MUMBAI: The largest software exporter Tata Consultancy Services (TCS), which faced bad press for massive retrenchments earlier this month, has reported street-beating revenue growth driven by its key financial services and insurance vertical despite the US tariffs-related uncertainty and mounting risks from a tightening visa regime in its largest market. However, net profit was almost flat with a positive 1.4% growth in the September quarter at Rs 12,075 crore, which missed street estimates.
In the year-ago period, the company had logged in Rs 11,909 crore and sequentially the software major's net declined by 5.4% from 12,760 crore.
The company, which opens the earnings season but did not hold a presser in remembrance of the first death anniversary of its former chairman and Tata group patriarch Ratan Tata, said in a statement that consolidated revenue grew 2.4% on-year to Rs 65,799 crore in the September quarter, beating analysts’ estimates compared to Rs 64,259 crore in the year-ago quarter and from Rs 63,437 crore in Q1FY26, an increase of 3.7%.
In constant currency terms, revenue rose 0.8% and international revenue grew by 0.6%, while the operating margin sequentially increased by 70 bps to 25.2% and the net margin improved to 19.6%. Cash flow from operations stood at 110% of net income.
The company attributed the better than expected topline to the strong performance by its key banking and financial services vertical, while revenue from its consumer, healthcare, and manufacturing verticals fell.
By geography, revenue from its largest market of North America inched down 0.1%, while that from Britain fell 1.9% and from continental Europe declined 3% but revenue from the Asia Pacific grew 2%. The home market saw a significant contraction of 33.3% on-year, primarily in the absence of billing from BSNL but from the previous quarter grew 4%. The MEA market grew 12.7%.
Total order bookings stood at $10 billion during the quarter, compared to $9.4 billion in the previous quarter and $8.6 billion in the year-ago period. Last month, the company announced a $644 million deal from the Scandinavian insurer Tryg.
The country’s $283 billion IT sector faces an uncertain demand environment as steep US tariffs have led to uncertainty, particularly in North America, its largest market. Another blow came when the US administration increased massively the H1-B visa fees to a whopping $1,00,000 per applicant.
Another worry for the company is a proposed 25% tax on American firms using foreign outsourcing services.
In July, the firm said it will reduce its workforce by 2% in fiscal year 2026, primarily affecting middle and senior management and has given pink slips to as many as 12,000 of its little over 0.6 million headcount.
The shares of TCS, which also declared Rs 11 dividend, closed 1.1% up ahead of the results.
“I am pleased with our strong performance. We are on a journey to become the world’s largest AI-led technology services company," K Krithivasan, the chief executive and managing director of TCS, said in the statement.
"Our journey is anchored in bold transformation across talent, infrastructure, ecosystem partnerships and customer value. The investments, including the building of a world-class AI infrastructure business, demonstrate our commitment to this transformation,” he added.
Chief financial officer Samir Seksaria chipped in saying, “We achieved good growth momentum across all verticals this quarter. Our disciplined execution helped us expand our margins while making strategic investments."
He added, "We’ve prioritised wage hikes, 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.”
Among the key business domains, life sciences and healthcare saw a healthy gain of 3.4%, while the BFSI segment grew by 1.1% and the technology and services segment also saw a growth of 2.8%, he said.
TCS also said it is “setting course to become the world’s largest AI-led technology services company,” announcing a series of strategic investments, including a new business entity to build a 1 gw capacity AI data centre in the country and the acquisition of ListEngage, a Salesforce-focused firm.
Krithivasan said the AI infrastructure initiative reflects TCS’s long-term commitment. The company also launched what it called the world’s largest “Ideate and build with AI” hackathon, involving 2.75 lakh employees, as part of its effort to embed an “AI-first” culture.
