TCS' net profit slips 5% QoQ in Q2 FY26; declares dividend of Rs 11/sh

The IT major's consolidated net profit declined 5.37% to Rs 12,131 crore in Q2 FY26 as against Rs 12,819 crore reported in Q1 FY26.

The decline in profit came despite revenue growth, as the company invested heavily in strategic initiatives, AI infrastructure, talent, and partnerships to support long-term growth. However, revenue from operations grew by 3.72% quarter on quarter (QoQ) to Rs 65,799 crore, driven by broad-based growth across verticals and markets.

On a year-on-year (YoY) basis, the IT firm's net profit increased 1.47%, and net sales grew by 2.4% in the quarter ended 30 September 2025.

Sequential revenue in constant currency rose 0.8% quarter-on-quarter in Q2 September 2024, with international revenue up 0.6% QoQ in constant currency. North America remained TCS?s largest market, contributing 48.8% of total revenue, whereas India accounted for 5.8%.

The company reported a profit before exceptional items and tax of Rs 17,203 crore in Q2 FY26, registering a growth of 7.3%, compared to Rs 16,032 crore recorded in the same period a year ago. The exceptional items included restructuring expenses of Rs 1,135 crore during the quarter.

TCS reported an operating margin of 25.2%, reflecting a sequential expansion of 70 basis points, and a net margin of 19.6%.

The company's order book total contract value (TCV) stood at $10 billion as of 30 September 2025, higher than $9.4 billion in Q1 FY26.

The company saw continued strength in the BFSI segment, which grew by 1.1% QoQ in CC terms, while the Technology & Services Sector (TSS) rose by 1.8% QoQ. Life Sciences and Healthcare led vertical performance with a robust 3.4% QoQ growth, followed by Manufacturing (1.6%) and Communications, Media & Information Services (CMI) at 0.8%, despite sector-specific headwinds.

The board has declared a second interim dividend of Rs 11 per equity share. The record date for the same is 15 October 2025, and the payment date is 4 November 2025.

As of 30 September 2025, TCS had applied for a total of 9,226 patents, including 239 filed in Q2 FY26. During the same period, the company was granted 5,086 patents, with 147 approvals coming in the quarter, highlighting its continued focus on innovation and technology development.

TCS has announced a major strategic move to bolster its artificial intelligence (AI) capabilities by setting up a new business entity focused on building world-class AI infrastructure. The company plans to establish a 1 gigawatt (GW) capacity AI datacenter in India, marking a significant step towards scaling AI adoption across industries.

In a parallel development, the board has approved the acquisition of List Engage, a US-based digital marketing firm with deep expertise in Salesforce Marketing Cloud. The acquisition is expected to strengthen TCS? Salesforce services and customer engagement offerings in global markets.

TCS is also deepening its AI-first culture through continued investment in talent and innovation. The company recently hosted the world?s largest ?Ideate and Build with AI? hackathon, with participation from 275,000 TCS employees, underscoring its commitment to nurturing next-generation AI talent and solutions.

K. Krithivasan, chief executive officer & MD, said, ?I am pleased with our strong Q2 performance. I would like to thank all our employees for their dedication and excellence. We are on a journey to become the world?s largest AI-led technology services company. Our journey is anchored in bold transformation across talent, infrastructure, ecosystem partnerships, and customer value. The investments, including the building of a world-class AI infrastructure business, demonstrate our commitment to this transformation.?

Aarthi Subramanian, executive director, president, and chief operating officer, said, ?We delivered strong growth momentum led by data, cloud, and AI-powered enterprise transformation. Our customer engagements are focused on rapid value realization to deliver speed, efficiency, and growth. TCS' AI Hackathon set a new benchmark?it is the largest, most diverse, and most innovative AI-first culture-building initiative. Our new AI and Services Transformation unit will further scale and integrate our efforts.?

Samir Seksaria, chief financial officer, said, ?We achieved good growth momentum across all verticals this quarter. Our disciplined execution helped us expand our margins while making strategic investments. We have prioritized wage hikes, building future-ready capabilities, and establishing new ecosystem partnerships. Looking ahead, our financial resilience and robust balance sheet will support both internal transformation initiatives and external investments aligned with our aspiration.?

TCS is a digital transformation and technology partner of choice for industry-leading organizations worldwide.

Shares of TCS shed 0.71% to Rs 3,040.30 on the BSE.

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