TCS smashes $30bn milestone amid AI boom—but is its 30% stock plunge a buying opportunity?

Tata Consultancy Services (TCS) reached a significant financial milestone in fiscal year 2024–25, crossing the $30 billion revenue threshold. The IT services giant posted consolidated revenues of ₹255,324 crore, marking a 6% year-on-year increase. Growth in constant currency terms stood at 4.2%, driven by momentum across regional markets and strategic investments in artificial intelligence, generative AI, and cloud transformation initiatives. The company reported a robust order book with total contract value of $39.4 billion for the year, and a record high $12.2 billion for the final quarter, reflecting strong enterprise demand despite ongoing global macroeconomic volatility.

The Indian market, in particular, emerged as a standout performer, growing by an impressive 62.6% year-on-year. Asia-Pacific and the Middle East and Africa regions also contributed significantly, with growth rates of 6.8% and 11.2% respectively. While North America—the company’s largest market—contracted slightly by 1.8%, all major geographies demonstrated sequential improvement in the final quarter. TCS maintained its industry-leading operating margin at 24.3%, and reported a net profit of ₹48,553 crore, with a net margin of 19.0%. Free cash flow generation stood at ₹46,449 crore, and the company proposed a final dividend of ₹30 per share.

Why is AI and cloud adoption driving growth for TCS?

Artificial intelligence and cloud services were instrumental in driving the company’s growth across verticals and geographies. Under its AI.Cloud vertical, TCS capitalised on rising enterprise interest in generative AI applications. One example involved a major North American utility company that partnered with TCS to deploy AI models using satellite, LiDAR, and weather data to manage vegetation growth and mitigate wildfire risks. Another significant engagement featured a global OTT platform leveraging a GenAI-powered movie script analyzer to improve content delivery based on viewership data and behavioural analytics.

TCS reported that over one-third of its client engagements now incorporate GenAI to accelerate delivery timelines, improve accuracy, and support digital transformation goals. Proprietary platforms such as WisdomNext 2.0, Mastercraft, and ignio are playing a critical role in enabling this transformation. WisdomNext, for instance, now offers enhanced agentic AI capabilities for faster onboarding, secure governance, and scalable innovation. Meanwhile, legacy modernization and platform simplification projects continued to gain momentum through cloud adoption, particularly in the areas of enterprise productivity and data platform modernization.

The company also experienced increased traction in cybersecurity services, with clients prioritizing managed detection and response (MDR), identity governance, and GenAI-powered threat mitigation across cloud environments. TCS Interactive’s “Creative Engineering powered by AI” approach is helping clients enhance customer experience and marketing strategies through data readiness and automation.

What verticals and markets contributed most to FY25 performance?

In FY25, energy, resources and utilities led sectoral performance with 5.1% growth, followed by manufacturing at 2.9%. BFSI, which remains the company’s largest industry segment, grew marginally at 0.7% despite global challenges. Communication and media contracted by 9.5%, while the life sciences segment declined 1.6% year-on-year, reflecting caution among global healthcare clients.

From a regional perspective, India demonstrated exceptional growth at 62.6% year-on-year in constant currency terms, buoyed by large-scale government and private sector transformation programs. The UK and continental Europe grew at 4.0% and 0.7% respectively, suggesting gradual recovery in enterprise IT spending. Meanwhile, the Middle East, Asia-Pacific and Latin America continued to expand steadily, highlighting the strategic relevance of localized and sectoral diversification for TCS.

How is TCS deepening strategic partnerships globally?

Throughout the year, TCS expanded its client base and renewed key multi-year partnerships with major global corporations. In collaboration with Google Cloud, TCS is enhancing GenAI-based service delivery across the communication, media, and information services industries. The engagement is aimed at combining deep domain expertise with the scalability of Google Cloud’s platform to accelerate AI adoption. In the aviation sector, TCS signed a five-year agreement with Air New Zealand to modernize its digital infrastructure, focusing on AI-driven improvements in fleet management, crew scheduling, and ground services.

In the financial services sector, the company deepened its relationship with Northern Trust to deploy its BaNCS platform across 99 markets, standardizing custody operations globally. TCS also partnered with The Cumberland Building Society in the UK to overhaul its core banking operations using TCS BaNCS and Quartz. In the manufacturing domain, TCS was selected by a global S/4HANA client to roll out SAP systems across 25 factories in the Americas and APAC, streamlining operations across finance, logistics, and quality management.

Other noteworthy engagements included the transformation of Oman’s capital market infrastructure through Muscat Clearing and Depository, strategic support for robotics innovation via MassRobotics, and the launch of a telecom service platform with Vantage Towers in Europe. Additionally, the company extended long-term partnerships with Olympus, DNB Bank ASA, and Avianca, reinforcing its position as a transformation partner in both regulated and emerging industries.

What operational factors supported financial resilience in FY25?

TCS’s ability to maintain stable operating and net margins in a volatile environment is indicative of its strong operational framework. CFO Samir Seksaria emphasized that the company’s disciplined execution and talent development strategy enabled it to navigate market uncertainties while investing in future-ready capabilities. The company’s focus on platform innovation, employee upskilling, and process automation helped preserve margins while delivering long-term value to stakeholders.

The company onboarded 42,000 new trainees during FY25, maintaining a total workforce of nearly 608,000 employees. Women represented 35.2% of the workforce, and talent retention remained strong with IT services attrition down to 13.3%. Employees logged over 56 million learning hours during the year, reinforcing TCS’s status as a global top employer across six continents. These efforts supported the delivery of high-quality outcomes for clients while underpinning internal innovation and transformation initiatives.

TCS also made substantial strides in intellectual property, applying for over 8,800 patents and receiving more than 4,800 grants by the end of the fiscal year. These investments, combined with the continued expansion of proprietary platforms, are enhancing the company’s value proposition across AI, cybersecurity, sustainability, and enterprise operations.

How did the market react to TCS’s performance and what’s the stock outlook?

Despite delivering on its operational and financial targets, TCS’s stock has experienced downward pressure. The share price has declined by approximately 30% from its 52-week high of ₹4,585.90, currently trading around ₹3,246.60. This selloff appears to reflect investor concerns over slower growth in the North American market and uncertainty around global IT budgets. However, analysts remain broadly constructive in their outlook.

Choice Broking retained a ‘Buy’ recommendation on the stock, revising its price target to ₹3,950, citing TCS’s robust pipeline, resilient margin profile, and leadership in AI-enabled services. Nomura India, while trimming its target to ₹3,490 from ₹3,890, pointed to short-term demand headwinds in key verticals, especially in the US. Nevertheless, the average 12-month target price across brokerages stands at ₹4,617.45, indicating a potential upside of over 40% from current levels.

TCS’s forward price-to-earnings (PE) ratio is currently around 22, which places it slightly above the Nifty IT index average but below its historical premium. This re-rating suggests a relatively attractive valuation, particularly for long-term investors seeking exposure to digital transformation themes. Analysts broadly view the stock as a “Hold” or “Accumulate,” depending on investment horizons and risk profiles.

For those already holding the stock, the company’s dividend history and consistent cash generation support its investment case. For new investors, the current valuation offers an entry point into a company that is expected to benefit from long-term secular trends in AI, automation, and platform engineering. That said, short-term volatility is likely to persist as global enterprises calibrate their IT spending.

What lies ahead for TCS and its global clients?

TCS’s performance in FY25 reflects its strategic shift toward platform-led, AI-first digital transformation. The company’s platforms—Crystallus, Cognix, BaNCS, and ignio—are enabling enterprises to become more adaptive, resilient, and innovation-driven. As clients continue to invest in autonomous operations, next-generation cloud infrastructure, and sustainability-driven digital ecosystems, TCS is well-positioned to capture demand.

Its continued investment in AI engineering, patent development, and workforce skilling reinforces its relevance as a global transformation partner. While short-term headwinds may weigh on sentiment, the company’s multi-vertical strategy, diversified client base, and global delivery model provide a strong foundation for future growth. With $30 billion in annual revenue now surpassed, TCS appears set to define the next phase of enterprise transformation on the global stage.