Tata Consultancy Services (TCS) on Thursday reported a consolidated net profit of ₹12,075 crore for the quarter ended September 30 (Q2FY26), a modest 1.4 per cent rise from ₹11,909 crore in the same period last year.
The IT major incurred restructuring expenses of ₹1,135 crore following a sharp reduction in headcount.
Revenue from operations rose 2.39 per cent year-on-year to ₹65,799 crore, against ₹64,259 crore in Q2FY25, beating market expectations. However, the profit remained below estimates due to severance payments related to the restructuring exercise. The company reported a total contract value (TCV) of $10 billion, driven by multiple large deals across sectors.
In a filing to the stock exchanges, TCS said it had launched restructuring initiatives in July, releasing employees whose redeployment was not feasible. “Termination benefits have been provided under a policy devised for this purpose. Such termination benefits, due to their size, nature or occurrence, are disclosed as ‘exceptional item’ in the audited consolidated interim financial results,” the company said.
“We have delivered good performance in the backdrop of continued macro challenges. All verticals except consumer business and all geographies except the United Kingdom returned to positive sequential growth,” K. Krithivasan, MD and CEO of TCS, told analysts at the earnings call on Thursday evening.
“Our deal pipeline continues to show strong momentum with a healthy mix of cost optimisation and transformation deals as well as services and platform deals across new and existing businesses based on client conversations,” he said.
Operating margins improved to 25.2 per cent in Q2FY26 from 24.5 per cent in the previous quarter, despite the rollout of the wage hike. “Giving a wage hike to our employees was our priority, and so we have rolled out our increments for 80 per cent of the workforce,” said Samir Seksaria, CFO of TCS.
Sudeep Kunnumal, chief HR officer of TCS, said it will be quick to adapt to the new H1B visa and immigration policies, having significantly localised its workforce in the US.
TCS announced the formation of a subsidiary in India to set up AI and sovereign data centres with 1-gigawatt capacity, and the acquisition of US-based ListEngage — a full-stack Salesforce partner — for $72.8 million. The company declared an interim dividend of ₹11 per share.