Shares of IT majors Infosys, Wipro, HCL Tech, Tech Mahindra, and others rallied up to 4% on Friday, buoyed by a better-than-expected first quarter show by Tata Consultancy Services (TCS), India’s leading information technology company.

Infosys climbed 4% to Rs 1,091, while HCL Tech and Tech Mahindra also gained around 4% each to Rs 1,192 and Rs 1,478, respectively, on the BSE. TCS advanced 3.5% to its day's high of Rs 2,118, while Wipro added over 2% to Rs 177. Among midcap IT stocks, Coforge, Persistent Systems, Oracle Financial Services and L&T Technology Services rose as much as 3%. The rally lifted the Nifty IT index 968 points, or 3.5%, to 28,439.55.

Also read: TCS' next growth phase hinges on AI investments, not just deal momentum

TCS’ Q1 results surprises brokerages

Nuvama, one of the bigger bulls on TCS, projects a 46% upside, and believes the company continues to deliver on margins and deal wins. Following a sharp 36% correction CYTD, the stock is trading at an attractive valuation of 13x FY27E PE, below its historical -1 standard deviation multiple, while offering a 5% dividend yield. Nuvama expects growth to recover over the next few quarters as TCS regains ground lost due to the Gulf war and as the macro environment and GenAI-related spending gradually improve.

Also read: TCS shares jump over 3% after Q1 results. What are Morgan Stanley, Citi and other brokerages saying?

Morgan Stanely with an Equal Weight rating and a target of Rs 2,200 (7% upside) suggests that the company's Q1FY27 results were in line to slightly better than expectations, while management's commentary for the second quarter was marginally positive.

While describing the first-quarter performance as soft, Emkay expects growth to improve, led by a recovery in the Life Sciences and Manufacturing verticals, alongside continued strength in Technology Services and BFSI. Emkay believes valuations remain attractive but said it is looking for stronger revenue growth before turning more constructive on the stock.

Dolat Capital has upgraded TCS to Buy with a target price of Rs 2,580, implying an upside of around 26%. The brokerage said management commentary points to a gradual demand revival, supported by technology backlogs and improving trends across key verticals.

While total contract value (TCV) remained modest, margins stayed resilient. Dolat expects the recovery to be gradual amid an uncertain macro environment and values the stock at 16x FY28E earnings of Rs 161.5, with the recent correction making valuations attractive.

The upbeat brokerage commentary comes at a time when Indian IT companies are facing investor concerns over weak discretionary spending, pressure on pricing, wage costs and the impact of AI on traditional outsourcing revenue. TCS’s margin declined sequentially as wage hikes took effect, though the company said it remains focused on disciplined execution and long-term competitiveness.