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Below the Quote on TCS by  Sumit Pokharna, VP-Fundamental Research, Kotak Securities 

The imposition of tariffs by the Trump administration, followed by a partial pause for countries other than China and an escalation of tariffs against China, among other measures, has led to heightened macro uncertainty and geopolitical tensions and risks slowing down global economic growth. We believe that a combination of higher uncertainty and growth slowdown is not a favorable environment for IT services demand, especially in H1FY26, which is a seasonally strong period for IT services. Clients under distress will look to pass on the pain to vendors, leading to an impact on IT service players in terms of demand or/and pricing.

Unfavorable elements in demand were highlighted by the TCS’ management in the multiple segments—retail, manufacturing, insurance, telecom, healthcare, and professional services. We believe that IT services spending growth will likely reduce below our base case assumption of 4-5% growth in FY26. We believe that FY26E could be impacted by project deferrals and cancellations, and a slowdown in decision-making on transformation programs that lack quick RoI. TCS is more resilient to the slowdown, but not immune to it, in our view. Revenue growth will be impacted by demand slowdown and some impact of revenue deflation from generative AI. The increased levels of uncertainty in the global economic and geopolitical landscape in the past few weeks have led to instances of delays in decision-making and higher scrutiny and pressure on discretionary spending recently. TCS had some delays and deferrals started happening from the third week of February, although a significant impact was felt in March.

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