TCS Q1 FY26: Solid Profit, Soft Revenue – Should You Buy Now?

Overview and Dividend:

Tata Consultancy Services (TCS) is the India’s second-most valuable company after Reliance having market cap ₹ 12,23,547 Crore. The company’s current price is ₹ 3,382. Its 52-week high/low are ₹ 4,592 / 3,056 respectively. The price earning ratio is 24.8. Its ROCE and ROE are 64.6 % and 52.4 % respectively. In Q1, TCS announced ₹ 11 per share as a interim dividend.

Key Performance Highlights

Tata Consultancy Services (TCS) showed a mixed performance in its Q1 results in FY26.The company is showing steady profit growth but a slight miss on revenue expectations.

Revenue

₹63,437 crore, up 1.3% YoY. It’s a single digit revenue growth. Mostly the growth has come from strong performance in India, the Middle East, and emerging markets. Market analysts had expected that ₹64,600+ crore will come due to softness in North America and the winding down of the BSNL project. Hence, the TCS has slightly missed to analyst expectations.

Net Profit

₹12,760 crore, up 6% YoY. Single digit in revenue impacted the net profit to be in single digit. Here, the net profit beats the expectation due to operational efficiency and better margin management despite of little contraction in revenue.

Operating Margin

24.7%, a slight improvement YoY. The operating margin has maintained due to increased employee productivity and reduced subcontractor expenses despite wage hikes. Amid global uncertainty TCS has shown standard Q1 number.

Total Contract Value (TCV)

The company has won $9.4 billion in deal in Q1 whereas it had won $12.2 billion in deal. This deal includes both renewals and new digital transformation contracts. This quarter it is less but still in a healthy deal pipeline.

Headcount & Hiring

Newly hired employees’ number is ~5,400 employees in Q1. The company has been continuing its investment in GenAI, cloud, and digital capabilities. The newly hired employees’ number is quite higher than previous quarter. It seems company is confident about future demand.

Management’s commentary

CEO K. Krithivasan on Client Demand & Outlook:

“We are seeing continued caution in discretionary spending, particularly in North America. However, our strong order book and healthy pipeline position us well for future growth.”

According to him may be there will be short-term challenges but he has remained optimist about medium- to long-term demand, especially in areas like AI, cloud, and digital transformation.

CFO Samir Seksaria on Margins & Profitability:

“Despite headwinds, we have delivered stable margins in Q1, supported by improved productivity, cost optimization, and favourable currency movements.”

He has clearly mentioned that, we are maintaining strong internal cost discipline. Hence, wage hikes were efficiently absorbed without impacting profitability.

COO N. Ganapathy Subramaniam on Execution:

“Our investments in AI and automation are starting to pay off. We’ve seen efficiency gains and faster project turnaround in multiple geographies.”

He confirmed that due to reinitiate of paused projects by large clients, company is prepared to capture that come back.

Strategic Direction

The management has also confirmed that they will focus on the company’s performance: By Strengthening deal execution, accelerating GenAI and cloud adoption and enhancing service offerings in emerging markets and public sector verticals in future ahead.

TCS’s management are confident in the company’s ability to adapt, innovate, and lead the next wave of IT services globally.