Mumbai, July 11, 2025 – Tata Consultancy Services (TCS), India’s leading IT company, announced its first-quarter results for FY26, reporting a revenue of ₹63,437 crore. The numbers have sparked discussions: is TCS facing a slowdown, or is it laying the groundwork for future growth? Let’s break down the results in simple terms for Indian readers.
A Mixed Bag of Results
TCS earned ₹63,437 crore in revenue from April to June 2025, a modest 1.3% increase compared to last year. However, in constant currency terms (adjusting for currency fluctuations), revenue fell 3.1% year-on-year. This dip comes after a stronger Q4 FY25, where revenue was ₹64,479 crore. On the brighter side, TCS’s net profit grew 6% to ₹12,760 crore, beating market expectations of ₹12,205 crore. The company also declared an interim dividend of ₹11 per share, to be paid on August 4, 2025.
Why the Slowdown Talk?
Several factors have raised concerns about TCS’s growth:
- Global Challenges: TCS’s CEO, K Krithivasan, pointed to global economic uncertainties, with clients holding back on big tech projects due to inflation and geopolitical tensions.
- BSNL Deal Impact: A major contract with BSNL, worth $300 million per quarter, has scaled down, hitting revenue hard, especially in India, where business dropped 21.7% year-on-year.
- Weak Markets: North America, TCS’s biggest market (nearly half its revenue), saw a 2.7% decline. The UK and Europe also faced drops of 1.3% and 3.1%, respectively.
- Sector Struggles: The consumer business (15.6% of revenue) fell 3.1%, and healthcare and media sectors dropped 9.6%.
These challenges led to a 3.5% fall in TCS’s share price after the results, pulling down the Nifty IT index by 2%.
Silver Linings in the Numbers
Despite the slowdown concerns, TCS showed strengths that hint at a brighter future:
- Strong Profits: The 6% profit growth was driven by smart cost management, currency benefits, and other income sources.
- Better Margins: TCS improved its operating margin to 24.5%, up 0.3% from the last quarter, showing it’s running a tight ship. Cash flow was also strong, with ₹12,804 crore generated.
- AI and Innovation: TCS is betting big on artificial intelligence (AI), with growth in AI, data, and cybersecurity services. Clients are signing deals for AI-powered automation and modern tech upgrades, like SAP S/4HANA.
- BFSI Holds Steady: The banking and financial services segment, which makes up 32% of revenue, grew 1% despite tough conditions.
- Hiring and Innovation: TCS added 6,071 employees, reaching a workforce of 613,069. It also invested 15 million hours in training staff on new tech and applied for 171 patents this quarter.
- Big Deals: TCS signed contracts worth $9.4 billion, slightly lower than the $12.2 billion in Q4 FY25 but still a sign of strong client trust.
What Lies Ahead?
TCS’s management is cautiously hopeful about FY26. They believe business could pick up if global economic conditions, especially in the U.S., stabilize. AI and cloud services are expected to drive growth, with analysts predicting that generative AI could lead to big gains for IT firms. TCS is also working to maintain its profit margins between 26-28% in the long term, even as it considers salary hikes for FY26.
The stock market has been tough, with TCS shares down 18% this year. However, at a price-to-earnings ratio of around 25, TCS looks attractive compared to its peers. Analysts from HDFC Securities (target price ₹4,070) and BNP Paribas (₹4,400) remain optimistic about its future.
The Big Picture
TCS’s Q1 FY26 results show a company navigating challenges with resilience. The revenue dip, driven by the BSNL deal and global uncertainties, has raised eyebrows, but strong profits, AI investments, and new deals tell a story of potential. For Indian investors and employees, the question is whether TCS is hitting a rough patch or setting the stage for a comeback. With its focus on innovation and efficiency, TCS might just turn this stumbling block into a stepping stone.
