The stock, trading at ₹3,251 on 13 January 2026, appears stable but has declined considerably from the price of ₹4,321 on 13 January 2025.
This editorial explores the prospects of TCS over the next three years.
This is not a stock recommendation.
Indicators to Watch
Here are key factors that investors should watch, apart from the Q3 FY26 results, which we will highlight a little later in this editorial.
The management commentary following TCS’s Q3 results appeared optimistic. They highlighted that Q3 FY26 experienced an acceleration, continuing the momentum established in earlier quarters.
There were no indications of a slowdown in client spending, as suggested by the management.
As with most IT companies, AI will remain the cornerstone. For TCS, the AI services now generate $1.8 bn in annualised revenue.
As of the December 2025 quarter, there were over 217,000 associates at TCS with advanced AI skills, directly powering client success at scale.
The company is executing its five-pillar AI strategy at speed and scale to transform into an AI-first enterprise. Recently, TCS announced a major AI upgrade to its flagship TCS BaNCS platform, launching a new, advanced AI core, TCS BaNCS AI Compass, to supercharge innovation for banks and security services companies.
The company is also expanding its long-standing partnership with Google Cloud and has adopted the next-generation agentic AI platform, Gemini Enterprise.
This collaboration will empower TCS’ workforce to build advanced agentic AI solutions that redefine Human + AI workflows.
The company’s several other AI initiatives should hold it in good stead going forward.
The company saw a drop in total contract value (TCV). The TCV deals signed in Q3 FY26 at $9.3 billion were lower than the previous quarter (Q2 FY26), which was around $10 billion. This suggests a softening of the deal momentum.
If this trend persists into Q4, it could put pressure on growth expectations for FY26/FY27.
TCS rewarded shareholders with a total dividend of ₹57 per share, consisting of:
Interim Dividend: ₹11
Special Dividend: ₹46
Record Date: 17 January 2026
Payment Date: 3 February 2026
The results reflect a “steady but cautious” environment, with a strong focus on internal efficiency and AI-led transformation.
While the TCV was lower, operating margins held steady at 25.2%, showing disciplined cost management despite wage pressures.
Segment Performance
- BFSI: Showed “green shoots” with 1.6% YoY growth, though it dipped slightly (0.4%) on a sequential basis.
- Regional Markets: India saw a strong sequential surge (8% QoQ) but remains volatile YoY due to high base effects from large previous projects (like BSNL).
Key Risks
Weak global IT spending – especially in the US – could be a drag on discretionary tech budgets and slow new deal wins. If clients defer or downsize projects, it can blunt revenue and TCV momentum.
- Tariff and Trade Uncertainty
Tariffs and trade uncertainty could reduce client budgets or change sourcing strategies, directly affecting TCS’s revenue base.
Visa costs and on-site staffing changes (H-1B fee hikes) increase operating complexity and may compress margins. Political shifts and immigration policy uncertainty continue to create volatility for Indian IT stocks dominated by US revenue.
TCS operates in 55 countries with over 600,000 employees and more than 200 delivery centers, delivering consulting-led services via a location-independent agile model.
What to expect from TCS in next three years?
Based on the Q3 FY26 results and the broader strategic roadmap presented by management, the next three years (2026–2029) for TCS are likely to be defined by a shift from volume-led growth to value-led “intelligent” automation.
TCS could report steady growth over the next three years (2026-2029), driven by AI adoption, digital transformation demand, and its resilient business model, despite near-term headwinds from softer deal wins and macroeconomic caution.
Investors should evaluate the company’s fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.
Happy Investing.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com
