Tata Consultancy Services (TCS), India's largest IT services company, has reported its financial results for the first quarter of the fiscal year 2026, revealing a slight dip in revenue but maintaining strong profitability.

Revenue and Profit

TCS reported a consolidated revenue of ₹63,437.00 crore for Q1 FY26, marking a 3.1% year-over-year decline in constant currency terms. Despite the revenue contraction, the company managed to improve its profitability. Net income stood at ₹12,760.00 crore, representing a 6.0% increase compared to the same period last year. The net margin improved by 90 basis points year-over-year to reach 20.1%.

Operational Performance

The company's operating margin for the quarter was 24.5%, showing an expansion of 30 basis points quarter-on-quarter. This improvement in margins despite the revenue decline highlights TCS's focus on operational efficiency.

Dividend Declaration

The Board of Directors has declared an interim dividend of ₹11.00 per equity share. The record date for the dividend is set as July 16, 2025, with the payment scheduled for August 4, 2025.

Order Book and Business Outlook

TCS reported a robust order book with total contract value (TCV) of $9.40 billion for Q1. The company cited global macro-economic and geo-political uncertainties as factors causing demand contraction. However, it noted positive growth in new services and strong deal closures during the quarter.

Workforce and Attrition

As of June 30, 2025, TCS's workforce stood at 613,069, with a net addition of 6,071 employees year-over-year. The company reported a last twelve months (LTM) IT services attrition rate of 13.8%, indicating improved employee retention.

Segment Performance

The Banking, Financial Services and Insurance (BFSI) segment remained the largest contributor to TCS's revenue, accounting for 32.0% of the total. However, most industry verticals experienced negative growth, with Life Sciences & Healthcare and Communication & Media segments both declining by 9.6% year-over-year in constant currency terms.

Management Commentary

K Krithivasan, CEO and Managing Director of TCS, commented on the results: "The continued global macro-economic and geo-political uncertainties caused a demand contraction. On the positive side, all the new services grew well. We saw robust deal closures during this quarter."

Future Focus

TCS highlighted its investments in artificial intelligence (AI) capabilities, with 114,000 employees now possessing higher-order AI skills. The company is focusing on scaling AI across enterprises and transforming various aspects of its services, including contact centers, cost optimization, and cyber defense capabilities.

In conclusion, while TCS faced revenue headwinds in Q1 FY26, the company demonstrated resilience through improved profitability, strong order bookings, and strategic investments in emerging technologies like AI. The declaration of an interim dividend also signals confidence in the company's financial position despite the challenging global environment.

Tata Consultancy Services (TCS), India's largest IT services company, has announced its financial results for the first quarter, showcasing resilience in the face of global economic headwinds. The company reported a 4% year-on-year increase in net profit, alongside a dividend declaration and strategic initiatives to drive future growth.

Financial Highlights

TCS reported a net profit of Rs 12,760.00 crore for Q1, marking a 4% increase from the same period last year. However, the company faced challenges on the revenue front, with a slight decline of 1.6% year-on-year to Rs 63,437.00 crore.

Despite the revenue dip, TCS demonstrated strong operational efficiency, with its operating margin expanding to 24.5%. This improvement in profitability underscores the company's ability to optimize costs and maintain financial discipline in a challenging market environment.

Dividend Announcement

In a move that will likely please shareholders, TCS has declared an interim dividend of Rs 11.00 per share for Q1. The record date for this dividend is set for July 16, with the payment scheduled for August 4.

Market Performance and Outlook

While facing a "demand contraction" due to global macroeconomic uncertainties, TCS reported robust deal closures during the quarter. The company's total contract value (TCV) for Q1 stood at US$9.40 billion, indicating strong future revenue potential.

K Krithivasan, CEO and Managing Director of TCS, commented on the results, stating, "We remain closely connected to our customers to help them navigate the challenges impacting their business, through cost optimization, vendor consolidation and AI-led business transformation."

Strategic Focus on AI and Innovation

TCS is positioning itself at the forefront of the AI revolution. The company reported that it now has 114,000 employees with higher-order AI skills, a significant increase that aligns with the growing demand for AI-driven solutions.

Aarthi Subramanian, Executive Director and Chief Operating Officer, highlighted the company's AI initiatives, including the launch of TCS SovereignSecure™ Cloud, TCS DigiBOLT™, and TCS Cyber Defense Suite, aimed at accelerating India's AI-led transformation.

Workforce and Talent Development

As of June 30, TCS's workforce stood at 613,069, with a net addition of 6,071 employees year-on-year. The company continues to invest heavily in skill development, with employees investing 15 million hours in acquiring 1.3 million competencies in emerging technologies during the quarter.

The IT services attrition rate for the last twelve months stood at 13.8%, indicating improved talent retention compared to previous periods.

Segment Performance

Banking, Financial Services and Insurance (BFSI) remained the largest revenue contributor, accounting for 32% of the company's revenue. However, some sectors like Life Sciences & Healthcare and Communication & Media saw declines of 9.6% each in constant currency terms.

Global Presence and Recognition

TCS continues to strengthen its global footprint, with notable client acquisitions and expansions across various geographies. The company's brand value soared by 28% year-on-year to $57.30 billion, earning it a place among the world's Top 50 Global Brands by Kantar BrandZ.

In conclusion, while TCS faces short-term challenges due to global economic conditions, its focus on AI, innovation, and operational efficiency, coupled with a strong order book, positions the company well for future growth. The dividend declaration also reaffirms TCS's commitment to delivering value to its shareholders.