The company posted a profit after tax (PAT) of Rs 10,657 crore in Q3FY26, compared to Rs 12,380 crore in the same period last year. The profit is attributable to shareholders.
Despite the decline in earnings, TCS registered a 5% YoY increase in revenue from operations, which rose to Rs 67,087 crore from Rs 63,973 crore in the year-ago quarter.
On a sequential basis, however, the company’s PAT dropped 12% from Rs 12,075 crore in Q2FY26. Revenue during the quarter grew 2% sequentially, compared with Rs 65,799 crore reported in the July–September quarter.
TCS also announced an interim dividend of Rs 57 per equity share for FY26. This includes a third interim dividend of Rs 11 per share and a special dividend of Rs 46 per share. Both dividends will be paid on Tuesday, February 3, 2026, with Saturday, January 17, 2026, fixed as the record date.
TCS CEO and MD K Krithivasan commented on the quarterly performance, noting that the growth momentum seen in Q2FY26 continued into the third quarter. He said the company remains focused on becoming the world’s largest AI-led technology services company and highlighted the company’s five-pillar strategy.
TCS AI services currently generate $1.8 billion in annualised revenue, which Krithivasan said reflects the value delivered to clients across the AI stack, from infrastructure to intelligence.Aarthi Subramanian, Executive Director-President and Chief Operating Officer, added that TCS continued to witness AI acceleration during the quarter.
Brokerages Review
Nomura: Neutral | Target price: Rs 3,300
Global brokerage firm Nomura has retained its ‘neutral’ rating on the stock with an unchanged target price of Rs 3,300.
Tata Consultancy Services (TCS) reported an adjusted EBIT margin of 25.2% for Q3, flat on a sequential basis. The margin was supported by 80 basis points (bps) of operational efficiencies and 20 bps from currency gains, offset by a 50 bps impact from salary hikes rolled out in September 2025 and another 50 bps from higher SG&A expenses.
The quarter included three notable one-offs: Rs 21.3 billion in provisions for gratuity and leave encashments under the new labour code, Rs 2.5 billion in restructuring costs, and Rs 10 billion in legal provisions. Management expects a recurring impact of 10–20 bps from the labour code in future quarters.
To reach its aspirational EBIT margin of 26–28%, TCS will require strong revenue growth. The company has guided for a 25% EBIT margin in FY26–27, implying up to a 20 bps improvement year-on-year.
Sensex, Nifty today: Catch all the LIVE stock market action here
Goldman Sachs | Target price: Rs 3,590
Goldman Sachs has raised its target price on TCS to Rs 3,590, up from Rs 3,510 earlier.
Goldman Sachs has released its outlook on the Indian IT sector following the Q3 results of TCS, stating that the demand environment appears stable to improving. However, companies continue to face limited visibility on the full extent of recovery in calendar year 2026 (CY26).
The banking, financial services, and insurance (BFSI) vertical has remained strong for a few quarters, and TCS highlighted early signs of recovery in some other verticals. Despite this, Goldman Sachs noted that overall growth is still not broad-based.
The firm has raised its EBIT estimates for TCS for FY26–FY28 by up to 3%.
Goldman Sachs concluded with a neutral-to-modestly-positive view across the Indian IT sector based on these earnings and forecasts.
Emkay Global: Add | Target price: Rs 3,500
Emkay Global has maintained an “Add” rating on Tata Consultancy Services (TCS) with a target price of Rs 3,500. The brokerage noted that TCS’s Q3FY26 operating performance was in line with expectations.
EBIT margin (EBITM) remained stable on a sequential basis at 25.2%, driven by productivity gains and operational efficiencies, even as the company absorbed wage hikes and increased investments.
The improving demand environment seen in Q2FY26 continued into Q3, supported by a steady rise in return-on-investment (RoI)-driven, short-cycle AI projects across various industries.
However, Emkay flagged that one-off items weighed on the company’s profit during the quarter. As a result, it cut TCS’s earnings estimates for FY26–FY28 by a range of 7.3% to 0.2%, factoring in the impact of the Q3 performance.
Also read: IT Q3 earnings season begins on a strong note as TCS, HCL Tech top estimates
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)