TCS Q3FY26 Results: Net Profit down 13.85%, revenue up 4.5%; Rs 57 dividend announced

TCS Q3FY26 Results: Tata Consultancy Services (TCS) on Monday reported a weaker-than-expected profit performance for the December quarter, consolidated net profit for Q3FY26 fell 14 per cent year-on-year to Rs 10,657 crore, below the Zee Business estimate of Rs 13,078 crore. On a sequential basis, profit declined from Rs 12,075 crore in the September quarter, reflecting the impact of exceptional items booked during the period.

The decline in profit is attributed to large one-off charges linked to restructuring, labour law changes and a long-running US legal dispute weighed on the bottom line. Revenue, however, came in slightly ahead of expectations, while operating metrics remained largely steady.

Revenue rises, profit declines

Revenue from operations rose 5 per cent year-on-year to Rs 67,087 crore, marginally higher than the Zee Business estimate of Rs 66,706 crore. Sequentially, revenue increased from Rs 65,799 crore in Q2FY26, indicating steady execution despite a cautious global technology spending environment.

The decline in reported profit was largely driven by one-time charges. Adjusting for these exceptional items, TCS reported net profit of Rs 13,438 crore, up 8.5 per cent year-on-year, suggesting that the underlying business performance remained intact.

During the quarter, the company incurred restructuring expenses related to workforce rationalisation initiatives announced in July 2025. These included termination benefits paid to employees whose roles could not be redeployed, and were classified as exceptional due to their non-recurring nature and material impact.

TCS also booked an incremental charge of Rs 2,128 crore following the implementation of India’s new Labour Codes. This comprised Rs 1,816 crore towards gratuity liabilities and Rs 312 crore towards long-term compensated absences. In addition, the company made provisions linked to a long-standing legal dispute with Computer Sciences Corporation in the US, providing Rs 1,010 crore towards damages and Rs 342 crore towards pre- and post-judgment interest. TCS said it continues to pursue legal remedies and maintains that it has a strong case.

Operationally, performance remained steady. Earnings before interest and tax (EBIT) increased year-on-year to Rs 16,889 crore from Rs 16,565 crore, while operating margin stood at 25.2 per cent, unchanged from the year-ago period. In constant currency terms, revenue grew 0.8 per cent sequentially, and cash flow from operations exceeded net income, reflecting healthy cash conversion.

Deal activity held up during the quarter, with total contract value reported at USD 9.3 billion. The company also said its annualised AI services revenue stood at USD 1.8 billion, supported by continued traction across cloud, data, cybersecurity and enterprise transformation engagements.

Alongside the results, TCS announced a total dividend of Rs 57 per equity share, comprising an interim dividend of Rs 11 per share and a special dividend of Rs 46 per share, underlining confidence in its balance sheet and cash generation.

Commenting on the performance, K Krithivasan, CEO and Managing Director, said, “The growth momentum we witnessed in Q2FY26 continued in Q3FY26. We remain steadfast in our ambition to become the world’s largest AI-led technology services company, guided by a comprehensive five-pillar strategy. Our AI services now generate USD 1.8 billion in annualised revenue, reflecting the significant value we provide to clients through targeted investments across the entire AI stack, from infrastructure to intelligence.”