Tata Consultancy Services is expected to report modest sequential revenue growth for the December quarter, with analysts projecting a 0.3% increase to $7,486.6 million. This would mark the fifth consecutive quarter where India's largest IT exporter has recorded below 1% sequential top-line growth in dollar terms, reflecting ongoing challenges in the global IT services market.

Revenue Performance and Growth Outlook

The projected revenue figures are based on estimates from ET Intelligence Group and 11 broking firms. Equirus Securities expects the company to report 1% constant currency sequential growth in revenue, noting that the tepid growth is largely attributed to seasonal softness, lower billing days in international markets, and the absence of major ramp-up expectations in the BSNL deal.

Currency Impact and Margin Dynamics

Cross-currency headwinds have significantly impacted the sequential revenue growth trajectory. Anand Rathi Share and Stock Brokers highlighted that the British pound, euro, and rupee depreciated by 1.4%, 0.4%, and 2.1% respectively against the US dollar during the quarter. Despite revenue growth challenges, operating margins are expected to improve by 20-40 basis points from the previous quarter's 25.2%, primarily aided by rupee depreciation against the dollar.

Industry Context and Peer Performance

HCL Technologies, India's third-largest software exporter, is also scheduled to announce its third-quarter results on Monday. The company is expected to report stronger sequential revenue growth of 2.1% to $3,721.8 million, supported by improving momentum in its products and platforms business. HCL Tech's operating margin may see a more substantial improvement of 60-100 basis points from the previous quarter's 17.5%.

Key Focus Areas and Management Commentary

Given the rising geopolitical uncertainty and increasing client focus on artificial intelligence implementation, management commentary on IT budget trends for 2026 and order pipeline will be crucial indicators. According to Kotak Securities, several factors will be critical to monitor:

• Measures to accelerate revenue growth and wallet share shifts in developed markets
• Progress on planned data center investments
• Path of margin recovery to the 18-19% band for the industry
• Drivers behind the products business segment

The results announcement will provide insights into how India's leading IT services companies are navigating the current environment of cautious client spending while positioning themselves for the artificial intelligence-driven transformation in the technology sector.

Tata Consultancy Services is expected to report steady but muted growth in the December quarter, with brokerages forecasting cautious performance amid ongoing client spending constraints. An average of five brokerages projects revenue growth of about 5% year-on-year and profit growth of around 6%, reflecting the challenging operating environment for IT services companies.

Financial Performance Projections

Based on brokerage estimates, TCS's Q3 performance is expected to show modest growth across key metrics:

Revenue Outlook: Currency and Regional Dynamics

YES Securities expects TCS to post revenue of about ₹67,390 crore, implying 5.3% year-on-year and 2.4% quarter-on-quarter growth. In constant currency terms, growth is expected to remain muted, reflecting weak discretionary spending and softness in the India business.

Axis Securities estimates 2.6% sequential topline growth, supported by traction in BFSI, hi-tech sectors and favourable cross-currency movements. However, Kotak Equities expects flat revenues quarter-on-quarter, with growth in international markets offset by a decline in domestic business.

Margin Pressure from Multiple Factors

Margins are expected to remain under pressure during the quarter due to several operational factors:

Kotak Equities expects margins to remain broadly stable, with rupee depreciation partly offsetting the impact of investments and employee-related costs.

Deal Pipeline and Strategic Focus Areas

Brokerages expect total contract value (TCV) of $10-11 billion for the quarter. Kotak Equities noted unconfirmed media reports of a large telecom deal win, which could support medium-term growth visibility.

Key areas of investor focus include:

• Management commentary on deal momentum and client budgets for CY26
• GenAI adoption progress and implementation
• GCC-related opportunities and expansion
• Clarity on margin aspirations and data centre investments
• Impact of rising competitive intensity in the IT services sector

Investors will closely track guidance on revenue acceleration, progress in large deal closures, and management's outlook on discretionary tech spending amid global macro uncertainty.