TCS Q2 results: Net profit up 1.4% at ₹12,075 cr, revenue rises 2.4%

TCS reported net profit of ₹12,075 crore for Q2FY26, up 1.3 per cent compared to ₹11,909 crore in the same quarter of FY25

Tata Consultancy Services (TCS), India’s largest information technology (IT) services firm, beat revenue gro­wth estimates for the second quarter of 2025-26 (Q2FY26), driven by growth in its international business and an uptick in demand from the banking and financial services sector, one of its largest verticals. 

In an increasingly uncertain environment, the company’s management reiterated that based on client conversations and its Q2 performance, international revenue growth in FY26 will be stronger than in the previous financial year. 

TCS reported net profit of ₹12,075 crore for Q2FY26, up 1.4 per cent compared to ₹11,909 crore in the same quarter of FY25.

The company’s revenue grew 2.4 per cent in reported terms at ₹65,799 crore for Q2FY26. Sequentially the same was up by 3.7 per cent. TCS’ performance compared to Bloomberg estimates was a beat on revenue growth, but miss on net profit.

 

According to Bloomberg estimates, revenue was expected at ₹65,267 crore, and net profit at ₹12,559 crore.

 

The order book TCV (total contract value) for Q2FY26 was at $10 billion. In Q1FY26, it was at $9.4 billion. TCV was up 20 per cent Y-o-Y. In Q1FY25, TCV was at $8.3 billion.

 

TCS also announced acquisition of ListEngage, which has deep capabilities in Salesforce. However, details of the acquisition were not available. This will be an acquisition the company is doing after more than a decade.

 

K Krithivasan, managing director and chief executive officer (MD & CEO), said: “I am pleased with our strong Q2 performance. We delivered a good performance this quarter despite macroeconomic challenges. We saw good momentum across verticals and geographies this quarter.”

 

He also stated that the company is on a journey to become the world’s largest artificial intelligence (AI)-led technology services company. In line with this ambition, the company also announced setting up of a new business entity to build AI infrastructure, including a 1 gigawatt (Gw) AI data centre.

 

“There is a lot of unmet demand in the market that has made us get into this segment. We are taking this bet as there is synergy for some of our clients such as hyperscalers,” Krithivasan said.

 

In terms of Q2FY26 performance, international business grew by 0.6 per cent. Among major markets, North America grew 0.8 per cent and Latin America grew 0.3 per cent on a sequential basis. The UK was down 1.4 per cent sequentially, whereas Europe grew 1.4 per cent. India grew by 4 per cent during the quarter compared to Q1FY26. On a Y-o-Y basis, North America was down 0.1 per cent, Europe was down 1.9 per cent, and Continental Europe was down 3 per cent.

 

Vertical growth was driven by BFSI (banking, financial services, and insurance), which grew 1.1 per cent quarter-on-quarter (Q-o-Q), and 1 per cent Y-o-Y. Life Science and Healthcare was up 3.4 per cent Q-o-Q but down 2.2 per cent Y-o-Y.

 

Aarthi Subramanian, executive director-president and chief operating officer, said: “We delivered strong growth momentum led by Data, Cloud and AI-powered enterprise transformation. Our customer engagements are focused on rapid value realisation to deliver speed, efficiency, and growth.”

 

She further added that TCS’ AI Hackathon “Ideate and Build with AI” set a new benchmark — it is the world’s largest, most diverse, and innovative AI-first culture-building initiative. The Hackathon saw 275,000 TCSers participating.

 

TCS reported operating margins at 25.2 per cent, an expansion of 70 basis points (bps) Q-o-Q.

 

Samir Seksaria, chief financial officer, said: “Our disciplined execution helped us expand our margins while making strategic investments. We have prioritised wage hikes while building future-ready capabilities and establishing new ecosystem partnerships. Looking ahead, our financial resilience and robust balance sheet will support both internal transformation initiatives and external investments aligned with our aspiration.”

 

Analysts, however, said that the numbers were a mix bag. Many stated that AI investments should be the focus. “Quarter performance can go up and down, what is important is how the next three to four years unfold and how prepared are firms. We at Gartner have rationalised IT spends growth at 8-9 per cent. This has come down from the double-digit high. The next growth is going to be AI-led. By 2029, almost 20 per cent of IT services spending will be on AI. And those companies that are able to restructure their model will lead. TCS is also realising that change is required, and some of the restructuring announcements hint towards this build-up,” said D D Mishra of Gartner.