TCS Q3 Results: Profit Slides, AI-Led Growth Accelerates

Consolidated Profit Decline

Indian IT giant Tata Consultancy Services (TCS) announced a 14% year-on-year decline in consolidated net profit for the December quarter, reporting Rs 10,657 crore, down from Rs 12,380 crore in the same period last year. The profit after tax (PAT) is attributable to shareholders.

Revenue Performance

Despite the dip in net profit, TCS’s revenue from operations rose 5% YoY, reaching Rs 67,087 crore, up from Rs 63,973 crore in Q3FY25. On a sequential basis, the bottom line fell 12% from Rs 12,075 crore in Q2FY26, while revenue grew 2% compared with Rs 65,799 crore in the July–September quarter.

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Interim Dividend Announcement

TCS declared an interim dividend of Rs 57 per share for FY26, comprising a third interim dividend of Rs 11 and a special dividend of Rs 46 per share. The dividends are scheduled for payment on Tuesday, February 3, 2026, with Saturday, January 17, 2026, set as the record date.

Management Insights on Growth

MD and CEO K Krithivasan highlighted that the growth momentum from Q2FY26 continued into Q3FY26. He emphasized TCS’s vision to become the world’s largest AI-led technology services company, guided by a five-pillar strategy. AI services now contribute $1.8 billion in annualized revenue, reflecting the value delivered through targeted investments across the AI ecosystem—from infrastructure to intelligence.

Executive Director-President and COO Aarthi Subramanian added that TCS continued to witness accelerated AI adoption during the quarter. The company focused on helping clients identify AI opportunities through Innovation Days and delivering solutions swiftly via Rapid Builds. Customers also continued to invest in Cloud, Data, Cybersecurity, and Enterprise Transformations, with TCS strengthening its Salesforce capabilities through the Coastal Cloud acquisition, complementing the existing ListEngage investment.

Impact of New Labour Codes

TCS reported a statutory impact of Rs 2,128 crore due to the new labour codes notified by the Government of India on November 21, 2025.

Key Financial Highlights

• Annualized AI services revenue: $1.8 billion, up 17.3% QoQ in constant currency
• Operating margin: 25.2%
• Net margin: 20%, up 40 bps QoQ
• Cash flow from operations: 130.4% of net income
• Q3 Total Contract Value (TCV): $9.3 billion

TCS’s results demonstrate a blend of short-term profitability pressures and long-term growth potential, driven by strategic investments in AI, cloud, and digital transformation services.

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Sorit Chaudhary

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