TCS Reports Mixed Q2 Results with Profit Dip and Revenue Growth

Tata Consultancy Services (TCS) has announced its financial results for the July-September quarter of FY26, revealing a net profit of ₹12,075 crore. This marks a 5.4% decline from the previous quarter, primarily due to a one-time restructuring cost of ₹1,135 crore. However, when excluding this charge, the profit reflects a slight increase of 1.4% compared to ₹11,909 crore in the same quarter last year.

Despite the profit drop, TCS's revenue showed positive momentum, reaching ₹65,799 crore, which is a 3.7% increase from ₹63,437 crore in the previous quarter and a 2.4% rise from ₹64,259 crore year-on-year. The company’s Chief Financial Officer, Samir Seksaria, attributed the improved operating performance to disciplined execution and a steady flow of deals, stating, "We expanded margins while continuing to invest in wage hikes, capability building and new partnerships."

The operating margin increased by 70 basis points to 25.8%, and earnings before interest and taxes (EBIT) rose by 6.5% to ₹17,978 crore. TCS's Chief Executive, K Krithivasan, described the quarter as one of "steady execution amid macro uncertainty," noting a reduction in project deferrals compared to the previous quarter.

Geographically, TCS's performance varied, with North America showing a recovery of 0.8% growth, while the UK experienced a decline of 1.4%. Emerging markets like India and the Middle East & Africa saw growth rates of 4% and 5.9%, respectively. The overall demand environment remains stable but tight, with clients consolidating vendors to enhance efficiency.

In terms of deal activity, TCS reported a total contract value of $10 billion for the quarter, up from $9.4 billion in Q1 and a 16% increase year-on-year. The company also announced an interim dividend of ₹11 per share, with the record date set for October 15.

In a strategic move, TCS has acquired ListEngage, a Massachusetts-based Salesforce Summit Partner, to bolster its marketing technology capabilities. The acquisition is valued at up to $72.8 million. TCS is also focusing on building AI infrastructure, planning to develop a 1 GW capacity AI data center in India, and has initiated a large-scale hackathon to foster an AI-first culture among its employees.

Overall, TCS's results reflect a complex landscape of challenges and opportunities as it navigates through the current economic environment while continuing to invest in future growth.