TCS Q1 FY26 Net Profit Rises 6%, Beats Estimates Despite Weak Revenue Growth

TCS Q1 FY26 Net Profit Rises 6%, Beats Estimates Despite Weak Revenue Growth Abplive | 10/07/2025 20:11:05

Tata Consultancy Services (TCS), India’s largest IT services firm, posted a 6 per cent year-on-year rise in net profit for the April–June 2025 quarter, reaching Rs 12,760 crore. The performance exceeded market projections, which had expected a more modest growth. Analysts polled by Bloomberg had estimated profit at Rs 12,263 crore, indicating just a 1.9 per cent increase.

While profit surprised on the upside, the company’s revenue figures came in below expectations. TCS reported operational revenue of Rs 63,437 crore, marking a 1.3 per cent year-on-year increase, but falling short of the Bloomberg consensus estimate of Rs 64,636 crore.

The company also announced an interim dividend of Rs 11 per share. According to a stock exchange filing, "The interim dividend shall be paid on Monday, August 4, 2025, to the equity shareholders of the Company." July 16, 2025, has been set as the record date for dividend eligibility. Shares of TCS closed with a marginal gain of 0.4 per cent at Rs 3,397.1 ahead of the earnings report.

EBIT Margins Improve

TCS saw sequential improvement in profitability, with EBIT margin expanding 30 basis points to 24.5 per cent in Q1 FY26. CEO and MD K Krithivasan noted: “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.”

Total Contract Value (TCV) for the quarter stood at $9.4 billion, slightly below the $12.2 billion recorded in the previous quarter but above analyst expectations of $8–9 billion. CFO Samir Seksaria commented, “We continued our investments in long term sustainable growth this quarter. We stayed agile and adapted to the dynamic environment, delivering steady margins.”

Hiring Trends And Attrition

TCS onboarded 6,071 new employees during the quarter, taking its total headcount to 6,13,069 as of June 30, 2025. The company’s attrition rate inched up to 13.8 per cent, compared to 13.3 per cent in Q4 and 13 per cent in the December 2024 quarter.

Milind Lakkad, Chief HR Officer, emphasised the company’s continued focus on employee development: “Talent Development is core to TCS. In this quarter, our associates invested 15 million hours in building expertise in emerging technologies, enabling them to lead the transformation journey for our customers. It is gratifying to note that TCS now has 1,14,000 people with higher order AI skills.”