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Informist, Monday, Jul. 6, 2026

 

By Shakshi Jain

 

NEW DELHI – Information technology services major Tata Consultancy Services Ltd. is likely to report a marginal sequential decline in consolidated net profit for the June quarter owing to annual salary hikes rolled out across the organisation from Apr. 1. Its revenue is expected to rise slightly, primarily because of depreciation of the rupee against the dollar. In constant currency terms, brokerages expect the IT sector bellwether's revenues to stay flat for the quarter on account of slow ramping up of deals in the backdrop of the war in West Asia. 

 

If analysts' consensus estimates hold, the net profit of TCS will fall sequentially after the sharp rise recorded in the March quarter. Its revenue, on the other hand, will increase for the fourth consecutive quarter, although at a slower sequential pace than in the trailing quarter.

 

The Tata Group company's consolidated net profit for the June quarter is expected to decline 1.4% sequentially to INR 135.23 billion, according to an average of the estimates from eight brokerages. However, this would mean growth of almost 6% on year. The highest estimate for net profit is INR 141.9 billion from Prabhudas Lilladher Pvt. Ltd., and the lowest is INR 131.73 billion from ICICI Securities Ltd.

 

Brokerages estimate a sequential impact of 90-160 basis points on the company's earnings before interest and tax margin for the June quarter on account of the salary increments effective April, with double-digit raises for top performers. This, however, is expected to be partially offset by the benefit from a weaker rupee in the quarter. Although the home currency appreciated 0.2% against the dollar by the end of the reporting quarter, it traded at weak levels for a majority of the three months, touching an intraday low of INR 96.96 on May 20.

 

It was possibly a quarter that delivered a double whammy to TCS –- besides the salary hikes causing a dent on the bottom line, growth in the top line was likely to have been stunted by slow conversion of deals to revenue amid macroeconomic uncertainties triggered by the West Asia war, brokerages said. The war also led to severe supply chain disruptions for clients, besides escalating freight costs and fuel prices.

 

The company's consolidated revenue for the reporting quarter is expected to grow about 2% sequentially and 14% on year to INR 720.3 billion, as per an average of estimates. This is primarily due to depreciation of the rupee against the dollar. The needle on the company's constant currency revenue did not shift materially in the June quarter, according to analysts, who estimate flat to 0.3% growth in the metric. 

 

"We expect TCS to report flat QoQ CC revenue growth, as steady execution in BFSI (banking, financial services, and insurance) and consumer is likely to be offset by continued softness in communications and cautious discretionary spending across manufacturing and North America," brokerage Motilal Oswal Financial Services said in an earnings-preview report.

 

The top-line estimates for the reporting quarter are in a narrow range--from INR 715.66 billion by Nomura Financial Advisory and Securities (India) Pvt. Ltd. to INR 723.92 billion by Emkay Global Financial Services Ltd.

 

For the March quarter, TCS had reported a consolidated net profit of INR 137.18 billion on revenue of INR 706.98 billion. In a conference call with analysts following the earnings announcement, Chief Executive Officer and Managing Director K. Krithivasan had said the impact of the West Asia war was then limited to the company's work in the region and, to some extent, the travel and transportation industry. However, he had warned that if the crisis continuede, the impact could be seen in other areas as well.

 

In dollar terms, the revenue of TCS is expected to remain largely unchanged on a sequential basis at $7.61 billion, as per an average of estimates from seven brokerages. Most analysts estimate a cross-currency impact of 30 bps for the June quarter. TCS derives roughly 49% of its revenue from North America,  about 17% from the UK, around 15% from continental Europe, and a little over 8% from the Asia-Pacific.

 

Brokerages expect the company to report deal wins worth $7 billion to $11 billion for the June quarter. This is markedly lower than the total contract value of $12 billion reported for the March quarter, when the company had signed three mega deals. "We expect the BFSI vertical to lead revenue growth, led by ramp up of two mega deal wins in FY27. TCS has announced 9 large deals in Q1 FY27 so far, and this also includes a mega deal win with SKF for global AI-led business transformation," ICICI Securities said in a report released earlier this month.

 

OPERATIONS, COMMENTARY

The earnings before interest and tax margin of TCS for the June quarter is expected to contract by 130 bps sequentially to 24%, according to the average of estimates from seven brokerages. On an annual basis, this would mean a decline of 50 bps.

 

Benefits from operational efficiencies and depreciation of the rupee are expected to partially offset the full-quarter impact of higher salaries, brokerages said. It must also be noted that in June, TCS had said it would make an incremental provision of $70 million as a one-time charge in the June quarter towards damages, interest, and legal costs tied to the lawsuit by DXC Technology predecessor Computer Sciences Corp., for which the company had already set aside $150 million earlier.

 

TCS will announce its June quarter earnings on Thursday. Investors await the management's commentary on demand and deal pipeline, progress on planned data centre investments, timeline for convergence of growth with peers and key drivers, strategic priorities for inorganic investments, and synergy benefits from the integration of acquired firms Coastal Cloud Holdings, LLC. and ListEngage, LLC.

 

Investors are also curious to hear from the company on the shift in assumptions tied to AI deflation after the release of new models by frontier labs. While cost per token has plummeted over time, recent frontier model releases have altered the discussion on AI projects and pricing from a broad disinflationary narrative to one of cost-management strain. Other areas include the impact of the rapid scaling up of global capability centres in India, both in terms of competitive intensity and as a growth lever.

 

Monday, shares of TCS ended at INR 2,057.60 on the National Stock Exchange, down 1.7% from Friday's close . The stock is down almost 21% since the company reported its March quarter earnings. It is also down 40% from its 52-week high of INR 3,426.1, recorded on Jul. 7, 2025.

 

Of the 20 research reports on TCS available with Informist, 19 have a 'buy' recommendation and one has a 'hold' call. The average target price of the 'buy' recommendations is INR 3,238, up over 57% from Monday's closing price.

 

Following are the Apr-Jun earnings estimates, in INR billion, for TCS from eight brokerages, in descending order of the net profit estimate:

 

Broking firm	Net sales	Net profit	Revenue ($)	EBIT margin (%)
Prabhudas Lilladher Pvt. Ltd.	722.20	141.90	7.63	25.00
Emkay Global Financial Services Ltd.	723.92	138.45
Motilal Oswal Financial Services Ltd.	718.00	136.00	7.58	23.90
Nomura Equity Research	715.66	135.18	7.61	24.30
JM Financial Institutional Securities Pvt. Ltd.	720.49	133.05	7.62	23.80
Nuvama Wealth Management Ltd.	720.33	132.87	7.61	23.70
Kotak Securities Ltd.	719.17	132.67	7.58	23.70
ICICI Securities Ltd.	722.67	131.73	7.62	23.80
Average	720.30	135.23	7.61	24.03

 

End

 

US$1 = INR 95.40

 

Edited by Avishek Dutta

 

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