TCS Reports Q2 FY26 Results: Revenue Growth Driven by Strategic Investments and AI Focus
Tata Consultancy Services (TCS), India's largest IT services firm, reported a consolidated revenue from operations of ₹65,799 crore for the second quarter of the financial year 2025-26 (Q2 FY26), marking a 2.4% increase year-on-year (YoY) compared to ₹64,259 crore in Q2 FY25. The results, announced post-market hours, showcased the company's resilience despite a challenging macroeconomic environment.
| Particulars | Q2 FY26 (₹ Crore) | Q2 FY25 (₹ Crore) | YoY Growth (%) |
| Revenue from Operations | 65,799 | 64,259 | 2.4% |
| Net Profit (PAT) | 12,075 | 11,909 | 1.4% |
| Operating Margin (EBIT Margin) | 25.2% | - | +70 bps QoQ |
| Total Contract Value (TCV) (USD) | $10 Billion | - | - |
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Financial and Operational Highlights
Revenue Performance: The reported revenue growth of 2.4% YoY (in Rupee terms) and 0.8% Quarter-on-Quarter (QoQ) in Constant Currency (CC) terms, was a recovery after two consecutive quarters of CC decline.
Net Profit (PAT): Consolidated Net Profit for the quarter stood at ₹12,075 crore, a marginal increase of 1.4% YoY (₹11,909 crore in Q2 FY25). This figure included one-off restructuring expenses of ₹1,135 crore. Excluding this one-off impact, the Net Profit grew 8.4% YoY to ₹12,904 crore.
Operating Margin: The operating margin expanded by 70 basis points (bps) sequentially to 25.2%, driven by disciplined execution.
Deal Wins (TCV): The Total Contract Value (TCV) of order book for the quarter was a strong $10 billion, up from $9.4 billion in Q1 FY26.
Interim Dividend: The Board of Directors declared a second interim dividend of ₹11 per equity share.
Sectoral and Geographical Performance
Growth was broad-based across sectors, with a continued momentum in key verticals.
Key Sectoral Growth (QoQ in Constant Currency)
| Sector | QoQ CC Growth | YoY CC Growth (Approximate) |
| Life Sciences and Healthcare | +3.4% | -2.2% |
| Technology & Services (TSS) | +1.8% | +2.8% |
| Manufacturing | +1.6% | - |
| Banking, Financial Services, and Insurance (BFSI) | +1.1% | +1.0% |
| Communications, Media, and Information Services (CMI) | +0.8% | - |
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The BFSI sector, which is the largest contributor to TCS's revenue (approx. 32.2%), showed steady growth.
Geographical Performance (YoY in Constant Currency)
Regional performance was mixed amid global uncertainties.
North America: Down 0.1% YoY
United Kingdom: Down 1.9% YoY
Continental Europe: Down 3.0% YoY
Asia-Pacific: Grew 2.0% YoY
India: Down 33.3% YoY (accounted for 5.8% of total revenue)
Strategies and Management Commentary
The management’s commentary highlighted an overarching strategic shift toward becoming a leader in the AI-led technology services space, backed by significant investments.
Key Management Statements
K Krithivasan, CEO and Managing Director:
Expressed satisfaction with the strong Q2 performance despite macroeconomic challenges.
Stated the company's core ambition: "We are on a journey to become the world's largest AI-led technology services company."
Emphasized that this journey is "anchored in bold transformation across talent, infrastructure, ecosystem partnerships and customer value."
Referenced the significant investments in building a world-class AI infrastructure business as a commitment to this transformation.
Samir Seksaria, Chief Financial Officer (CFO):
Attributed the margin improvement to "disciplined execution" alongside strategic investments.
Stressed the priority given to wage hikes, building future-ready capabilities, and establishing new ecosystem partnerships.
Affirmed that the company's financial resilience and robust balance sheet will support both internal transformation initiatives and external investments.
Aarthi Subramanian, Executive Director, President, and COO:
Noted that the strong growth momentum was led by Data, Cloud, and AI-powered enterprise transformation.
Indicated that customer engagements are focused on rapid value realization to deliver speed, efficiency, and growth.
Mentioned the success of the company's "Ideate and Build with AI" Hackathon, which saw 275,000 employees participating, underscoring the push for an AI-first culture.
Strategic Initiatives and Investments
AI Infrastructure Business: TCS announced plans to set up a new, wholly-owned subsidiary in India to build AI and Sovereign Data Centers, targeting 1 GW capacity over six years with a planned capital expenditure of $6–6.5 billion.
Acquisition: The company announced the acquisition of US-based ListEngage for $72.8 million. ListEngage is a Salesforce Summit Partner specializing in Marketing Cloud, CRM, Data Cloud, Agentforce, and AI advisory services, which significantly strengthens TCS's Salesforce capabilities.
Talent Transformation: The quarter saw a focus on re-aligning and optimizing the workforce, resulting in a net reduction of nearly 20,000 employees in the quarter, largely attributed to ongoing restructuring efforts and normal attrition. The company is actively working on developing future-ready capabilities in line with its AI focus.