TCS Q1 Results Highlights: Net profit rises 6%, management says AI not likely to reduce headcount

“If the macroeconomic environment improves, and as a result of business improves, we will definetly give the best possible hikes we normally give,” said TCS Chief Human Resources Officer (CHRO) Milind Lakkad.

"We see customers investing in industry specific solutions. Gen AI is becoming the tool to understand the legacy core…Due to the nature of opportunities in AI, customers are looking for domain specific use cases, and leveraging AI to modernise legacy applications … Agentic AI is only 6-8 months old, but it is becoming a part of our client conversations… We are working on industry value chain solutions with Agentic AI in BFSI space, we will see more of this across industries. Other area is BPS where agentic AI is giving exciting opportunities," said TCS COO Aarthi Subramanian.

TCS Chief Human Resources Officer (CHRO) Milind Lakkad said that the company doesn't expect to reduce headcount as a result of AI. "We expect to hire as we had planned. The kind of jobs they will do is different," he said.

TCS CEO K Krithivasan said that the company has an advance purchase order for BSNL. It is yet to get the final order.

TCS Chief Human Resources Officer (CHRO) Milind Lakkad said that the company’s hiring shouldn’t be connected to quarterly growth, as the former is done on an annual basis. "We hired from the stating of the year, however later we experienced some issues in business. So some imbalances could be seen. However, it is not something to bother too much about because we will leverage these resources in future," he said.

TCS Chief Human Resources Officer (CHRO) Milind Lakkad said that the company hasn't yet taken any decision on wage hikes yet. Speaking about the company's attrition rate, Lakkad said, "We started the quarter, and then realised there would be some challenges towards the end of it. We will leverage some of these resources for future quarters."

TCS CEO K Krithivasan said that with trade discussions coming to close, new bill getting enacted in the US -- things should become clearer by the end of July. International business will be better in FY26 as compared to FY25, he added.

TCS CEO K Krithivasan said that sequential growth decline stood at 3.3%. Out of this, 0.5% should be attributed to international business & 2.8% decline was due to the ramp down of BSNL deal, he added.

TCS CEO K Krithivasan said that new service lines have delivered growth in Q1. “Most geographies and businesses had strong order book closures,” he added. “AI solutions such as TCS WisdomNext & Sovereign AI Cloud seeing good traction,” he said.

TCS CEO K Krithivasan said that the trend of seeing a delay in deal closures continued and further intensified in Q1 FY26.

The post earnings press conference for TCS had begun. CEO and MD K Krithivasan, along with other executives, are currently addressing media personnel.

Net profit drops 22% YoY to Rs 144.37 crore

Revenue from operations falls 4% YoY to Rs 892 crore

EPS declines to Rs 23.18 per share

"Markets will react to TCS’s earnings in early trade, with a keen eye on management commentary, which could set the initial tone. With the Nifty now hovering near its immediate and crucial support zone—marked by the 20-day exponential moving average (20-DEMA) and the upper boundary of its previous consolidation range around the 25,200–25,300 zone—it will be critical for the index to hold this level to maintain its positive bias. That said, with the earnings season underway, stock-specific opportunities are likely to emerge on both sides, so participants should align their positions accordingly," said Ajit Mishra – SVP, Research, Religare Broking.

• Net profit rises 28% YoY to Rs 93.62 crore.
• Revenue from operations rises 15% YoY to Rs 274 crore.
• EPS improves to Rs 11.31 per share.

Milind Lakkad, Chief HR Officer, said "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 114,000 people with higher order AI skills".

"We continued our investments in long term sustainable growth this quarter. We stayed agile and adapted to the dynamic environment, delivering steady margins. Our industry leading profitability alongside robust cash conversion, positions us well to make strategic investments for the future," says TCS CFO Samir Seksaria.

"Across industries, clients are increasingly shifting their focus from use case based approach to ROI led scaling of AI. We are investing across the AI ecosystem including infrastructure, data platform solutions, AI agents and business applications. Launching TCS SovereignSecureTM Cloud, TCS DigiBOLTTM, and TCS Cyber Defense Suite, to accelerate India’s AI led transformation was a particular highlight of this quarter," says Aarthi Subramanian, Executive Director - President and Chief Operating Officer of TCS.

"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. 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," says TCS CEO and MD K Krithivasan.

TCS reported a revenue of Rs 63,437 crore for Q1 FY26, marking a fall of 3%YoY in CC terms; overall revenue growth YoY stood at 1.3%. Net headcount addition during the quarter stood at 6,071. LTM Attrition was reported at 13.8%. Operating margin beats estimates, at 24.5%.

Tata Consultancy Services (TCS) has reported a net profit of Rs 12,760 crore for the first quarter of the financial year 2026. This marks an on-year increase of nearly 6 percent from the Rs 12,040 crore net profit reported in Q1 FY25. The company’s revenue from operations meanwhile rose to Rs 63,437 crore during the quarter under review.

The firm also announced a dividend of Rs 11 per share.

The shares of TCS rose 0.33 percent to close in the green at Rs 3,395 apiece.

“We expect EBIT margins to decline YoY despite the deferral of wage revision, normally scheduled in April of every year. The impact on margins is due to a lack of any leverage from growth. Despite tailwinds from currency, EBIT margins will likely stay flat QoQ,” analysts at brokerage house Kotak said in a note.

IT stocks recorded notable losses, pushing the Nifty IT index down nearly 1 percent to hover around 38,365. Coforge shares tumbled over 2 percent, while those of Infosys, TechM, Wipro and Persistent Systems were down over 1 percent each. TCS, HCL Tech and LTI Mindtree shares were meanwhile trading in the red with marginal losses.

TCS shares have dropped over 2 percent in the past one month, and nearly 21 percent in the past six months. The stock is down around 18 percent in 2025 so far. The sharp fall came on the back of global uncertainties, buoyed by US President Donald Trump's tariff flip flops.

The stock, which is a notable constituent of benchmark indices Sensex and Nifty 50, currently has a P/E ratio of over 25.

Axis Securities expects TCS revenue to fall 0.3 percent sequentially in Q1, driven by the impact from BSNL deal. "EBIT margin to remain flattish by 60 bps during the quarter," it said.

ICICI Securities has projected TCS to report a revenue decline of 3.4 percent CC, "led by $300 million quarterly ramp-down from BSNL deal, partly offset by resilient growth in international markets led by BFSI".

IREDA’s asset quality and exposure in light of the ongoing Gensol developments will be a key thing to watch out for during the company's Q1 earnings announcement. The recent insolvency proceedings against Gensol Engineering and its subsidiary, triggered by defaults totaling over Rs 700 crore have placed a spotlight on IREDA’s risk management and asset quality.

"IREDA’s total exposure to Gensol Engineering and its subsidiary is approximately Rs 470 crore, including term loans and working capital facilities. While IREDA’s gross NPA ratio remains moderate at 2.45% as of March 31, 2025, the Gensol account is under stress and is being closely monitored. The account is not yet classified as an NPA, but the situation is evolving. The top 20 group exposures constitute nearly 59% of IREDA’s loan book, reflecting a high degree of concentration risk. Any significant slippage, such as the Gensol account, could have a material impact on asset quality metrics," said Vaibhav Vidwani, Research Analyst at Bonanza.

Around 17 companies are announcing their results for the April-June quarter of financial year 2026 today. These are some of the notable names among them:

• Tata Consultancy Services (TCS)
• IREDA
• Anand Rathi Wealth
• Oswal Pumps
• Tata Elxsi

The key things to watch out for in TCS quarterly show include demand outlook in BFSI, retail, communication, hi-tech and other key segments, as well as any impact of volatile macro environment and tariff issues on demand. The firm's deal pipeline, outlook on CY25E/FY26E IT budgets, any further update on growth strategies as well as possible wage hike and new deal with BSNL will be in focus.

Equirius Capital expects TCS' US revenue to dip sequentially by 0.4 percent in CC terms. It noted that tepid growth will largely be driven by expected ramp down in BSNL deal and some softness in sales growth in international markets. The firm expects EBIT margins to improve marginally as soft demand will likely result into lower operating. "Equirus expects material dip in TCV QoQ given seasonal softness," it added.

Analysts have suggested that the IT sector may see a soft earnings season, amid global uncertainties. "If the final U.S. tariffs are pushed on the consumer, U.S. inflation will rise, which is injecting continued uncertainty for global corporations and could drag growth in IT," said Girish Pai, analyst at BOBCAPS.

The record date to determine the eligibility of the shareholders set to receive the possible dividend has been set at July 16. "The interim dividend, if declared, shall be paid to the equity shareholders of the Company whose names appear on the Register of Members of the Company or in the records of the Depositories as beneficial owners of the shares as on Wednesday, July 16, 2025, which is the Record Date fixed for the purpose," the company said.

TCS is set to release its results for the April-June quarter of the ongoing financial year 2026 in the post market hours of July 10. While intimating stock exchanges about the same, the company had said that its board will meet on July 10 to consider and approve the results and a dividend.

The post earnings press conference has been scheduled at 5.30 pm, and the post earnings conference call has been scheduled at 7 pm.

The shares of Tata Consultancy Services (TCS) were trading flat on July 10, ahead of the firm's Q1 FY26 results announcement, which will effectively open the earnings season for the IT pack. The shares of the IT major were trading with minor gains and losses in the morning. At 10.30 am, the stock was up 0.02 percent to hover around Rs 3,384 apiece.