TCS-Porsche deal: Why Morgan Stanley, Citi, other brokerages still see up to 20% downside potential

Shares of Tata Consultancy Services (TCS) gained over 1% on Tuesday after India’s largest IT services provider signed a five-year deal with Porsche AG valued at €1.25 billion ($1.45 billion) and acquired the German automaker’s IT arm, MHP, for €320 million ($373.4 million) in an all-cash transaction.

The acquisition is expected to be completed within three-four months, subject to necessary approvals. The deal marks a significant expansion of TCS’ partnership with the German luxury carmaker.

The Indian IT services major said that the acquisition will anchor a long-term AI transformation partnership between the company and Porsche. The partnership with Porsche, one of the world’s most successful sports car manufacturers, provides a marquee anchor for TCS’ AI transformation agenda and will position the company as a strategic consulting and technology partner for Porsche and broader European automotive and industrial customers, it said in an exchange filing on Monday.


The scale of opportunity is the primary motivation, TCS chief executive K Krithivasan told ET. “Currently, MHP operates only in Europe, and now we are able to operate at a global scale with this combined entity,” he said. “Porsche will be our customer zero, but our centre will bring solutions to all other automobile customers, expanding the scale and scope of what we can do together.”

Michael Leiters, chief executive officer of the Volkswagen Group-owned sports and luxury car manufacturer, said in the joint ET interview that although MHP is a key subsidiary and IT solutions are critical, Porsche wants to focus on its core business. “We think that MHP is in much better hands in TCS because they have the breadth to extend business opportunities for MHP,” Leiters said.

Morgan Stanely on TCS share price

Morgan Stanley maintained its ‘Equal weight’ call on TCS shares, with a target price of Rs 2,200 apiece. This implies a downside potential of nearly 4% from the stock’s previous closing price of Rs 2,284.10 apiece on NSE.

The international brokerage noted that MHP reported €742 million revenue in 2025, with 4,500 employees. It expects the financial impact to be modest, adding nearly 3% to revenue growth, ET Now reported. It added that M&A-led capacity expansion is seen as a medium-term positive.

Citi on TCS share price

Citi maintained its ‘Sell’ call on the shares of TCS, with a target price of Rs 1,825 apiece, implying 20% downside potential. The international brokerage overall remains cautious on Indian IT counters.

The Porsche deal strengthens TCS’ position in European auto and industrial sectors, ET Now quoted Citi as saying, adding that the international brokerage estimates 5-8x EBIT based on assumed FY28 run-rate. M&A could support near-term growth, but risks existing book declining on an year-on-year basis, it further said.

Also read | TCS to acquire Porsche IT unit MHP for €320 million

JM Financial on TCS share price

JM Financial maintained its ‘Add’ rating on the shares of TCS, with a target price of Rs 2,205 apiece, implying 3.5% downside potential. The domestic brokerage expects the acquisition to add 3% to the overall TCS revenue on an annual basis.

In addition, TCS has also announced a five-year strategic deal with Porsche. As part of the partnership, TCS shall establish a dedicated AI Mobility Centre of Excellence for Porsche to industrialise AI across manufacturing, engineering, operations and customer experience. Closure timelines and margins need to be monitored, according to JM Financial.

TCS share price

TCS shares have recorded marginal gains over the past week, and 1% in a month. The stock is overall down more than 29% in 2026 so far.

In the longer term, TCS shares have delivered negative returns of more than 27% in one year, 32% in three years and 38% in five years.

Also read | TCS secures €1.25 billion five-year strategic deal with Porsche

(With inputs from agencies)

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