MUMBAI: Tata Consultancy Services (TCS), India’s largest IT services firm, reported a modest 6 per cent year-on-year rise in net profit for the June quarter, reaching Rs12,760 crore. The growth was largely driven by a surge in non-core income, even as the company’s topline growth remained subdued.
TCS revenue for the quarter stood at Rs63,437 crore, marking a 1.3 per cent increase in rupee terms. However, on a constant currency basis, revenue dropped by over 3 per cent, largely due to headwinds in key markets and the wind-down of the Rs15,000-crore BSNL deal, which had bolstered numbers in prior quarters.
Non-core income soared to Rs1,660 crore from Rs962 crore a year ago, aided by a one-time write-back of previously paid income tax, providing a significant lift to the bottom line.
TCS CEO and MD K. Krithivasan acknowledged a “demand contraction” amid ongoing macroeconomic and geopolitical uncertainties. He tempered expectations for FY26, ruling out double-digit revenue growth.
However, he did signal optimism about international markets performing better compared with FY25, a shift from earlier guidance.
Krithivasan noted that delays in client decision-making, already evident last quarter, had “intensified.” He expressed hope that discretionary spending – a key driver for IT growth – would recover once uncertainties settle.
Positive developments such as US trade deals and legislative clarifications could provide clearer signals by late July or early August.
Operating profit margin dips
Operating profit margin dipped slightly to 24.5 per cent, down from 24.7 per cent a year earlier. Notably, this came before the impact of annual wage hikes, which are still under consideration.
HR head Milind Lakkad said the company is yet to finalise wage revisions but is sticking to its fresher hiring plans for now.
Chief Financial Officer Samir Seksaria reaffirmed TCS’s margin aspiration of 26–28 per cent, noting that the company is factoring in various levers to achieve this goal.
Deal wins for the quarter totaled $9.4 billion. While Krithivasan noted clients are favouring cost-optimisation deals amid challenges, the overall pipeline remains strong with stable pricing, though minor fluctuations persist.
By segment, BFSI – TCS’s largest vertical – grew just 1 per cent, while revenue from North America, its biggest geography, contracted 2.7 per cent.
India revenue saw a steep 21.7 per cent decline, now accounting for just 5.8 per cent of the revenue mix, down from 7.5 per cent a year earlier.
This was primarily due to the tapering BSNL contract, although the company has secured an additional Rs2,900 crore work order from the state-run telco, pending commencement.
Newly appointed COO Aarthi Subramanian noted growing client interest in TCS’s AI offerings, including agentic AI in business process services (BPS), though she did not disclose specific revenue figures.
