TCS' revenue grew modestly (0.8% CC QoQ) amid caution, yet margins held firm at 25.2%, backed by productivity gains precisely counterbalanced wage hikes and strategic AI investments, signaling disciplined execution.
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IDBI Capital Report
IDBI Capital has reiterated its Buy rating on Tata Consultancy Services Ltd. with a target price of Rs 3,733, valuing the stock at 24.4x FY27E EPS.
The brokerage highlights TCS’s operational resilience amid macroeconomic headwinds, supported by disciplined execution and strategic AI positioning.
Revenue witnessed a muted 0.8% constant currency QoQ, topline grew 4.9% YoY reflecting cautious global spending but signaling recovery momentum in consumer, EN&U, and life sciences verticals.
Operating margin stood at 25.2% (ex-one-offs), aided by productivity gains offset by wage hikes and brand investments, underscoring management’s focus on long-term competitiveness.
AI revenue surged to $1.8 billion annualized, up 17.3% QoQ, driven by rapid-build projects delivering tangible business value. Strong cash conversion (130% of net income) and $9.3bn TCV signings, including North America mega-deals, reinforce confidence in CY2026 outlook.
Strategic partnerships and workforce upskilling position TCS as an AI-enabled transformation leader.
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Also Read: TCS Q3 Review: Brokerages Split As Inline Quarter Meets Tepid Global Demand, FY27 Hope Intact
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