TCS stock rises 0.6% on $1-billion TPG deal; brokerages positive on lower equity burden, HyperVault validation

Tata Consultancy Services Ltd (TCS)

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26 Aug, 2025 12:21

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Tata Consultancy Services (TCS) stock rose on Friday with investors reacting positively to its $1-billion strategic partnership with private-equity firm TPG for the HyperVault AI data-centre business. Brokerages have taken a positive view of the deal, citing reduced equity outlay for TCS and strong external validation of HyperVault’s long-term potential.

TCS share price rose to 3,164.8 on NSE in the opening trade, up 0.6 percent from the previous close. The IT giant's stock is down 23 percent year-to-date, significantly underperforming NSE Nifty 50, which has gained over 10 percent over the same period.

TCS on November 20 said it will jointly invest up to $2 billion (Rs 18,000 crore) with TPG to build its GW-scale, AI-ready data-centre platform. TPG will invest $1 billion (about Rs 8,820 crore) in equity for a final stake between 27.5 percent and 49 percent, with the rest funded by TCS through equity and debt. The partnership strengthens returns for shareholders, moderates its capital commitment, and accelerates HyperVault’s expansion to over 1 GW of capacity in the coming years, said TCS.

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Brokerages respond positively to TCS-TPG $1 billion AI data centre deal

Morgan Stanley, which maintains an overweight rating with a target price of Rs 3,430, said the $1-billion strategic investment by a global private-equity player validates the business potential of HyperVault. The brokerage expects more clarity-building announcements and noted that TCS had earlier indicated a $6-7 billion outlay for its 1-GW build-out before the current $2-billion equity structure.

JPMorgan, also overweight with a Rs 4,050 target price, said the deal structure enables TCS to execute its data-centre capex while limiting its direct equity burden to $1 billion over the next five to six years. The firm highlighted that TCS and TPG will jointly invest up to Rs 18,000 crore in equity across tranches, in line with the company’s previously announced $6.5-billion plan for its AI-ready data-centre platform.

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