TCS FY26 Annual Earnings Summary
4 quarters covered · ₹2,67,021 Cr revenue · ₹49,388 Cr PAT · 19.4% average EBITDA margin.
Quarter-by-quarter progression
Management promises made during the year
Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q1 FY26Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q1 FY26Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q2 FY26Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q2 FY26Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q3 FY26Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q3 FY26Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q4 FY26Current-quarter commentary contains related risk or weakness, so the promise appears not to have been delivered yet.
Q4 FY26Risks flagged during the year
CEO noted that until most trade deals are announced, lack of clarity will persist, potentially delaying decision-making further.
Q3 FY26 · highNorth America revenue was flattish and UK faced ongoing challenges, which could temper growth if discretionary spending remains subdued.
Q4 FY26 · highAI-led productivity may cannibalize traditional services revenue before AI revenue fully offsets the decline.
Q4 FY26 · highFY26 constant-currency revenue declined 2.4%, and an analyst flagged a 5-6 percentage point growth gap versus the closest competitor.
Q1 FY26 · mediumCFO acknowledged carrying excess capacity due to demand contraction, which may pressure margins until growth resumes.
Q1 FY26 · mediumDecline in BFSI Europe was partly due to completion of a large engagement, with structural delays also contributing.
Q1 FY26 · mediumAdvance purchase order received but circle-wise POs awaited; execution timeline and margin impact unclear.
Q2 FY26 · mediumLingering economic uncertainties keep clients cautious on discretionary spending, which could slow revenue growth.
Q2 FY26 · mediumRecent cyber attacks on TCS clients led to project start delays, though TCS systems were not compromised.
Q2 FY26 · mediumThe capital-intensive data center business will have lower ROE than TCS's historical 50%+, though management expects overall ROE to remain benchmark.
Q3 FY26 · mediumTCS released ~1,800 employees in Q3 and expects restructuring to continue into Q4, impacting margins and morale.
Q3 FY26 · mediumRevenue from BSNL remains flat until formal PO is received; no clear timeline provided, creating uncertainty.
What changed through the year
Q1 FY26 · International revenue to improve in FY26 vs FY25
Management expects constant currency international revenue to be better in FY26 than FY25, though overall growth aspiration remains high.
Q1 FY26 · Q2 revenue likely better than Q1 if no further delays
CEO stated Q2 should be at least better than Q1 if no additional project delays occur.
Q1 FY26 · Margin improvement levers: utilization, productivity, pyramid
CFO cited improving utilization, productivity, and pyramid as key levers to improve margins from current levels.
Q2 FY26 · FY26 international revenue growth better than FY25
Management expects constant currency international revenue growth for FY26 to exceed the ~70bps achieved in FY25.
Q2 FY26 · Operating margin aspirational band of 26%-28%
CFO reiterated the goal to return to the aspirational margin band of 26%-28%, with continued improvement expected.
Q2 FY26 · AI data center subsidiary with 1 GW capacity over 5-7 years
Board approved creation of a subsidiary to build a sovereign AI data center in India, with capacity up to 1 GW, phased over 5-7 years at ~$1B per 150 MW.
Q2 FY26 · Continued workforce release of ~2% mid-senior level
CHRO indicated that the planned release of ~2% of mid-to-senior workforce with skill mismatch is halfway done; further releases may continue.
Q3 FY26 · International revenue growth aspiration for FY26
Management aims to deliver higher international revenue growth in FY26 compared to FY25, with optimism for Q4.
Q3 FY26 · Operating margin target of 26%-28% band
CFO stated efforts to inch closer to the traditional 26%-28% margin band, with 26% as near-term goal.
Q3 FY26 · AI services revenue growth trajectory
AI services revenue expected to continue growing at a strong rate, with $1.8B annualized in Q3.
Q3 FY26 · Data center revenue timeline
Revenue from AI data center build-out expected to start ~18 months after anchor customer announcement.
Q4 FY26 · FY27 growth: normal first-half seasonality, no quantified target
Management expects FY27 to start with a normal Q1/Q2 seasonal pattern and is positive on international growth, but refused to quantify growth.
Q4 FY26 · AI revenue expected to outrun traditional-services taper
AI revenue is expected to grow faster and eventually overcompensate for tapering traditional services revenue, but management could not predict the timing.
Q4 FY26 · Wage hikes: 150-200 bps margin headwind expected
Wage hikes are expected to create a 150-200 bps margin headwind in the next quarter.
Q4 FY26 · Medium-term margin aspiration: 26-28%
Longer term, management wants margins to move toward 26-28%, while continuing investment in build, partner, and acquire initiatives.