigger fresh selling towards 1,900. On the upside, 2,120 is the immediate hurdle, while a sustained move above 2,250 would indicate improving momentum and could lead to a recovery towards 2,450," he said.

Also Read: TCS Q1 Preview: Can the IT bellwether earnings give hope to investors holding the battered stock?

For traders, this means the setup is clear. The 1,985-2,000 zone is the key support. If the stock breaks below it, selling pressure may increase. On the upside, 2,120 is the first level to watch. A stronger recovery would need the stock to cross and sustain above 2,250.

What brokerages say on TCS Q1 results

Brokerages expect TCS to report flat to marginal constant-currency revenue growth for the quarter. Nuvama expects 0.1% quarter-on-quarter constant-currency growth, while Systematix expects 0.3%. Nomura, Motilal Oswal and Kotak Equities expect revenue to be broadly flat.

The weak growth is expected to reflect delayed client spending, macro uncertainty, productivity pass-throughs in large renewed deals and softness in select verticals. The Middle East conflict has also been cited as a near-term pressure point.

Margins may fall

Margins are likely to fall sharply on a sequential basis because of wage hikes. Nuvama and Kotak expect EBIT margin to decline 160 basis points quarter-on-quarter. Motilal Oswal expects a 140-basis-point fall to around 23.9%, while Nomura and Systematix expect a 100-basis-point decline.

5 things to watch out for

Five things investors should watch in the results are constant-currency revenue growth, EBIT margin impact from wage hikes, deal wins and total contract value, commentary on US and BFSI demand, and the impact of AI on pricing and revenue.

TCS Q1 Results Live Updates: Tata Consultancy Services set to post Q1 results today. Brokerages estimate marginal rise in revenue
AI will be a major focus. Clients are asking IT vendors to deliver more productivity, which can reduce billing in traditional contracts. At the same time, TCS is investing in AI capabilities to build new service lines. Investors will want to know whether AI is becoming a growth driver or adding more pricing pressure.

Deal wins will also matter. Systematix expects TCS to report deal total contract value of around $10 billion, while Kotak expects $8-9 billion. Investors will track whether these deals can convert into stronger revenue growth in coming quarters.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)