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Informist, Saturday, Jan. 10, 2026

 

NEW DELHI – Information technology services bellwether Tata Consultancy Services Ltd. is likely to post subdued earnings for the December quarter which is traditionally a weak quarter for the industry due to fewer working days and furloughs. The Tata-group company is expected to post a low single-digit sequential increase in its consolidated top line for the reporting quarter on the back of growth in overseas markets and the depreciation of the rupee against the dollar. However, its bottom line is expected to fall marginally when compared with the net profit for the September quarter exclusive of exceptional items. The bottom line for the December quarter was likely dragged down by annual wage hikes, seasonal furloughs, and planned investments, according to analysts.  

 

"Growth is anticipated to be led by BFSI (banking, financial services, and insurance) and life sciences verticals, with North America and Continental Europe showing positive trends," DRChoksey FinServ Pvt. Ltd. said in its earnings preview report.

 

TCS' consolidated revenue for the December quarter is expected to rise 1.5% sequentially and 4.4% on year to INR 668.01 billion, according to the average of estimates by 17 brokerages. The highest estimate for revenue is INR 676.48 billion by Nirmal Bang Equities Pvt. Ltd. and the lowest is INR 663.26 billion by Nomura Financial Advisory and Securities (India) Pvt. Ltd.

 

The company's consolidated net profit for the reporting quarter is likely to fall 1.8% sequentially to INR 129.79 billion, as per the average of estimates. Ajusted for the one-time cost of INR 11 billion that TCS had reported for the September quarter, the company's net profit for the quarter was INR 132.10 billion. On a year-on-year basis, TCS' net profit for the December quarter is expected to rise 4.8%. The highest estimate for bottom line is INR 135.11 billion by DRChoksey FinServ and the lowest is INR 118.63 billion by HSBC Securities and Capital Markets (India) Pvt. Ltd.

 

"Growth to be driven by developed markets, as execution on the BSNL extension deal has not yet started," Nuvama Wealth Management Ltd. said.

 

In dollar terms, the company's revenue for the December quarter is expected to total around $7.48 billion, as per the average of estimates from 13 brokerages. The estimates are in a tight range--the lowest is $7.4 billion from Indsec Securities and Finance Ltd. and the highest is $7.6 billion from Nirmal Bang Equities Pvt. Ltd. Analysts expect a 30-basis-point to 50-bps hit on revenue for the reporting quarter due to currency fluctuations. 

 

In constant currency terms, brokerages estimate TCS' revenue for the quarter under review to be flat or grow only marginally. Most analysts expect the IT major to report aggregate deal wins in the $8 billion–$10 billion range for the December quarter. TCS had bagged new deals worth $10 billion in the September quarter.

 

OPERATIONS, INVESTOR FOCUS

The IT major's earnings before interest and tax margin for the December quarter is expected to contract by 30 basis points to 24.9%, according to the average of estimates from 12 brokerages. This is likely due to the annual salary increments which came into effect Sept. 1 and furloughs which lead to lower utilisation, analysts said. However, it must be noted that five brokerages expect the company's EBIT margin to remain stable or to expand sequentially for the reporting quarter due to the depreciation of the rupee.

 

In the September quarter, the company's EBIT margin had expanded sequentially by 70 basis points to 25.2%. The company has maintained its long-term margin aspiration at 26-28% for several quarters now.

 

For the September quarter, TCS had reported a consolidated net profit of INR 120.75 billion on revenue of INR 657.99 billion. In the year-ago December quarter, the company had recorded a consolidated net profit of INR 123.80 billion on revenues of INR 639.73 billion.

 

TCS and HCL Technologies Ltd. will kick off the earnings season for the IT industry Monday. Investors will keenly await management commentary on client budgets for 2026, progress on the planned data centre investment, demand in the key banking and financial services vertical, prevailing pricing scenario, and revenue flow from the second phase of the BSNL deal. Other areas of focus include deal pipeline and conversion, hiring plans, and areas of strategic importance for inorganic investments.

 

In 2023, TCS had won a INR-150-billion fourth-generation rollout project from Bharat Sanchar Nigam Ltd. Last year, the IT major got a INR-29.03-billion add-on advance purchase order from BSNL for planning, engineering, supply, installation, testing, commissioning, and annual maintenance of the fourth-generation mobile network at 18,685 sites, it had said. 

 

"The recent acquisition of ListEnagge and Coastal cloud provides growth support for near term. Commentaries around realising synergy from acquisitions shall be monitored," Motilal Oswal Financial Services Ltd. said.

 

On Friday, shares of TCS ended flat at INR 3,207.80 on the National Stock Exchange. The stock has risen 4.8% since the company reported its results for the September quarter. The stock is down 25.8% from its 52-week high of INR 4,322.95, it touched on Jan. 13 last year.

 

Among the 20 research recommendations on TCS available with Informist, 18 have a "buy" recommendation on the stock and two have a "hold" call. The average target price of the "buy" recommendations is INR 3,739 and that of the "hold" calls is INR 3,420. This is almost 17% and 7% higher than the current market price, respectively.

 

Following are the Oct-Dec earnings estimates for TCS from 17 brokerages in descending order of the estimate of net profit in INR million:

 

Broking Firm	Net Sales (in INR million)	Net Profit (in INR million)	Revenue ($ million)	?IT margin
DRChoksey FinServ Pvt Ltd	671,334	135,110
Prabhudas Lilladher Pvt Ltd	665,900	132,900	7,474	25.1
Emkay Global Financial Services Ltd	667,881	132,744
Kotak Securities Ltd	665,128	132,261	7,457	25.2
JM Financial Institutional Securities Pvt Ltd	668,689	131,918
HDFC Securities Ltd	666,420	131,330	7,479	25.2
IDBI Capital Market Services Ltd	665,809	131,164	7,481	25.1
Sharekhan Ltd	666,012	130,960	7,483	25
YES Securities (India) Ltd	673,916	130,921
Motilal Oswal Financial Services Ltd	666,000	130,800	7,477	24.9
Nirmal Bang Equities Pvt Ltd	676,481	130,166	7,601	24.8
Dolat Capital Market Pvt Ltd	673,048	129,807	7,537	24.7
Nuvama Wealth Management Ltd	665,842	128,929	7,481	24.6
Elara Securities (India) Pvt Ltd	664,516	128,471	7,466
Indsec Securities and Finance Ltd	667,500	127,400	7,400	24.8
Nomura Equity Research	663,264	122,986	7,452	24.5
HSBC Global Research	668,396	118,625	7,503	25.1
Average	668,008	129,793.65	7,483.92	24.92

 

End

 

US$1 = INR 90.16

 

Edited by Akul Nishant Akhoury

 

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