Mumbai, India – July 10, 2025 – Tata Consultancy Services (TCS), India’s largest IT services exporter, announced its financial results for the first quarter of fiscal year 2025-26 on Thursday, July 10, 2025, post-market hours. The company reported a 6% year-on-year (YoY) increase in consolidated net profit, reaching ₹12,760 crore, surpassing market expectations. This comes despite a challenging global macroeconomic environment.
However, revenue growth remained modest, with consolidated revenue from operations increasing by 1.3% YoY to ₹63,437 crore. In Constant Currency (CC) terms, revenue saw a 3.1% YoY decline, reflecting the prevailing demand contraction.
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TCS Result – Key Financial Highlights (Q1 FY26 vs. Q1 FY25):
- Net Profit (PAT): ₹12,760 crore (up 6.0% YoY)
- Revenue: ₹63,437 crore (up 1.3% YoY)
- Revenue (Constant Currency): Down 3.1% YoY
- Operating Margin: 24.5% (expanded by 30 bps QoQ)
- Net Margin: 20.1% (up 90 bps YoY)
- Net Cash from Operations: ₹12,804 crore (100.3% of Net Profit)
- Total Contract Value (TCV) for Q1: US$9.4 billion
- Interim Dividend: ₹11 per share (Record Date: July 16, 2025; Payment Date: August 4, 2025)
Segmental Performance: A Mixed Bag
While the overall revenue growth remained subdued, some sectors showed resilience:
- BFSI (Banking, Financial Services, and Insurance): TCS’s largest revenue generator, BFSI, registered a 1.0% YoY growth in CC terms, contributing 32% to total revenue.
- Technology & Services and Energy, Resources & Utilities: These sectors also demonstrated positive YoY growth.
- Consumer Business, Life Sciences & Healthcare, and Communication & Media: These segments experienced declines, with Life Sciences & Healthcare and Communication & Media seeing the largest drops at 9.6% YoY in CC terms.
- India Market: A significant decline of 21.7% YoY in CC terms was observed, partly due to the ramp-down of the BSNL project.
Geographical Performance: North America and Europe Face Headwinds
Geographically, North America, TCS’s largest market, saw a 2.7% YoY decrease in CC terms. The UK and Continental Europe also experienced declines of 1.3% and 3.1% respectively. However, MEA, Asia Pacific, and Latin America posted healthy growth.
Management Commentary and Deal Wins
TCS CEO and Managing Director, K Krithivasan, acknowledged the “continued global macro-economic and geo-political uncertainties” that led to reduced demand. However, he highlighted the “robust deal closures during this quarter” and the strong growth in new services, particularly AI & Data, TCS Interactive, and Cyber Security. The TCV of $9.4 billion indicates healthy client traction in next-gen technologies, operational model transformations, and vendor consolidation.
TCS also reported a net addition of 6,071 employees YoY, bringing its total workforce to 613,069. The LTM IT Services attrition rate stood at 13.8%.
TCS Result – Brokerage Reactions and Stock Price Outlook
Brokerages have offered a mixed, yet largely optimistic, outlook following the results. The company’s ability to exceed profit expectations despite muted revenue growth in constant currency terms has been noted.
- Positive Sentiments: Many experts believe that TCS shares have the potential to hit ₹3,580 levels if they hold above the ₹3,360 mark, reflecting a positive market reaction to the better-than-expected profit and strong deal wins. The focus on AI, cloud, and cybersecurity in deal wins is seen as a positive driver.
- Concerns: The decline in constant currency revenue, particularly in developed markets and the India segment (due to the BSNL project ramp-down), remains a point of concern for some analysts. The impact of potential US tariff uncertainties under a new administration is also being closely monitored.
- Margin Performance: The sequential expansion of operating margin by 30 bps to 24.5% was seen positively, indicating operational efficiency despite revenue challenges. The company’s CFO, Samir Seksaria, reiterated the long-term goal of reaching 26-28% in operating margins.
- Valuation and Strategy: Brokerages will be keenly watching management commentary on the outlook for the US macro environment, any updates on wage hikes (which were deferred for Q1), and the sustained pipeline of large deal wins. TCS’s strategic positioning in vendor consolidation and AI-led transformations is seen as a key advantage.
What to Expect with TCS Stock Price Now:
TCS shares closed at ₹3,395 on the NSE on July 10, showing a marginal increase of 0.33% before the results were announced. Given the beat on profit expectations and the healthy deal wins, the stock may see positive momentum in the short term, potentially testing resistance levels around ₹3,580.
However, the muted constant currency revenue growth and the broader global economic uncertainties, coupled with the decline in key segments and geographies, could temper significant upward movement. Investors will be closely watching the commentary on the demand environment in the upcoming investor calls.
Overall, while the profit beat and robust deal wins provide a positive signal, the market will likely remain cautious, evaluating the sustainability of deal conversions and the pace of demand recovery in key markets. The declared interim dividend of ₹11 per share also adds to shareholder value.
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