admin
Tata Consultancy Services (TCS) recently unveiled its financial results for the third quarter of FY26, showing an unexpected decrease in profit due to one-time costs but sustained revenue growth. TCS also declared an aggregate dividend payout of Rs57 per share.
Profit can be negatively affected by one-time charges.
TCS reported a consolidated net profit for Q3FY26 of Rs10,657 crore, representing a 13.85% decline year-on-year and sequentially from Rs12,075 crore reported for Q2FY26. Profit was lower than market expectations mainly due to exceptional expenses booked during the quarter.
Adjusted for these one-off items, net profit was at Rs13,438 crore – representing 8.5% annual growth and indicative of stable underlying business performance.
Revenue shows steady increases.
Revenue from operations increased 5% year-on-year to Rs67,087 crore compared to Rs63,992 crore last quarter, reflecting consistent execution despite cautious global IT spending.
Revenue in constant currency terms experienced a sequential increase of 0.8%.
Details of any exceptional expenses
The decline in profit was due primarily to non-recurring costs, including:
Reducing costs associated with workforce realignment.
Charges due to India’s new labour codes is Rs2,128 crore.
Gratuity payments amount to Rs1,816 crore in 2017.
Long-term leave liabilities amount to Rs312.2 crore.
Computer Sciences Corporation and United States Legal Dispute Provision are in dispute, which must be addressed.
At present, Rs1,010 crore have been set aside as damages liabilities.
Interest of Rs342 crore was accrued.
TCS stated it plans to continue legal proceedings and remain confident of its position.
Margin and operations remain strong.
Last year’s EBIT stood at Rs16,565 crore but has increased significantly this year to Rs16,8889 crore.
Operating margin remained steady at 25% for Q3.
Operating cash flow exceeded net profit, showing strong cash generation capabilities.
During the quarter, the company reported a total contract value (TCV) of USD 9.3 billion and annualised AI services revenue reaching USD 1.8 billion, driven by increased demand for cloud, data, cybersecurity and enterprise transformation services.
Rs57 dividend announced for shares
These dividends serve to demonstrate the company’s robust balance sheet and confidence in future cash flows.
K Krithivasan, CEO and MD of TCS, reported that growth momentum continued from the previous quarter and reiterated TCS’s goal of becoming a world leader in AI-led technology services. Additionally, TCS investments across its AI ecosystem are creating value for clients.
