Total Contract Value (TCV)
$9.4B
+13.2% YoY
Robust deal wins across verticals, but revenue conversion delayed.
TCS
Information Technology
15 Jul 2025
Tata Consultancy Services Ltd — Q1 FY26
TCS reported Q1 FY26 revenue of INR 63,437 crore (+1.3% YoY) but constant currency revenue declined 3.1% YoY, reflecting intensified discretionary spending delays and project deferrals.
✓ Verified against BSE filing
2-Min Summary
TCS reported Q1 FY26 revenue of INR 63,437 crore (+1.3% YoY) but constant currency revenue declined 3.1% YoY, reflecting intensified discretionary spending delays and project deferrals. Operating margin was 24.5%, down YoY due to capacity buildup and demand contraction. Total contract value was robust at $9.4 billion (+13.2% YoY), yet revenue conversion lagged. Management noted that international revenue should improve in FY26 vs FY25, but near-term visibility remains low due to trade uncertainty. Key risk: if trade deals are delayed, client decision-making may remain sluggish, further pressuring Q2 revenue.
Key Numbers
Headcount
613,069
+5,000 QoQ
Net addition of over 5,000 employees; lateral hiring recalibrated.
Attrition (LTM IT Services)
13.8%
+50bps QoQ
Attrition increased sequentially, indicating some churn.
AI-skilled workforce
114,000
N/A
Employees with higher-order AI skills, up from prior quarter.
Management Guidance
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.
revenueQ2 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.
revenueMargin improvement levers: utilization, productivity, pyramid
CFO cited improving utilization, productivity, and pyramid as key levers to improve margins from current levels.
marginsKey Risks
Trade deal uncertainty delaying client decisions
CEO noted that until most trade deals are announced, lack of clarity will persist, potentially delaying decision-making further.
high · analyst_questionExcess capacity weighing on margins
CFO acknowledged carrying excess capacity due to demand contraction, which may pressure margins until growth resumes.
medium · management_commentaryBFSI Europe weakness and large engagement completion
Decline in BFSI Europe was partly due to completion of a large engagement, with structural delays also contributing.
medium · analyst_questionNew BSNL order ramp-up uncertain
Advance purchase order received but circle-wise POs awaited; execution timeline and margin impact unclear.
medium · analyst_questionNotable Quotes
We saw cost pressures in our customers causing previously unseen project costs, deferrals, and decision delays that resulted in less-than-expected revenue conversion.
If there are no further delays, Q2 should be at least better than Q1, but we need to wait and watch based on what happens in the market.
We are not starting seeing that so far. Because, as you know, even with China, they have a framework deal. The actual deal and tariffs have not been announced.