Target: ₹3,600
CMP: ₹3,280.10
Tata Consultancy Services outlined the following aspirations during its Analyst Day: It reiterated its goal to be the world’s largest AI-led technology services company; entry into the data centre space is a function of huge opportunities as well as gaining access in AI-related infrastructure; inculcating AI-first culture across organisation and emphasis on training and adding skills to build future-ready, AI-led tech firm; and AI models moving from automation to autonomy where systems have decision-making ability under human supervision.
TCS’ annualised AI revenue reached $1.5 billion and grew over 15 per cent quarter on quarter in Q2FY26. While TCS invests $1 billion annually into learning and development (L&D), research and specialised infrastructure, this cost is partly offset through operational efficiency and repurposing existing spending .
Accenture’s AI revenue has reached $2.7 billion and it contributes about 4 per cent of its top line, which means TCS’ AI scale-up appears faster than Accenture’s. The company’s AI revenue needs to sustain momentum to offset revenues losses in the traditional application development and maintenance (ADM), testing revenue in the medium term.
Furthermore, it maintains its capital allocation policy, targeting a return of 80-100 per cent of free cashflow to shareholders’ post-investments. We maintain Accumulate with an unchanged TP of ₹3,600 on 26x FY27E P/E. Key risk is slower-than-expected growth.