IT bellwether Tata Consultancy Services(TCS) is set to announce its Q4FY26 results on April 9. The IT sector is interestingly poised at the current juncture. While the Middle East conflict has added to the near-term uncertainty, the steep depreciation in the rupee has turned out to be a favourable development for the tech sector.
However, despite its valuation discount to Infosys, TCS investors wait for a growth recovery in the company. According to BNP Paribas, “Interest in its data centre business has considerably reduced, especially with lack of growth in the core business.”
Here are 5 factors to watch out for-
1. The big AI gamechanger: Key tech market leaders like TCS are poised to tackle the AI challenges through partnerships with firms like OpenAI & Anthropic. According to Anand Rathi, “while near-term pricing pressure exists, AI structurally expands the addressable market & reinforces the advantage of scaled players.”
Indian IT is navigating a cyclical slowdown marked by cautious spending & AI-related pricing concerns, with the underlying structural shift. TCS continues to strengthen its positioning in the AI space through partnerships and strategic initiatives. The company has been actively collaborating with global AI players and is focusing on enterprise AI deployment and orchestration.
2. Rupee depreciation impact: The rupee has corrected significantly since the start of January. In fact, the currency has depreciated nearly 2.6% QoQ. This is expected to benefit the margins of IT companies including TCS.
3. Margins in focus: The IT sector, including large caps like TCS are bracing for significant margin improvement on the back of a weak rupee.
Nomura expects EBIT margin of TCS to improve 10 basis point (bps) QoQ as the company continues investments into AI initiatives.
4. Announcement on headcount, restructuring or layoff: TCS in the previous quarter restructured nearly 2% of its workforce citing AI reskilling. Any announcement of further restructuring amid Gen AI led disruption is something that the street will be watching out for.
In its Q3FY26, TCS reported a decline in its workforce, with total headcount standing at 5,82,163 employees.
5. Impact of Middle East war: The impact of the ongoing Middle East conflict on businesses, cost of takeout projects and BFSI vertical are also among key factors to watch. Nuvama expects the war to “likely create uncertainty over the end clients’ demand.”
TCS Q4 preview: Revenue growth in focus
TCS’ revenue outlook is something that the street is keenly awaiting.
Anand Rathi expects topline growth by 2.6% quarter-on-quarter (QoQ), led by growth in BFSI, Hi-tech, and cross-currency tailwinds.
Nuvama Institutional Equities expects TCS to perform the best among the companies under its coverage, with around 1.2% QoQ growth in constant currency terms and +1.7% in dollar terms.
Nomura also expects around 1% sequential revenue growth in constant currency terms, largely driven by demand from developed markets.
TCS Q4FY26: Dividend announcement expected?
TCS in its regulatory filing said that it will “recommend a final dividend, if any, on the Company’s equity shares for the financial year ending March 31, 2026.”
TCS last announced a dividend in January 2026 as part of its Q3 FY26 results, declaring an interim dividend of Rs 11 per share along with a special dividend of Rs 46 per share.
Key challenges ahead
For the future, investor sentiment around AI is seen as a crucial aspect for the company and its shares. Development around the Middle East conflict along with the rupee’s movement is expected to impact the deal win outlook for TCS.