Tata Consultancy Services has delivered impressive Q3FY26 financial results that exceeded analyst expectations across key metrics. The IT services giant reported strong revenue growth and maintained healthy profit margins, prompting positive analyst recommendations.

Financial Performance Highlights

The company's Q3FY26 performance demonstrated robust fundamentals across multiple parameters:

The adjusted profit after tax figure excludes one-off restructuring and statutory impact of new labor laws expenses totaling ₹34.00 billion, providing a clearer view of operational performance.

Segment-wise Growth Analysis

TCS demonstrated balanced growth across various business segments and geographical markets. The regional market and others segment led the growth trajectory with a strong 4.6% quarter-on-quarter increase in constant currency terms.

Key sector performance included:

• Consumer business: +1.3% QoQ CC
• Energy, resources, and utilities: +1.0% QoQ CC
• Life sciences and healthcare: +0.9% QoQ CC

Nine-Month Performance

For the nine-month period ending Q3FY26, TCS showed consistent growth momentum compared to the same period in FY25:

Deal Pipeline and Market Position

The company reported a total contract value of $9.30 billion for Q3FY26, representing an 8.8% decline year-on-year. Despite this decrease, TCS maintained a stable book-to-bill ratio of 1.2x, indicating healthy demand conversion capabilities.

Analyst Outlook and Recommendations

Motilal Oswal projects continued strong performance for Q4FY26, expecting revenue, EBIT, and adjusted PAT to grow 6.8%, 10.8%, and 10.9% year-on-year respectively. Based on the company's solid fundamentals and growth prospects, the brokerage has reiterated its buy rating with a target price of ₹4,400, suggesting a potential upside of 36% for investors.

Choice Institutional Equities has issued a positive outlook on Tata Consultancy Services , maintaining its BUY rating with a target price of ₹3,950.00. The brokerage firm's recommendation is based on the company's strong artificial intelligence growth momentum and strategic business transformation initiatives.

AI-Driven Growth Strategy

TCS's artificial intelligence expansion is being powered by multiple growth drivers that position the company for sustained performance. The brokerage highlights rapidly expanding AI services revenue as a key factor, supported by the company's AI-first delivery culture that has been integrated across its operations.

The technology services giant is witnessing rising adoption among large clients, indicating strong market confidence in its AI capabilities. Additionally, TCS is undergoing workforce transformation to align with its AI-focused strategy, while building strong ecosystem partnerships to enhance its market position.

Strategic Partnerships and Infrastructure

A notable development in TCS's AI strategy is its HyperVault AI-led data-centre joint venture with TPG. This partnership represents a significant step in strengthening the company's AI infrastructure capabilities and expanding its service offerings in the data management space.

Core AI Programs

TCS is executing two fundamental AI programs that form the backbone of its strategic direction:

• AI-led business transformation: Focusing on helping clients transform their business models using artificial intelligence
• AI-enabled modernisation: Supporting clients in modernizing their existing systems and processes with AI integration

These programs support TCS's strategic shift toward an outcome-based, AI-driven business model, which the brokerage believes will provide long-term competitive advantages in the market.

Financial Projections and Valuation

Choice Institutional Equities has provided detailed growth projections for TCS over the FY25–FY28E period:

The target price of ₹3,950.00 is based on a 24x multiple applied to the average of FY27E and FY28E EPS of ₹164.60. This valuation methodology reflects the brokerage's confidence in the company's earnings growth trajectory and its ability to maintain premium valuations in the market.

Investment Outlook

The BUY rating reflects Choice Institutional Equities' positive assessment of TCS's strategic positioning in the artificial intelligence space. The combination of expanding AI services revenue, cultural transformation, client adoption, and strategic partnerships creates a comprehensive growth framework that supports the brokerage's optimistic outlook on the stock's performance potential.