Tata Consultancy Services Limited (TCS) AI Stock Analysis

• Market Cap: ₹11.60T
• Dividend Yield: 3.55%
• Average Volume (3M): 239.35K
• Price to Earnings (P/E): 24.3
• Beta (1Y): 0.89
• Revenue Growth: 3.62%
• EPS Growth: 4.43%
• Country: IN
• Employees: 607,979
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 37.14
• Shares Outstanding: 3,618,087,400
• 10 Day Avg. Volume: 255,633
• 30 Day Avg. Volume: 239,351
• PEG Ratio: 4.01
• Price to Book (P/B): 13.56
• Price to Sales (P/S): 5.03
• P/FCF Ratio: 28.57
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: ₹3,430.00
• Price Target Upside: 6.96% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 80 Outperform
• Price Target: ₹3,758.00 ▲(17.19% Upside)

The score is driven primarily by strong financial performance—solid margins, very low leverage, and consistently strong cash generation—partly offset by slowing revenue growth. Technicals are supportive with the price above key moving averages and positive MACD, while valuation is reasonable but not cheap given the ~24.8 P/E, helped by a ~3.6% dividend yield.

Positive Factors

High profitability and margins

Sustained high gross and net margins indicate durable pricing power, efficient delivery and scalable offshore-led operating model. Healthy margins support reinvestment in IP, R&D and talent, enabling sustained cash generation and resilience across enterprise cycles over months.

Conservative balance sheet with very low leverage

Extremely low debt provides structural financial flexibility to fund strategic investments, win large contracts, and withstand demand shocks. Low leverage lowers bankruptcy risk, enables opportunistic M&A, and supports consistent capital returns without straining cash flow.

Strong free cash flow conversion

High FCF conversion demonstrates earnings quality and durable cash generation, enabling steady dividends, capacity for buybacks, and funding of digital transformation investments. Reliable cash conversion reduces reliance on external financing over multiple quarters.

Negative Factors

Decelerating revenue growth

A sustained slowdown in top-line growth can compress long-term earnings trajectory and limit scope for margin expansion. If revenue growth remains single-digit, it pressures the company's ability to sustain historic operating-leverage gains and high returns over the medium term.

Exceptionally high ROE may be hard to sustain

Very elevated ROE reflects strong capital efficiency but can revert if growth stalls or margins normalize. Structural mean reversion or higher reinvestment needs could push returns lower, reducing a key durable profitability metric investors rely on for long-term cash returns.

Operating cash flow runs below net income

Persistent OCF short of net income suggests working-capital or timing pressures from client billing and collections. If structural, weaker cash conversion can constrain capital allocation flexibility for capex, M&A or payouts despite strong reported earnings.

Tata Consultancy Services Limited Business Overview & Revenue Model

Company Description

Tata Consultancy Services Limited provides information technology (IT) and IT enabled services worldwide. The company operates through Banking, Financial Services and Insurance; Manufacturing; Retail and Consumer Business; Communication, Media and Technology; Life Sciences and Healthcare; and Others segments. It offers CHROMA, a cloud-based talent management solution; ignio, a cognitive automation software; TCS iON, an assessment platform; TAP, a procurement offering; TCS MasterCraft, a platform to automate and manage IT processes; Quartz, a blockchain solution; and TCS OmniStore, a commerce platform. The company also provides customer intelligence and insight solutions; Intelligent Urban Exchange, a smart city solution; OPTUMERA, a merchandise optimization platform; TwinX, an AI powered system of actionable intelligence for business leaders to simulate and optimize enterprise decisions; TCS BaNCS, a financial platform; and Jile, an agile DevOps platform. In addition, it offers drug development and connected intelligent platforms; ERP on cloud, an enterprise solution; and HOBS, a platform for subscription based digital business. Further, the company provides cognitive business, consulting, analytics and insights, automation and artificial intelligence, Internet of Things, cloud, blockchain, cyber security, interactive, digital and quality engineering, sustainability, and enterprise application services. It serves banking, financial, and public services; capital market; consumer goods and distribution; education; insurance; life sciences and healthcare; manufacturing, retail; hi-tech; travel, transportation, and hospitality industries; communications, media, and technology industries; and energy, resource, and utility industries. The company was founded in 1968 and is headquartered in Mumbai, India. Tata Consultancy Services Limited is a subsidiary of Tata Sons Private Limited.

How the Company Makes Money

TCS generates revenue primarily through its IT services and consulting offerings, which are billed on a time-and-materials basis or through fixed-price contracts. The company's key revenue streams include software development, system integration, application maintenance, and IT infrastructure services. Additionally, TCS provides business process outsourcing (BPO) services, which contribute significantly to its earnings. The company has established long-term partnerships with numerous Fortune 500 companies, which provide a steady flow of projects and contracts. TCS also invests in research and development to enhance its service offerings and maintain a competitive edge in the market, further driving its revenue growth.

Tata Consultancy Services Limited Financial Statement Overview

Summary

High-quality fundamentals: strong profitability (~45% gross margin, ~19% net margin), very low leverage (~0.10x debt/equity), and robust free cash flow conversion (~0.91–0.94x of net income). The main offset is decelerating revenue growth (~6% latest annual), which tempers the outlook despite continued strength in margins and cash generation.

Income Statement

TTM (Trailing-Twelve-Months) results show strong profitability with roughly 45% gross margin and ~19% net margin, supporting consistently high earnings power. Revenue is still growing, but the latest annual growth rate (~6%) is well below the prior years’ mid-to-high teens pace, signaling a slowing top-line trajectory. Operating profitability remains solid overall, though margins appear slightly off peak levels versus earlier years.

Balance Sheet

The balance sheet is conservative with low leverage (debt at ~0.10x equity in both the latest annual period and TTM), providing strong financial flexibility. Equity has expanded over time and returns on equity are very high (mid-to-high 40%+), highlighting efficient capital use. The main watch item is that returns are exceptionally elevated (which can be hard to sustain), but there is no sign of balance-sheet strain from debt in the provided data.

Cash Flow

Cash generation is strong: free cash flow is high and closely tracks net income (about ~0.91–0.94x across periods), indicating good earnings quality and conversion. Free cash flow has been growing in the annual series, and the TTM step-up is notable. A mild weakness is that operating cash flow runs slightly below net income in several periods (coverage below 1.0 in TTM and the latest annual), suggesting some working-capital or timing headwinds, though not severe given the overall consistency.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	2.55T	2.41T	2.25T	1.92T	1.64T
Gross Profit	1.10T	1.08T	1.06T	914.87B	773.02B
EBITDA	713.69B	677.30B	626.62B	568.57B	483.66B
Net Income	485.53B	459.08B	421.47B	383.27B	324.30B
Balance Sheet
Total Assets	1.60T	1.46T	1.44T	1.42T	1.31T
Cash, Cash Equivalents and Short-Term Investments	408.72B	435.83B	455.26B	445.97B	364.64B
Total Debt	93.92B	80.21B	76.88B	78.18B	77.95B
Total Liabilities	638.58B	551.30B	524.45B	516.68B	436.51B
Stockholders Equity	947.56B	904.89B	904.24B	891.39B	864.33B
Cash Flow
Free Cash Flow	449.71B	416.64B	388.65B	369.54B	356.26B
Operating Cash Flow	489.08B	443.38B	419.65B	399.49B	388.02B
Investing Cash Flow	-23.18B	60.26B	390.00M	-8.97B	-81.29B
Financing Cash Flow	-474.38B	-485.36B	-478.78B	-335.81B	-326.34B

Tata Consultancy Services Limited Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 3206.70
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IN:TCS, the sentiment is Positive. The current price of 3206.7 is above the 20-day moving average (MA) of 3193.53, above the 50-day MA of 3136.34, and above the 200-day MA of 3150.77, indicating a bullish trend. The MACD of 7.14 indicates Positive momentum. The RSI at 54.55 is Neutral, neither overbought nor oversold. The STOCH value of -11.55 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for IN:TCS.

Tata Consultancy Services Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TCS	80 Outperform	₹11.60T	24.31	―	3.55%	3.62%	4.43%
LTIM	78 Outperform	₹1.87T	38.37	―	1.08%	8.72%	4.54%
WIPRO	75 Outperform	₹2.80T	21.09	―	4.05%	1.10%	14.83%
HCLTECH	73 Outperform	₹4.61T	27.95	―	2.86%	7.52%	0.87%
INFY	73 Outperform	₹7.02T	24.99	―	2.70%	7.90%	4.28%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
TECHM	55 Neutral	₹1.64T	31.99	―	2.76%	3.30%	36.78%

Tata Consultancy Services Limited Corporate Events

TCS Completes 100% Acquisition of Coastal Cloud Holdings

Tata Consultancy Services Limited has completed the acquisition of 100% equity interest in Coastal Cloud Holdings, LLC and its subsidiaries, finalizing a transaction previously announced in December 2025. The deal was executed in two steps: an 86% stake was obtained through the merger of Trident LE, LLC (a wholly owned subsidiary of TCS’s ListEngage Midco, LLC) into Coastal Cloud, and the remaining 14% was acquired by TCS North America Corporation via the purchase of SCP V-B Blocker III LLC, an entity created solely to hold that minority stake and with no other operations or assets. As a result of the acquisition, three U.S. subsidiaries and one Canadian subsidiary of Coastal Cloud will become indirect subsidiaries of TCS, expanding the company’s North American corporate structure and potentially strengthening its capabilities and client reach in that region.

TCS Completes 100% Acquisition of Coastal Cloud Holdings

Tata Consultancy Services Limited has completed the acquisition of 100% equity interest in U.S.-based Coastal Cloud Holdings, LLC and its subsidiaries as of January 14, 2026, through a two-step transaction executed via its subsidiaries ListEngage Midco, LLC and TCS North America Corporation. The deal consolidates full ownership of Coastal Cloud—along with three U.S. subsidiaries and one Canadian subsidiary that now become indirect subsidiaries of TCS—enhancing TCS’s North American footprint and expanding its capabilities in cloud and digital services integration, with potential benefits for its client offerings and competitive positioning in key markets.

TCS Publishes Audio Recording of Q3 FY26 Earnings Call for Investors

Tata Consultancy Services Limited has notified the stock exchanges that it has made available the audio recording of its earnings conference call covering the audited standalone and consolidated financial results for the quarter and nine‑month period ended December 31, 2025. The call, held on January 12, 2026 following board approval of the results the same day, offers investors and other stakeholders access to management’s commentary and discussion of the company’s performance through an online audio link on TCS’s investor relations website, enhancing disclosure and transparency around its financial reporting.

TCS Sets January Board Meet to Approve Q3 Results and Consider Third Interim Dividend

Tata Consultancy Services Limited has scheduled a board meeting on January 12, 2026 to approve its audited standalone and consolidated financial results under Indian Accounting Standards for the quarter and nine-month period ended December 31, 2025. At the same meeting, the board will consider declaring a third interim dividend, with January 17, 2026 set as the record date for determining eligible equity shareholders, and the company has also announced a trading window closure for insiders from December 24, 2025 until 48 hours after the results are made public, underscoring its adherence to regulatory and governance norms around financial disclosures and dividend actions.

TCS Expands North American Presence with New Subsidiaries

Tata Consultancy Services Limited announced the incorporation of two wholly owned subsidiaries in the USA, named TCS North America Corporation and Trident LE LLC, through its subsidiary ListEngage MidCo LLC. This strategic move is aimed at expanding TCS’s footprint in North America, enhancing its capabilities in advisory and AI services, and strengthening its market position in the IT and IT-enabled services sector.

TCS Reaffirmed as ESG Leader with Rating of 73

Tata Consultancy Services Limited has been reaffirmed with an ESG (Environmental, Social, and Governance) rating of 73, categorized as ‘Leader’, by NSE Sustainability Ratings & Analytics Limited. This independent assessment, based on publicly available data for the fiscal year 2024-25, highlights TCS’s strong performance in ESG parameters, reinforcing its commitment to sustainable practices and potentially enhancing its reputation among stakeholders.

TCS Acquires Coastal Cloud to Boost Salesforce Capabilities

Tata Consultancy Services Limited has announced the acquisition of Coastal Cloud Holdings, LLC, a Salesforce summit partner known for its consulting, implementation, and managed services across multiple Salesforce clouds. This strategic move, executed through TCS’s subsidiary ListEngage MidCo, LLC, is expected to enhance TCS’s capabilities in Salesforce services and strengthen its market position in the cloud services sector. The acquisition, which involves the incorporation of two wholly owned subsidiaries in the USA, reflects TCS’s commitment to expanding its expertise in data and AI integration, further solidifying its industry leadership.

TCS Acquires Coastal Cloud to Boost Salesforce Capabilities

Tata Consultancy Services Limited announced the acquisition of Coastal Cloud Holdings, LLC, a Salesforce summit partner known for its consulting and managed services across multiple Salesforce clouds. This strategic acquisition, executed through TCS’s subsidiary ListEngage, is set to enhance TCS’s capabilities in Salesforce services and expand its market presence in the United States, leveraging Coastal Cloud’s expertise in Data & AI and its team of nearly 400 Salesforce-skilled professionals.

TCS Acquires US Salesforce Firm Coastal Cloud to Boost Consulting Capabilities

Tata Consultancy Services Limited has announced the acquisition of Coastal Cloud Holdings, LLC, a prominent US-based Salesforce consulting firm. This strategic move will enhance TCS’s capabilities in Salesforce consulting and integration, leveraging Coastal Cloud’s expertise in multiple Salesforce clouds and data and AI services. The acquisition is expected to strengthen TCS’s market position in the US and expand its service offerings, benefiting stakeholders by broadening its technological and consulting reach.

TCS Expands Partnership with ALDI SOUTH for Global Digital Transformation

Tata Consultancy Services (TCS) has announced an extension of its partnership with ALDI SOUTH, a leading international retailer, to drive digital transformation across multiple continents using AI-enabled cloud solutions. This strategic collaboration aims to enhance ALDI SOUTH’s IT infrastructure by improving operational stability, efficiency, and cyber resilience, while also accelerating automation. The partnership underscores TCS’s role as a key enabler in ALDI SOUTH’s digital advancement, supporting the retailer’s commitment to delivering reliable, value-driven customer experiences globally. By leveraging TCS’s expertise, the collaboration is set to modernize core systems, reduce costs, and lay the groundwork for future-ready retail operations.

TCS Faces Adverse Ruling in U.S. Court, Considers Legal Options

Tata Consultancy Services Limited has announced that the United States Court of Appeals for the Fifth Circuit has issued an adverse ruling against the company in a lawsuit filed by Computer Sciences Corporation/DXC Technology Company. The ruling confirmed the District Court’s decision on damages but vacated the previously granted injunction, directing a reassessment by the Northern District of Texas. TCS is considering its legal options, including a potential appeal, and plans to make necessary financial provisions in accordance with accounting standards.

TCS and Tata Motors Collaborate for Enhanced Sustainability Reporting

Tata Consultancy Services has partnered with Tata Motors to enhance sustainability reporting and reduce environmental impact through a five-year collaboration. Utilizing TCS’s Intelligent Urban Exchange (IUX), Tata Motors aims to automate ESG reporting and accelerate its sustainability goals, focusing on areas such as carbon accounting and regulatory compliance. This partnership supports Tata Motors’ commitment to achieving net-zero emissions and advancing sustainability across its operations and supply chain, aligning with broader industry efforts to drive decarbonization and environmental resilience.

TCS Clarifies Misleading Report on M&S Contract and Cyber Incident

Tata Consultancy Services Limited has addressed a misleading article published by The Telegraph, which inaccurately reported on TCS’s contract with Marks & Spencer (M&S) and a cyberattack incident. TCS clarified that the service desk contract with M&S was awarded through a competitive process unrelated to the cyber incident, and that the commercial aspect of the service desk is a minor part of their overall engagement with M&S. TCS also reiterated that it does not provide cybersecurity services to M&S, and the vulnerabilities did not originate from its systems.

TCS Hosts World’s Largest AI Hackathon to Drive Innovation

Tata Consultancy Services (TCS) has successfully concluded the world’s largest AI Hackathon, part of its strategy to foster an AI-first culture within the company. With participation from over 281,000 employees across 58 countries, the event showcased diversity and innovation, integrating AI solutions from top partners and TCS’s own platforms. The hackathon aims to enhance AI adoption among employees, providing them with tools and experiences to innovate and improve client solutions. The initiative has attracted interest from TCS customers, who are considering integrating hackathon-developed solutions into their products and services.