CLSA has reiterated its outperform rating on Tata Consultancy Services (TCS) with a target price of ₹4,279 per share, implying a strong upside from the current market price of ₹3,110. The brokerage said that while the company’s broader demand commentary has remained largely unchanged compared with the first quarter of FY26, management sounded more upbeat about revenue opportunities stemming from artificial intelligence.
According to CLSA, TCS believes that AI adoption is likely to drive an expansion in overall IT budgets, creating a net positive revenue effect for the company despite the prevailing weak demand environment. This, the brokerage noted, could provide incremental growth opportunities at a time when the global technology services sector is otherwise facing muted client spending.
CLSA also drew attention to the recent share buyback announcement by Infosys, which it said could put additional pressure on TCS to consider a similar move. The brokerage suggested that instead of announcing a large special dividend in the third quarter of FY26, TCS might undertake a tender buyback of around ₹200 million as a confidence-building measure for investors. The company last carried out a share buyback in December 2023.
The brokerage concluded that the AI-led revenue potential, coupled with the likelihood of shareholder-friendly actions, reinforces its positive stance on TCS.
Disclaimer: The views and investment recommendations expressed above are those of CLSA. They do not represent the views of this publication. This article is for informational purposes only and is not investment advice.
