Tata Consultancy Services (TCS) Q2 25/26 earnings summary

Executive summary

• Q2 FY26 revenue grew 3.7% QoQ and 2.4% YoY in reported currency, reaching INR 65,799 crore ($7,466 Mn), with 0.8% sequential growth in constant currency.

• Operating margin was 25.2% (excluding one-off severance/restructuring), and net margin was 19.6%.

• Total contract value (TCV) reached $10 billion, up 16% YoY, with North America contributing $4.3 billion and a mega deal with Tryg Insurance.

• All verticals except Consumer Business and all geographies except the UK saw positive sequential growth; BFSI and Europe showed improved momentum.

• Audited results were approved with an unmodified audit opinion; a second interim dividend of INR 11 per share was declared.

Financial highlights

• Q2 FY26 consolidated revenue was INR 65,799 crore, with net profit at INR 12,131 crore and EPS at 35.67.

• Free cash flow was $1.4 billion (INR 120,920 Mn), and net cash from operations was $1.5 billion (110.1% of net income).

• Total cash and investments at period end were $6.3 billion (INR 559,500 Mn).

• Board recommended a second interim dividend of INR 11 per share, payable November 4, 2025.

• Exceptional restructuring expenses of INR 1,135 crore ($129 Mn) were recognized in Q2 FY26.

Outlook and guidance

• FY26 international revenue growth expected to surpass last year’s 70 bps constant currency growth.

• IT services spend remains steady; no significant change in demand environment anticipated.

• Q3 furloughs expected to be similar to last year.

• Margin improvement targeted towards aspirational 26% band, with continued investments in talent and AI.

• Forward-looking risks include competition, wage inflation, currency fluctuations, and geopolitical instability.