Buy Tata Consultancy Services; Prabhudas Lilladher Sets Target at Rs 3,800

Brokerage firm Prabhudas Lilladher has maintained a buy rating on Tata Consultancy Services (TCS), assigning a target price of Rs 3,800 in its latest research report dated October 10, 2025.

The brokerage noted that TCS’s quarterly performance exceeded expectations, with revenues rising 0.8% QoQ (constant currency) and margins improving by 70 basis points. Growth was broad-based across verticals and regions, with the international business showing a 0.6% QoQ CC increase, compared to a decline of ~0.5% QoQ in the previous quarter.

While smaller deals and discretionary spending have slowed on the ground, TCS is aggressively investing in artificial intelligence (AI). The firm has significantly enhanced its AI strategy by hiring high-level executives and incorporating AI into various service areas. Apart from that, TCS is developing a 1GW AI data center in India, which is an unequivocal indication of the company's strong commitment to AI infrastructure and future collaborations with hyperscalers and tech partners. The total cost for these projects is projected to be between USD 5–7 billion, and there is still consideration for vendor participation and detailed execution plans.

Outlook:

According to Prabhudas Lilladher, similar workforce optimization measures are expected to be implemented in the latter half of FY26. As a result, the research firm has increased its FY26E/FY27E/FY28E margins by 40bps/30bps/30bps, respectively, while leaving revenue growth projections unchanged. A target price of Rs 3,800 is derived by applying a 23x multiple to the Sept'27 EPS, which continues to endorse the stock's buy rating.