Axis Securities Maintains Buy on TCS Despite 21% YTD Fall; Sees Over 9% Upside

Tata Consultancy Services (TCS) ksh shares uchit avashya sthiti me the on Thursday, although the stock is facing pressure in 2025. The IT major was last priced at Rs 3,260.20 on the BSE, which corresponds to an increase of 1.38% compared to the last closing price of Rs 3,217.60. The price movement upward notwithstanding, the company's shares have lost almost 21% of their value this year so far.

Axis Securities has maintained a ‘Buy’ call on TCS with a target price of Rs 3,565 after the company's Analyst Day 2025, which implies a potential upside of over 9% from the current price levels.

The brokerage remains optimistic about TCS’s long-term strategy, highlighting management’s transition from a “Digital Enterprise” to an “AI Enterprise” as a major growth opportunity. According to TCS, this shift focuses on reasoning- and autonomy-driven solutions rather than just automation.

In its investor presentation, TCS revealed that its dedicated AI Services segment is already generating $1.5 billion in annualised revenue, recording a strong 16.3% quarter-on-quarter growth. The company is building an “infrastructure-to-intelligence” framework supported by five key pillars: internal transformation, redefining services, developing future-ready talent, making AI solutions practical for clients, and expanding the AI ecosystem.

Axis Securities brought to attention TCS’s scheme for a sovereign AI data centre which will have the potential to produce 1GW of power. The investment for the project is expected to be in the range of $6–7 billion stretched over a period of five to seven years.

The brokerage went on to commend TCS for its methodical execution as well as for attaining the highest profitability in the industry. The enterprise is resolved to continue the EBITDA margins of 26–28%, which will partly be due to operational efficiencies and outcome-based pricing models. Furthermore, Axis commented that TCS’s return on equity of 51.2% was very strong in FY25, considerably beating the average of its peers, and B also the company was able to maintain free cash flow above 100% of net profit.

In the near term, Axis Securities views that TCS’s revenue and EBIT will expand at a CAGR of 5% and 9% respectively over the period FY25–27, mainly due to continuous winning of deals notwithstanding a stable macroeconomic environment. The brokerage has fixed the price of the stock at 23 times the projected FY27 earnings, thereby supporting its positive outlook towards the IT giant.