FILE PHOTO: A man walks past a logo of Tata Consultancy Services (TCS) before a press conference announcing the company’s quarterly results in Mumbai, India, January 11, 2024. REUTERS/Francis Mascarenhas/File Photo
| Photo Credit:
FRANCIS MASCARENHAS
The net profit of Tata Consultancy Services (TCS) fell 14 per cent on year in Q3 due to one-time expenses, though revenue rose more than expected in a traditionally weak quarter on AI-driven demand and revenue growth from the North American market.
However, operating income rose 7.9 per cent on year to ₹16,889 crore, while operating margin remained stable at 25.2 per cent, excluding exceptional items.
The IT bellwether reported net profit of ₹10,657 crore, which was down 11.7 per cent sequentially.
Exceptional items included restructuring cost of ₹253 crore, impact of the new labour codes amounting to ₹2,128 crore, and provision towards legal claim of ₹1,010 crore.
TCS declared a third interim dividend of ₹11 and a special dividend of ₹46 per equity share of ₹1 each of the company. Both dividends will be paid on February 3.
Revenue grew 4.8 per cent on year to ₹67,087 crore and 1.9 per cent sequentially, 0.8 per cent up in constant currency terms. TCS’ annualised AI revenue crossed $1.8 billion with 17.3 quarterly growth.
K Krithivasan, MD & CEO, said, “We remain steadfast in our ambition to become the world’s largest AI-led technology services company, guided by a comprehensive five-pillar strategy.”
Optimistic on orders
Total contract value (TCV) declined 6.9 per cent to $9.3 billion, with a vertical break-up of $3.8 billion for BFSI (mega deal in North America), $1.4 billion for consumer business and North America TCV stood at $4.9 billion.
TCS, during its analyst call, said the first three quarters for FY26 show an order book range of $28-29 billion, raising hopes for about $38-39 billion for the year, which will be one of the highest, and carry forward into FY27 as well.
Samir Seksaria, Chief Financial Officer, said, “Backed by a robust balance sheet, we continue to invest confidently in strategic growth areas. Executing our five-pillar AI strategy at speed and scale is central to our transformation into an AI-first enterprise and delivering long-term value for our stakeholders.”
Pressure points
In Q3, regional markets fell by 19.4 per cent year-on-year, though they grew 4.6 per cent sequentially. The India market saw a 34 per cent annual decline with an 8 per cent sequential growth. Latin America grew 1.4 per cent annually and 4.6 per cent sequentially.
Meanwhile, the UK market declined annually and sequentially at 3.2 per cent and 1.9 per cent growth, respectively. Middle East and Africa reported 8.3 per cent annually and 3.2 per cent sequentially.
Krithivasan attributed the US and market performances to seasonal furloughs. “We see a steady increase in the short cycle projects where the decision-making is faster based on the ROI. You can see that reflected in our AI revenue. Our growth will be driven by AI and data,” he said.
According to Kranthi Bathini, Equity strategist, WealthMills Securities, “TCS will yield better returns in the long term. Uncertainty in geopolitics and the US market are main drivers to this quarter’s performance. We need to see how budgets take place as per US companies. Business sentiment is negative at this point.”
Published on January 12, 2026
