Tata Consultancy Services Limited

Technology — Information Technology Services · NSE

₹2,465.00+₹115.00 (+4.89%)

DalalBaazaar Score

68 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by high debt relative to equity.

In simple words: Strong business and financial position, with both sales and profits growing well. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:46 pm

Understanding the Business

Company site ↗

The 60-second version of Tata Consultancy Services Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Tata Consultancy Services Limited provides information technology (IT) and IT enabled services.

IndustryInformation Technology Services

SectorTechnology

Employees5,84,519

Annual revenue₹2.67 L Cr

How does it make money?

Turns over ₹2.67 L Cr a year. Of every ₹100 of sales, about ₹18 reaches shareholders as profit, with ₹28 left at the operating level before interest, tax and depreciation. Each of its 5,84,519 employees supports ₹45.7 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹45.7 lakh

Who are its competitors?

The closest listed comparisons in its industry are INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO LTD, TECH MAHINDRA LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 54.9%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 45.6% against a peer median of 24.6% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

Peer median ROE24.6%

What is the outlook?

39 analysts covering the stock expect revenue to grow about 4.8% and earnings to grow about 4.6% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+4.8%

Est. earnings growth+4.6%

Analysts39

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +18% while net margin moved -1% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+18%

Margin effect-1%

DalalBaazaar Score

68/ 100

Good

Weighted across six categories. Every point is explained below.

✗ Revenue CAGR of only 5.8% — barely ahead of inflation
✗ Profit CAGR of only 5.3%

Quality vs. Valuation

Company Quality

69/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

58/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

17.3x

3Y Median

27.7x

40 monthly readings · mean 26.7x · range 15.1x–38.1x

Sector Median

18.1x

median of 4 sector peers

🟢Current valuation is approximately 38% below its 3y median of 27.7x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟡Against its sector it is priced broadly in line with the peer median of 18.1x.

vs. its own history

Cheap

27.7x median over 40 months · -38%

vs. sector peers

Fair

18.1x median of 4 peers · -5%

vs. generic bands

Fair

15x–35x

EV/EBITDA

11.8x

PEG

3.26

What's Good / What's Bad

🟢 What's Going Well3

Cash generation is improving
Free cash flow is up 23% over 3 years.
High return on capital employed
ROCE of 54.9% is the mark of a business that converts capital into profit efficiently.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Return on capital is falling
ROCE has declined from 57.6% to 54.9% — often a sign of competition or overexpansion.

Red Flags

3 items require attention · 1 high · 2 watch

🔴High leverageFinancial
Debt/Equity of 9.83x — earnings must service borrowings before shareholders see anything.
🟡Debt is increasingFinancial
Total debt is up 47% over 3 years.
🟡Receivables growing faster than salesFinancial
Receivables up 40% against revenue up 18% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 54.9% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Priced below its own history
The stock trades 38% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Leverage amplifies any setback
Debt/Equity of 9.83x. Interest is payable whether or not the business has a good year.
Sales are being booked faster than collected
Receivables are up 40% against revenue up 18%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Growth barely outpaces inflation
Revenue compounding at 5.8% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 26%✓ 28.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Revenue growth stays above 4% a year✓ 5.8% CAGR
Latest reported year was 11.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
3Free cash flow remains positive✓ ₹47,948 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.1x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 52%✓ 54.9%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

10 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

7 good · 2 neutral · 2 weak

Market Cap

₹8.92 L Cr

Large Cap

Large, widely-covered business — typically the steadiest of the bands

P/E (Trailing)

17.3x

Fair

Fairly valued against the generic band

P/B Ratio

7.50x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹142.66

Profitable

Profitable on a per-share basis

ROE

45.6%

Strong

Strong capital efficiency

ROCE

54.9%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

9.83x

High

High leverage

Revenue Growth (YoY)

11.2%

Healthy

Healthy top-line growth

Profit Growth (YoY)

15.0%

Healthy

Profits growing at a healthy clip

Dividend Yield

1.95%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹39,460 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

15.3x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

ROA

23.8%

Good

Assets are working hard

Operating Margin

24.0%

Good

Healthy core-business profitability

Net Margin

18.2%

Good

Strong bottom-line conversion

Current Ratio

2.48

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.18

Defensive

Steadier than the market

52W Range Position

36%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

2143.3 / 2241.6

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

80.8

Overbought zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹2.25 L Cr	₹2.41 L Cr	₹2.55 L Cr	₹2.67 L Cr	+5.8%
EBITDA	₹62,600 Cr	₹68,506 Cr	₹71,193 Cr	₹75,940 Cr	+6.7%
EBITDA Margin	27.8%	28.4%	27.9%	28.4%	—
PAT (Net Profit)	₹42,147 Cr	₹45,908 Cr	₹48,553 Cr	₹49,210 Cr	+5.3%
EPS	₹115.19	₹125.88	₹134.19	₹136.01	+5.7%
ROE	46.6%	50.7%	51.2%	45.9%	—
ROCE	57.6%	62.6%	62.0%	54.9%	—
Total Debt	₹7,688 Cr	₹8,021 Cr	₹9,392 Cr	₹11,283 Cr	+13.6%
Free Cash Flow	₹38,865 Cr	₹41,664 Cr	₹44,971 Cr	₹47,948 Cr	+7.3%

🟢 Revenue has grown at 5.8% a year over 3 years.

🟢 EBITDA has grown at 6.7% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 28.4% over 3 years.

🟢 PAT (Net Profit) has grown at 5.3% a year over 3 years.

🟢 EPS has grown at 5.7% a year over 3 years.

🟡 ROE has held roughly flat at 45.9% over 3 years.

🔴 ROCE has fallen from 57.6% to 54.9% over 3 years (-2.7 pts).

🔴 Total Debt has grown at 13.6% a year over 3 years.

🟢 Free Cash Flow has grown at 7.3% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1.82 L Cr

Total Liabilities

₹73,894 Cr

Cash & Equivalents

₹6,405 Cr

Operating Cash Flow

₹52,094 Cr

Capex

-₹4,146 Cr

Shareholding (proxy)

Institutional Holding

17.5%

Insider Holding

71.8%

Corporate Actions

Next Earnings

08 Oct 2026

Dividend Rate

₹48

Ex-Dividend Date

14 Oct 2026

Analyst Consensus

Recommendations

26 Buy · 12 Hold · 4 Sell

Target Price (Mean)

₹2,390.26

-3.0% vs CMP

Target Range

₹1,800 – ₹3,266

Peer Comparison

Company	P/E	ROE
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%
TECH MAHINDRA LIMITED	28.8x	19.2%

Recent News

3 mixed3 general

TCS Share Price rises 2.65%: price action and valuation

Univest, 15 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

TCS share price rebounds 14% from September low: Can the rally extend further?

TradingView, 14 Oct

TCS Share Price Rises 2.59% on AI Launch

HDFC Sky, 15 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Buy Tata Consultancy Services; target of Rs 2530: Geojit Financial Services

Moneycontrol.com, 15 Oct

India's TCS rises as margins steady despite AI investments

Reuters, 09 Oct

Analysts Have Made A Financial Statement On Tata Consultancy Services Limited's (NSE:TCS) Second-Quarter Report

Simply Wall Street, 11 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in overbought territory — momentum entries here carry more short-term pullback risk.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Profitability · Risk

MiddlingValuation

WeakGrowth

Points for each in the Score ↑

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself. 1 high-severity red flag sits above this conclusion and should be read first.

All 5 tripwires holding · see Key things to watch ↑