LKP Research Initiates 'Buy' on TCS with ₹3,880 Target
LKP Research has issued a strong 'Buy' recommendation for Tata Consultancy Services (TCS), establishing a price target of ₹3,880. The call comes after the IT major reported its third-quarter results, which showed topline growth of 0.8% sequentially and a 2.6% decline year-over-year on a constant currency basis. This performance was broadly in line with the typical seasonal weakness experienced in Q3 due to furloughs and lower utilization.
Growth Drivers and Sectoral Performance
International operations provided crucial support, with a 0.4% sequential increase in constant currency. Latin America led the charge with a 4.6% QoQ growth, complemented by a 3.2% rise in the Middle East and Africa (MEA) region. Within verticals, Life Sciences & Healthcare and Consumer Business Group (CBG) demonstrated resilience, growing 0.9% and 1.3% QoQ respectively. CBG's strength was attributed to robust activity in retail, travel, and hospitality across Americas, Europe, and the Asia-Pacific (APA) region, despite ongoing softness in the United Kingdom market.
Manufacturing, while showing marginal 0.2% QoQ growth, saw its automotive sector weakness offset by improvements elsewhere. The Banking, Financial Services, and Insurance (BFSI) segment experienced seasonal softness due to furloughs. However, TCS management expressed confidence in an upcoming recovery, supported by healthy deal traction.
Outlook and Strategic Partnerships
LKP Research remains optimistic about TCS's long-term fundamentals. The firm noted that the impact of labor code changes is largely behind the company. Stable international business trends and a significant USD 1 billion equity partnership with TPG to develop AI data center infrastructure are expected to enhance future deal visibility. Based on a valuation of 22 times its fiscal year 2028 earnings per share estimate, LKP Research maintains its positive stance.
The report was published on January 16, 2026.