TCS-TPG to invest $1 billion in 'HyperVault'; what it means for investors?

TCS-TPG deal: TCS, on Thursday, announced securing a $1-billion investment from TPG to scale up its AI-data centre platform 'HyperVault'.

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TCS-TPG deal news

 

Tata Consultancy Services (TCS) share price bucked the weak market trend on Friday, November 21, 2025. TCS shares rose 0.7 per cent in the intraday trade on the BSE after the information technology (IT) company secured a $1-billion investment from TPG to accelerate its artificial intelligence (AI) push.

 

At 9:35 AM, TCS share price was up 0.45 per cent at ₹3,160 per share as against a 0.08 per cent dip in the benchmark BSE Sensex index.

 

So far in calendar year 2025, TCS shares have tumbled 23.2 per cent on the BSE as against a 9.5 per cent increase in the Sensex index. In the last one month, however, the stock has added 4.6 per cent.

 

The stock trades at price-to-earnings (P/E) valuation multiple of 22.9x versus IT industry P/E of 26.10x.  

 

Notably, the TCS-TPG deal comes after the Indian IT company said during the September quarter earnings concall with analysts that it aimed to enter the data centre segment.

 

The management, back then, told investors and analysts that it planned to build 1 gigawatt (Gw) of capacity, requiring an investment of $6.5–7 billion.

 

TCS-TPG deal

In a bid to fast forward its journey toward becoming the largest AI-led technology services enterprise in India, TCS, on Thursday, announced securing a $1-billion investment from TPG to scale up its AI-data centre platform 'HyperVault'.

 

HyperVault, TCS said, will work with hyperscalers and AI companies to design, deploy, and optimise AI infrastructure, to enable service delivery of AI services.

 

It will provide secure, reliable, large-scale AI-ready infrastructure for hyperscalers and AI-driven organisations. It will offer "purpose-built, liquid-cooled data centers with high rack densities, energy efficiency and network connectivity" across all key cloud regions, TCS said.  ALSO READ | Eicher Motors hits new high, up 7% in 1 week; should you buy or hold?

 

TCS-TPG deal: Investment details

Under the deal, TCS has entered into a Securities Subscription Agreement (SSA) and a Shareholders’ Agreement (SHA) with TPG Terabyte Bidco Pte Ltd and its wholly-owned subsidiary HyperVault AI Data Center Limited.

 

TPG’s investment in HyperVault is being routed through TPG Rise Climate and its Global South Initiative, with additional support from its Asia Real Estate business.

 

While both the companies will, collectively, invest up to ₹18,000 crore over the next few years, TCS and TPG's investment ratio will be 51:49 per cent. Further, TPG's contribution will be capped at ₹8,820 crore for a stake between 27.5 per cent and 49 per cent.

 

The investment in HyperVault, TCS said, will be funded through a mix of equity from TCS and TPG and via debt.

 

Meanwhile, one of the key terms of the agreement states that HyperVault will become the exclusive vehicle for TCS' AI and non-AI data centre business in India.

 

Both the parties face a 3-year lock-in period. Lastly, TCS will hold Board majority, with TPG allowed up to two seats.  ALSO READ | Groww share price surges 7% ahead of Q2 results; What to expect and should you buy?

What does the TCS-TPG deal mean for investors?

According to analysts at Emkay Global Financial Services, amid the surging AI demand, the AI-DCs are crucial for providing necessary infra – including computer hardware, high-speed storage, and low-latency networks – to hyperscalers, AI companies, private enterprises, and the public sector.

 

In this backdrop, the purpose of the agreement to accelerate HyperVault’s GW-scale AI-ready infra build, aligns well with TCS’ plan to create AI-ready DCs with capacity in excess of 1 Gw over the next few years.

 

The data centre build-out is expected to add 100-200 megawatt (Mw) over the next 18-24 months, backed by an initial investment of $600 million-1 billion.

 

"By leveraging hyperscaler partnerships and a full-stack AI capability across DCs, cloud, platforms, and AI-led services, TCS is building optimised AI infra to deliver end-to-end digital solutions, combining cloud, compute, and connectivity beyond traditional co-location services," it said with a 'Add' rating on TCS stock with a share price target of ₹3,250, at 21x Sep-27E EPS.

 

This capability, as per the brokerage, is expected to aid TCS deliver a complete set of AI solutions for its customers and partners.

 

"HyperVault, meanwhile, is expected to deliver secure, reliable, large-scale AI-ready infra, offering purpose-built, liquid-cooled data centers with high rack densities and energy efficiency. This investment taps into India’s rapidly-expanding DC market," Emkay Global said.

 

Notably, the current AI-DC market in India stands at ~1.5-Gw capacity and is projected to surpass 10 Gw by 2030. Since 2019, the sector has attracted $94 billion in investments, highlighting significant growth potential.