TCS Q3 Preview: PAT may rise 6% YoY; margin pressure likely – News Air Insight

IT services major Tata Consultancy Services (TCS) is expected to report steady but muted growth in the December quarter, with an average of five brokerages pencilling in revenue growth of about 5% year-on-year and profit growth of around 6%, reflecting cautious client spending and margin headwinds. Based on the estimates, Q3 revenue could come in at roughly Rs 67,000-67,500 crore, while profit after tax (PAT) is seen at around Rs 13,000-13,200 crore.

Revenue: Growth steady, currency a swing factor

YES Securities expects TCS to post revenue of about Rs 67390 crore, implying 5.3% YoY and 2.4% QoQ growth. In constant currency terms, growth is expected to remain muted, reflecting weak discretionary spending and softness in the India business.

Axis Securities estimates 2.6% sequential topline growth, supported by traction in BFSI, hi-tech and favourable cross-currency movements. Kotak Equities, however, expects flat revenues QoQ, with growth in international markets offset by a decline in domestic business.

Margins: Wage hikes and investments weigh

Margins are expected to remain under pressure during the quarter. YES Securities sees EBITDA margins compressing by 43 basis points QoQ to 26.9%, while Axis Securities expects a 28 bps sequential decline due to wage hikes, higher investments and fewer working days.

Kotak Equities expects margins to remain broadly stable, with rupee depreciation partly offsetting the impact of investments and employee-related costs.

Profit: Growth modest but sequential recovery

PAT is projected to grow around 6% YoY, with YES Securities estimating Rs 13,090 crore, supported by operating leverage and currency benefits. Sequentially, profit growth could be stronger, aided by seasonal cost controls.

Deal pipeline and guidance in focus

Brokerages expect total contract value (TCV) of $10–11 billion for the quarter. Kotak Equities noted unconfirmed media reports of a large telecom deal win, which could support medium-term growth visibility.Management commentary on deal momentum, client budgets for CY26, GenAI adoption, and GCC-related opportunities will be closely tracked. Investors will also watch for clarity on margin aspirations, data centre investments, and the impact of rising competitive intensity.

What investors should watch

Key triggers for the stock include guidance on revenue acceleration, progress in large deal closures, and management’s outlook on discretionary tech spending amid global macro uncertainty.

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