Tata Consultancy Services and HCL Technologies are relatively muted in morning trade after their third-quarter results. Both tech majors saw a one-time impact of labour codes, but TCS’s investments in Gen AI and HCLTech continue to deliver the highest growth in the IT Services largecap space has taken centre stage. Here’s a detailed comparison between the Q3 performance of both companies-
TCS VS HCL Technologies: Brokerage view on valuation
Motilal Oswal has a Buy on both TCS and HCLTech with a price target that indicates as much as 36% upside potential for TCS and sees 32% upside for HCLTech. Motilal Oswal highlighted that TCS “just beats estimates, whereas demand signals remain choppy.” For HCLTech, Motilal Oswal is optimistic about the “services guidance being raised and margin recovery visibility improving as well.”
Nuvama has a more calibrated view. While they see TCS’s valuation as attractive, they predict the room for upside to be fairly limited. Nuvama Institutional Equities raised the target price on TCS to Rs 3,750 from Rs 3,650, citing attractive valuations. The brokerage house retained its ‘Buy’ rating on the stock. TCS’s investments in Gen AI (including acquisitions) are helping it build capabilities for the future, even as its Gen AI revenues continue to accelerate. All along, it has shown impeccable control over margins. TCS has corrected sharply (-21% in CY25) and is now trading at a highly attractive valuation of 20x FY28E—in line with its historical multiple, said Nuvama. While growth has remained tepid, the expectations are of a recovery over the next few quarters, as macro and Gen AI both gradually turn favourable.
Nuvama has raised the target price for HCLTech to Rs 1,700 from Rs 1,650 but maintained a ‘Hold’ rating. HCLTech continues to deliver the highest growth in the IT Services largecap space. However, “the current valuations leave limited upside potential,” they added. This is because they believe that earnings upgrades also appear unlikely. The brokerage tweaked its FY26 and FY27 EPS estimates by -5% and +0.1%, respectively.
TCS VS HCL Technologies: Q3FY26 performance
TCS’ consolidated net profit for the third quarter of the current financial year fell 14% year-on-year to Rs 10,657 crore. Excluding exceptional items, TCS’s net profit came in at Rs 13,438 crore, up 8.5% YoY, showing that the profit decline was driven largely by one-off costs rather than operating weakness. Its revenue from operations for the quarter increased 5% YoY to Rs 67,087 crore.
TCS acknowledged a one-time impact after the enforcement of India’s new Labour Code. The firm posted an incremental expense of Rs 2,128 crore under exceptional items, mainly because of modifications in the definition of wages, which included Rs 1,816 crore for gratuity and Rs 312 crore for long-term compensated absences.
HCL Technologies posted an 11% YoY fall in consolidated net profit at Rs 4,076 crore, compared with Rs 4,591 crore recorded in the same period a year ago. The revenue from operations in Q3 FY26 stood at Rs 33,872, up 13% YoY from Rs 29,890 crore reported in the corresponding period of the last financial year.
TCS VS HCL Technologies: Dividend announcement
TCS announced a special dividend of Rs 46 per share along with the third interim dividend of Rs 11 per share. This takes the total dividend announcement for FY26 so far to Rs 79 per share. The record date has been set for January 17.
Meanwhile, HCLTech announced an interim dividend of Rs 12 per equity share for FY26. The record date for the payment of the dividend has been fixed on January 16, 2026, and the payment will be made on January 27, 2026.
TCS VS HCL Technologies: Stock performance
The share price of TCS is down nearly 2% in the last five trading sessions. The cut is deeper on a longer perspective. TCS is down over 24% over the last 12 months.
The share price of HCLTech has risen 2% in the past five days. The stock has declined around 1% in the last one month. However, the stock price of HCLTech has dropped by 16.2% over the previous one year.