Tata Consultancy Services (TCS) shares declined 1.44 per cent to ₹3,219.10 on Monday following mixed Q1FY26 results that showed revenue missing estimates despite a profit beat. The stock traded between ₹3,213.50 and ₹3,272.00 during the session.
The IT services giant reported revenue of ₹63,430 crore for Q1FY26, down 1.6 per cent quarter-on-quarter and missing consensus estimates of ₹64,650 crore.
The revenue decline was attributed to a 0.5 per cent dip in international revenue and a 2.8 per cent impact from the BSNL deal ramp-down. In constant currency terms, revenue fell 3.3 per cent QoQ.
However, TCS managed to beat profit expectations with adjusted PAT rising 4.4 per cent QoQ to ₹12,760 crore, surpassing consensus estimates of ₹12,250 crore. The profit growth was driven by a 62 per cent QoQ spike in other income, primarily from higher interest income on tax refunds.
EBIT came in at ₹15,510 crore, marginally down 0.6 per cent QoQ but below consensus estimates of ₹15,690 crore. EBIT margin improved 26 basis points to 24.5 per cent, slightly above the expected 24.2 per cent.
The company signed deals worth $9.4 billion during the quarter, down 23 per cent QoQ but within the expected range of $8-10 billion. North America contributed $4.4 billion, BFSI $2.5 billion, and Consumer Business Group $1.6 billion to the total contract value.
TCS added over 5,000 employees during Q1FY26, bringing total headcount to 613,069. The attrition rate increased 50 basis points to 13.8 per cent on a last-twelve-months basis. The company has yet to finalize wage hike decisions.
Management expressed optimism about FY26 outperforming FY25 in international revenues, driven by expected macro stability in the second half. The company now has 114,000 people with higher-order AI skills and continues investing in AI-driven capabilities.
Choice Institutional Equities maintained its ‘BUY’ rating with a target price of ₹3,950, implying a 16.8 per cent upside. The brokerage expects revenue, EBIT, and PAT to grow at CAGRs of 6.5 per cent, 9.6 per cent, and 9.4 per cent respectively over FY25-FY28. The board recommended an interim dividend of ₹11 per share.
Published on July 14, 2025