Tata Consultancy Services Limited has informed the Exchange about Transcript
TCS · price
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TCS held an investor call to discuss its entry into AI data centers as part of its five-pillar strategy to become the world's largest AI-led technology services company. The company plans to build 1 GW of passive (co-location) data center capacity over 5-7 years, in phased pods of 100-200 MW, with total investment estimated at $6-7 billion. The first phase will cost around $600M-$1B, funded through a mix of debt and equity (TCS is in advanced talks with partners and bankers), not entirely from its own cash. The focus is on AI workloads with high rack density (averaging 240 kW, up to 370 kW per rack) and 70% liquid cooling, achieving a PUE of 1.25-1.3. The 18-month build cycle will deliver first revenue around FY27-28, with no speculative capacity — only built against firm demand. Management expects mid-to-high teens IRR at project level and reiterated that its capital allocation policy of returning 80-100% of free cash flow to shareholders remains unchanged.
This is a major strategic shift into a capital-intensive infrastructure business that could alter TCS's traditionally asset-light profile, but management insists it will not materially dent industry-leading return ratios given phased build-out and a mix of debt and partner equity. For shareholders, the move opens a new long-term annuity revenue stream tied to the AI boom, while preserving dividend/buyback capacity.