TCS Q3 Results: Cons PAT falls 14% YoY to Rs 10,657 crore, but revenue rises 5%

Daily Update, Business

Tata Consultancy Services Ltd (TCS) on Monday reported a 14 per cent year-on-year (YoY) fall in its consolidated net profit for the third quarter of the current fiscal period. During the quarter under review, profit came at Rs 10,720 crore as against Rs 12,444 crore in the year-ago period. On a quarter-on-quarter basis, profit slipped 11.63% from Rs 12,131 million in the September 2025 quarter.

However, the IT bellwether’s revenue from operations rose 5 per cent to Rs 67,087 crore in Q3 FY26 compared to Rs 63,973 crore in the corresponding period last year. On a quarter-on-quarter basis, revenue grew 2% from Rs 65,799 crore.

Earnings before interest and taxes (EBIT) rose 2% to Rs 16,889 crore in the last quarter against Rs 16,565 crore in the last year period. EBIT margins for the IT firm were flat at 25.2% in Q3 of the current fiscal.

Operating margins in Q3 came at 25.2% and were stable successively. In the third quarter, total contract value (TCV) stood at $9.3 billion. The company reported annualized AI Services revenue at $1.8 billion increasing 17.3% QoQ in constant currency terms.

TCS Q3 Results:

TCS also declared a third provisional dividend of Rs 11 per share and a special dividend of Rs 46 per equity share of Rs 1 each of the company.

“The third interim dividend and the special dividend shall be paid on Tuesday, February 3, 2026, to the equity shareholders of the Company, whose names appear on the Register of Members of the Company or in the records of the Depositories as beneficial owners of the shares as on Saturday, January 17, 2026, which is the Record Date fixed for the purpose,” TCS said.

K Krithivasan, Chief Executive Officer and Managing Director, said “The growth momentum we witnessed in Q2FY26 continued in Q3FY26. We remain steadfast in our ambition to become the world’s largest AI-led technology services company, guided by a comprehensive five-pillar strategy. Our AI services now generate $1.8 billion in annualized revenue, reflecting the significant value we provide to clients through targeted investments across the entire AI stack, from Infrastructure to Intelligence.”

The quarterly earnings were released post-market hours today. Earlier in the day, TCS shares sold 0.86 per cent higher at Rs 3235.70.

TCS ended the December quarter with 5,82,163 employees, down 11,151 from the previous quarter, even as it sharply expanded its pool of AI-trained personnel and posted stable financial performance.

The company reported revenue of ₹67,087 crore for Q3 FY26, up 2% quarter-on-quarter, and net income of ₹13,438 million, an increase of 8.5% year-on-year. Operating margin stood at 25.2%, while annualized AI services revenue rose to $1.8 billion, up 17.3% sequentially on a constant-currency basis.

The decrease in overall headcount highlights how TCS is reshaping its workforce as it moves toward AI-led delivery. Even with fewer employees on the rolls, the company said it now has more than 217,000 employees with advanced AI skills working across client projects.

“Our associates are at the heart of our transformation into an AI-first enterprise,” chief HR officer Sudeep Kunnumal said. “As of this quarter, there are over 217,000 associates with advanced AI skills, directly empowering customer success at scale. We doubled our intake of fresh graduates with higher-order skills, rapidly expanding our next generation talent pool.”

The numbers point to a shift away from traditional manpower heavy delivery models toward higher-skilled, AI-enabled teams. CEO K Krithivasan has said that all new engagement at TCS is now designed to be AI-led, with automation improving productivity and reducing the volume of routine work.

That shift is also reflected in the company’s growing AI business. TCS said its AI services now generate $1.8 billion in annualized revenue, while total contract value for the quarter stood at $9.3 billion, suggesting strong business demand for AI-driven transformation.

Chief Financial Officer Samir Seksaria said the company’s margin stability and cash generation gave it the confidence to continue investing in both technology and talent. Cash flow from operations in Q3 was 130.4 per cent of net income.

Together, the Q3 numbers show TCS using a smaller but more skilled workforce to support their push toward becoming an AI-led services company, even as traditional hiring and headcount growth slow across Indian IT.

Tata Consultancy Services (TCS) on Monday announced a dividend of Rs 57 per share, including a special dividend of Rs 46, in line with strong cash generation even as growth remains measured in a slowing global technology spending environment. The record date for the dividend has been fixed as January 17, with the payout scheduled for February 3.

TCS Q3

Domestic brokerage Motilal Oswal Financial Services (MOFSL) expects TCS to post a 5.1% year-on-year increase in net profit to Rs 13,080 crore, supported by a 4.1% YoY increase in sales to Rs 66,570 crore. On a sequential basis, MOFSL sees revenue growth of 0.5% quarter-on-quarter in constant currency terms, with international business also growing 0.5%, aided by the BSNL ramp-up. Inorganic contribution from the recent ListEngage acquisition is anticipated to be around 0.1%. MOFSL has a target price of Rs 4,400 on the stock.

Axis Securities is relatively more optimistic on sequential growth, predicting 2.6% QoQ revenue expansion, driven by traction in BFSI and hi-tech verticals, along with cross-currency tailwinds. However, it expects EBIT margins to decline by 28 basis points during the quarter due to salary increases, higher investments and fewer working days. Axis Securities estimates Q3 net profit at Rs 13,163 crore, up 5.8% YoY, with revenue rising 5.6% YoY to Rs 67,526 crore. The brokerage said investor focus will be on the deal pipeline, vertical-wise commentary and perspective on the BSNL advance purchase order.