TCS vs KPIT Technologies Q4 FY26

TC

TCS

Q4 FY26 · Information Technology

TCS exited Q4 with 1.2% sequential constant-currency growth after three quarters of sequential recovery, while rupee revenue rose 9.6% YoY to ₹70,698 crore. The quarter's signal is not just headline growth, but demand stabilization: $12 billion TCV, three mega deals, and client additions across every revenue band after roughly two years. AI is becoming a commercial wedge, with annualized AI revenue above $2.3 billion, but management also admitted traditional service lines may taper as AI productivity benefits are passed to clients. Operating margin held at 25.3% in Q4, helped by currency and operating levers, while wage hikes and build-partner-acquire investments will pressure FY27. Outlook is cautiously constructive: deal momentum and AI demand are improving, but macro/geopolitical risk, BFSI caution, elevated SG&A, and uncertain AI cannibalization timelines limit conviction.

Guidance read

FY27 growth: normal first-half seasonality, no quantified target for FY27: Management expects FY27 to start with a normal Q1/Q2 seasonal pattern and is positive on international growth, but refused to quantify growth. AI revenue expected to outrun traditional-services taper for multi-year: AI revenue is expected to grow faster and eventually overcompensate for tapering traditional services revenue, but management could not predict the timing. Wage hikes: 150-200 bps margin headwind expected for Q1 FY27: Wage hikes are expected to create a 150-200 bps margin headwind in the next quarter. Medium-term margin aspiration: 26-28% for multi-year: Longer term, management wants margins to move toward 26-28%, while continuing investment in build, partner, and acquire initiatives.

Risk read

Key risks include AI cannibalization may arrive before AI revenue offset — AI-led productivity may cannibalize traditional services revenue before AI revenue fully offsets the decline.; FY26 constant-currency decline keeps recovery burden high — FY26 constant-currency revenue declined 2.4%, and an analyst flagged a 5-6 percentage point growth gap versus the closest competitor.; SG&A investment may be structurally higher — SG&A may stay structurally elevated because partnership, recruitment, training, and new-business investments are now flowing through the cost base.; Geopolitical exposure could broaden through secondary effects — Management framed geopolitical impact as limited to Middle East and travel/transportation, but acknowledged secondary supply-chain disruption could broaden the hit..

Promise ledger

Of 2 tracked promises, management 0 met, 0 close, 2 missed.

KP

KPIT Technologies

Q4 FY26 · Information Technology

KPIT reported a muted FY26 with Q4 constant currency growth of 1.8% QoQ, but highlighted $349M in deal wins and 18% YoY growth in trucks & off-highway. Two large SDV programs are ramping down, creating a ~4-5% sequential revenue gap in H1 FY27, partially offset by new account wins. Management guided FY27 EBITDA margin of 20.5-21.2% despite increased AI investments, and medium-term margin expansion to 22-24% driven by solutions/products mix shift to 50% of revenue. Key risks include further program cancellations (e.g., Honda) and macro headwinds from tariffs/geopolitics. The company is expanding into India, China, and micromobility, but near-term growth remains uncertain.

Guidance read

FY27 EBITDA margin guidance of 20.5-21.2%: Despite increased investments in AI, solutions, and new markets, management expects EBITDA margin to improve modestly. Medium-term EBITDA margin target of 22-24%: Driven by higher share of solutions and products (target 50% of revenue in 3 years) and fixed-price contracts. Solutions & products revenue to grow 30% YoY in FY27: Management expects 30%+ growth in this segment, which currently represents ~15% of revenue. India revenue to double in FY27: India currently ~4% of revenue; management expects strong growth driven by local OEMs and global OEMs' India-for-India strategy.

Risk read

Key risks include Unexpected program cancellations (e.g., Honda) — Honda cancelled all new platform programs, impacting KPIT's revenue. Management noted this was a surprise and will affect H1 FY27.; Delays in middleware and autonomous driving programs — New architecture programs have been pushed out, leading to lower-than-expected revenue in these areas. Recovery may take 1-2 years.; Competition from Chinese automotive R&D firms — Analyst raised concern about Chinese competitors with high R&D spend and negative EBITDA margins. Management acknowledged competition but believes KPIT's localized solutions and ecosystem give it an edge.; Macro headwinds from tariffs and geopolitical conflicts — Management noted that if current conflicts persist beyond 3-6 months, they could impact OEM spending, especially in the truck segment..

Promise ledger

Scorecard data is being built as historical quarters are processed.