admin
Last Updated:
Tata Consultancy Services (TCS) is scheduled to release its results for the first quarter of the ongoing financial year 2025-2026 tomorrow
TCS will announce it’s Q1 results on July 10
TCS Q1 Results: Information technology giant Tata Technology Services will kick off India Inc.’s Q1 earnings season for the quarter ended June 30 for FY26 on Thursday, July 10.
This comes at a time when India’s IT sector is navigating through a challenging phase marked by a slowdown in demand, uncertainties arising from global trade tensions, and rapid developments in artificial intelligence.
While companies like TCS were cautiously optimistic in the previous quarter about growth in FY26, based on their deal pipelines, investor attention is now focused on the upcoming management commentary, which will provide clearer insights into prospects.
Revenue Growth Concerns
A sequential decline in revenue is widely anticipated, primarily due to the tapering off of BSNL deal revenues. Kotak Institutional Equities expects a 0.4% drop in constant currency (CC), while BNP Paribas has projected a steeper decline of 1.3% CC from the previous quarter. ICICI Securities forecasts a sharper fall of 3.4% CC, attributing it to a $300 million quarterly ramp-down in the BSNL deal, partially offset by continued growth in international markets, particularly the BFSI segment.
To make up for this loss, TCS is pursuing new opportunities in both domestic and international markets. In the previous quarter, it launched sovereign AI, cloud, and cybersecurity offerings aimed at tapping into government-led technology investments at scale.
Outlook on Discretionary Spending
Despite the slowdown triggered by geopolitical conflicts and global trade disruptions, analysts believe the overall environment is slightly better than initially feared. The market is now closely watching for updates on IT budgets, potential impacts of U.S. President Donald Trump’s tariff plans across key sectors, and the broader demand outlook. TCS has continued to maintain a healthy flow of deals, with the total contract value (TCV) for Q1 estimated between $8–9 billion.
Among the notable Q1 deals are AI, data analytics, and digital innovation contracts with Schneider Electric and Marathon de Paris, along with platform modernisation agreements with ICICI Securities and Oman’s Dhofar Insurance. TCS also secured an extension of its BSNL deal for engineering and maintenance of its 4G network, as well as a digital transformation deal with Virgin Atlantic.
Margin Pressure Ahead
Even though the depreciation of the rupee and favourable cross-currency movements could offer some cushion, weak revenue growth may continue to exert pressure on operating margins. Kotak Institutional Equities expects EBIT margins to decline year-on-year despite the deferral of wage hikes. The brokerage notes that the lack of growth leverage will likely negate any currency-related gains, keeping EBIT margins flat on a sequential basis.
BNP Paribas anticipates EBIT margins to shrink from 24.2% in the previous quarter to 23.9% in Q1 FY26.
Hiring & Wage Policy Changes
TCS had surprised the market last quarter by deferring its annual wage revision cycle, typically scheduled for April. The company also introduced a new HR policy requiring all associates to be billable for at least 225 days a year, effectively reducing the bench period for employees.
Commentary on hiring plans — especially for freshers and laterals — as well as insights into the impact of AI on job roles, will be closely monitored. So far, TCS has indicated plans to onboard over 42,000 freshers in the current fiscal year.
Gen AI: The New Growth Lever
Generative AI (Gen AI) and agentic AI are emerging as key growth drivers for Indian IT firms. TCS, along with Infosys and Wipro, has reported strong traction in Gen AI-led deal discussions. While firms like Accenture and TCS have begun quantifying Gen AI revenues, most Indian IT companies are yet to do so.
Analysts are looking for detailed updates on enterprise Gen AI adoption, its deflationary effects, and how TCS plans to monetise its AI offerings. Information about deal pipelines and revenue contribution from Gen AI will be crucial for evaluating long-term growth prospects.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
view comments
- First Published:
