Mumbai: Brokerage firm Axis Securities has maintained a ‘Buy’ rating on shares of Tata Consultancy Services (TCS), setting a target price of Rs 3,565, which implies a potential upside of more than 9% from current levels.
TCS shares were trading in the green on Thursday. At last count, the stock was up 1.38% at Rs 3,260.20 on the BSE, compared to its previous close of Rs 3,217.60. Despite the recent uptick, the IT major has faced considerable pressure in 2025 so far, with the stock down nearly 21% year-to-date.
The positive outlook follows the company’s Analyst Day 2025, where management outlined its strategic transition from a Digital Enterprise to an AI-driven enterprise. Axis Securities noted that TCS views this shift as a significant long-term growth opportunity.
According to the company’s investor presentation filed with stock exchanges, TCS is moving beyond automation-led digital services towards AI-powered reasoning and autonomous systems. Its dedicated AI Services segment has already achieved an annualised revenue run rate of $1.5 billion, recording a strong 16.3% quarter-on-quarter growth.
The company also detailed its “infrastructure-to-intelligence” architecture built around five key transformation pillars—internal transformation, redefining service offerings, building a future-ready talent model, making AI tangible for clients, and expanding the AI ecosystem.
As part of its long-term AI strategy, TCS announced plans to set up a sovereign AI data centre with a capacity of up to 1 gigawatt, involving an estimated investment of $6–7 billion over the next 5–7 years, Axis Securities said.
The brokerage highlighted TCS’s strong execution capabilities and industry-leading profitability. The company aims to maintain EBITDA margins between 26% and 28%, supported by operational efficiencies and outcome-based pricing models.
Axis also underscored TCS’s robust shareholder returns, noting a return on equity (RoE) of 51.2% in FY25, well above industry peers, along with free cash flow generation consistently exceeding 100% of net profit.
“We expect TCS’s revenue and EBIT to grow at a CAGR of 5% and 9% respectively over FY25–27E, driven by steady deal wins despite a stable macroeconomic environment,” Axis Securities said. The brokerage values the stock at 23x P/E based on FY27 estimated earnings.