Tata Consultancy Services (TCS) on Thursday reported a 5.4% sequential drop in net profit at Rs 12,075 crore for the July–September quarter, weighed down by a one-time restructuring cost of Rs 1,135 crore. Excluding this charge, the country’s largest software exporter posted a 1.1% rise in profit to Rs 12,904 crore, ahead of Bloomberg’s estimate of Rs 12,594 crore.
Despite the profit dip, the operating performance offered a measure of reassurance. Operating margin expanded 70 basis points sequentially to 25.8%, while Ebit rose 6.5% quarter-on-quarter to Rs 17,978 crore. The company’s disciplined execution, cost focus and steady deal flow helped deliver the improvement, Chief Financial Officer, Samir Seksaria said. “We expanded margins while continuing to invest in wage hikes, capability building and new partnerships,” he said, adding that TCS’s strong balance sheet gives it headroom to pursue both internal transformation and external growth opportunities.
Revenue growth was the other bright spot this quarter. The Tata group major posted consolidated revenue of Rs 65,799 crore, up 3.7% from Rs 63,437 crore in the previous quarter, beating Bloomberg’s consensus estimate of Rs 65,283 crore. On a constant currency basis, revenue grew 0.8%, reversing the 3% sequential decline seen in Q1.
Chief Executive and Managing Director K Krithivasan described the quarter as one of “steady execution amid macro uncertainty”. He noted that project deferrals and pauses had reduced meaningfully compared to the previous quarter. “We have had a better growth compared to Q1. The macros have not changed much, but our deep client engagements and rapid AI-led builds give us confidence that we can sustain or improve the growth momentum into the second half,” he said.
The overall demand environment, however, remains stable but tight. “Lingering uncertainties in the broader economy continue to weigh on discretionary spending,” Krithivasan said, adding that clients are consolidating vendors to drive transformation more efficiently.
Geographically, performance was mixed. International revenue grew 0.6% on a constant-currency basis. North America, which had been flat last quarter, showed some recovery with 0.8% growth. The UK slipped 1.4%, while continental Europe grew 1.4%. Among emerging markets, India rose 4%, and the Middle East & Africa grew 5.9%, even as Asia-Pacific stayed flat.
Growth was broad-based across sectors, with life sciences and healthcare leading the pack at 3.4%. BFSI rose 1.1%, while manufacturing and technology & services grew 1.6% and 1.8%, respectively. The consumer business declined 1%, and regional markets were down 1.1%.
Deal activity remained robust. Total contract value for the quarter stood at $10 billion, up from $9.4 billion in Q1 and 16% higher year-on-year. Krithivasan said the pipeline remains strong with a mix of cost-optimisation and transformation-led deals. “We expect international revenue growth in FY26 to surpass last year’s performance,” he said.
TCS declared an interim dividend of Rs 11 per share, with a record date of October 15 and payout on November 4.
The company continued to step up its investments in emerging technologies, particularly artificial intelligence. “We delivered strong growth momentum led by data, cloud and AI-powered enterprise transformation,” Aarthi Subramanian, executive director and COO, said. “Our engagements are now sharply focused on rapid value realisation and measurable business outcomes.”
TCS’s AI ambitions are also expanding on multiple fronts. Krithivasan said the company aims “to become the world’s largest AI-led technology services company,” underscoring its push to build future-ready skills, AI-first service models and ecosystem partnerships. To accelerate capability building, TCS is pursuing acquisitions that enhance its expertise in high-end services, IP, and market reach.
On Thursday, the company announced the acquisition of Massachusetts-based ListEngage MidCo LLC, a Salesforce Summit Partner specialising in marketing technology and data platforms. The 100-person firm will strengthen TCS’s Salesforce and marketing cloud capabilities. The all-cash deal is valued at up to $72.8 million, excluding incentives and related costs.