Rating Context and Current Position
On 22 April 2025, MarketsMOJO adjusted Tata Consultancy Services Ltd.’s rating from 'Sell' to 'Hold', reflecting a modest improvement in the company’s overall assessment. The Mojo Score increased by 3 points, moving from 48 to 51, signalling a more balanced outlook on the stock’s prospects. This rating suggests that investors should maintain their current holdings rather than aggressively buying or selling the stock at this time.
It is important to note that while the rating change occurred nearly ten months ago, the financial data and performance indicators referenced here are current as of 23 February 2026. This ensures that investors receive the most relevant and timely information when considering the stock’s potential.
Quality Assessment: Strong Fundamentals Underpin Stability
As of 23 February 2026, Tata Consultancy Services Ltd. continues to demonstrate excellent quality metrics. The company maintains a robust long-term Return on Equity (ROE) averaging 43.49%, which is a strong indicator of efficient capital utilisation and profitability. This level of ROE is well above industry averages, underscoring the company’s ability to generate shareholder value consistently.
Net sales have grown at a healthy compound annual growth rate of 10.21%, reflecting steady demand for the company’s software and consulting services. Additionally, the company’s debt profile remains conservative, with an average Debt to Equity ratio of zero, indicating a strong balance sheet and minimal financial risk. These factors contribute to the 'excellent' quality grade assigned by MarketsMOJO.
Valuation: Attractive but Reflective of Market Caution
The valuation of Tata Consultancy Services Ltd. is currently rated as 'attractive'. The stock trades at a Price to Book (P/B) ratio of 9.1, which, while elevated, is considered fair relative to its historical valuations and peer group. This suggests that the market recognises the company’s premium quality but is cautious about paying a significant premium.
Despite the stock’s negative price performance over the past year, with a return of -29.27% as of 23 February 2026, the company’s profits have increased by 4.9% during the same period. This divergence between earnings growth and stock price indicates potential undervaluation or market concerns not fully aligned with fundamentals.
The Price/Earnings to Growth (PEG) ratio stands at 3.9, signalling that the stock is somewhat expensive relative to its earnings growth rate. However, the company offers a high dividend yield of 4.1%, which provides income-oriented investors with an attractive return component amid price volatility.
Financial Trend: Flat but Stable Performance
Financially, the company’s recent results have been flat, reflecting a period of consolidation. The quarterly Earnings Per Share (EPS) is at Rs 29.44, which is the lowest in recent quarters, and the Debtors Turnover Ratio for the half-year stands at 4.76 times, indicating some pressure on receivables management.
While these metrics suggest a pause in growth momentum, the company’s strong fundamentals and conservative financial structure provide a buffer against volatility. Investors should monitor upcoming quarterly results for signs of renewed growth or further stagnation.
Technical Outlook: Bearish Sentiment Persists
From a technical perspective, the stock is currently rated as 'bearish'. Price trends over various time frames show consistent underperformance relative to benchmarks. The stock has declined by 0.33% in the last trading day and has lost 16.47% year-to-date. Over the past six months, the stock has fallen by 12.31%, and over one year, it has declined by 29.27%.
This persistent downward trend suggests that market sentiment remains cautious, possibly reflecting broader sector challenges or macroeconomic concerns. The stock has also underperformed the BSE500 index in each of the last three annual periods, highlighting ongoing relative weakness.
Institutional Confidence and Market Position
Institutional investors hold a significant stake in Tata Consultancy Services Ltd., with 23.25% ownership. This level of institutional interest often reflects confidence in the company’s long-term prospects, as these investors typically conduct thorough fundamental analysis before committing capital.
The company’s large-cap status and position within the Computers - Software & Consulting sector further reinforce its importance in the market, making it a key stock for investors seeking exposure to India’s technology services industry.
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What the Hold Rating Means for Investors
The 'Hold' rating assigned to Tata Consultancy Services Ltd. by MarketsMOJO indicates a balanced view of the stock’s prospects. It suggests that while the company exhibits strong quality and attractive valuation characteristics, there are cautionary signals from its financial trends and technical outlook that warrant a measured approach.
For investors, this means maintaining existing positions without initiating significant new purchases or sales. The stock’s high dividend yield offers some income stability, but the recent price underperformance and flat financial results advise prudence.
Investors should continue to monitor the company’s quarterly earnings, sector developments, and broader market conditions to reassess the stock’s potential. The Hold rating reflects a wait-and-watch stance, recognising both the strengths and challenges facing Tata Consultancy Services Ltd. at this time.
Summary of Key Metrics as of 23 February 2026
- Mojo Score: 51.0 (Hold grade)
- Return on Equity (ROE): 43.49% (long-term average)
- Net Sales Growth: 10.21% CAGR
- Debt to Equity Ratio: 0 (average)
- Price to Book Value: 9.1
- Price/Earnings to Growth (PEG) Ratio: 3.9
- Dividend Yield: 4.1%
- Stock Returns: 1 Year -29.27%, YTD -16.47%, 6 Months -12.31%
- Institutional Holdings: 23.25%
These figures collectively underpin the Hold rating, reflecting a company with solid fundamentals but facing headwinds in market sentiment and recent financial trends.
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