{"id":"f-e550251d2f-29e7d138-5e82-5417-be64-95cce16fde1e","title":"TCS Q3 preview: Flattish revenue, steady margins expected as AI monetisation takes spotlight","description":"Tata Consultancy Services Q3FY26 results announcement on January 12 is expected to show stable growth, AI-led revenue at 5%, $6.5 billion India AI investment, and focus on margins, deal wins, and capital allocation.","timestamp":1767969780,"category":"business","headline":"TCS Q3 preview: Flattish revenue, steady margins expected as AI monetisation takes spotlight","modifiedHeadline":"TCS Q3: Flat Revenue, AI Focus Expected","subCategories":["scid_4d81caea"],"region":"IN","bundleMetaData":{"bundleId":"f0174910-1006-4696-b0a0-c46669d6afc7","bundleTitle":"Boost your career","cardData":null},"iabCategoryId":"53","fcSummary":"TCS is expected to report stable Q3 FY26 results, with focus on AI-led growth, capital allocation, and margin resilience. Revenue growth is seen as muted, but AI revenue is rising. Investors will watch for updates on deals, margin sustainability, and potential one-time charges.","summary":"TCS Q3 preview: Expect steady margins, flattish revenue. AI revenue at 5%, $6.5B India AI investment eyed amid focus on deal wins.","ctaUrl":"https://trends.glance.com/newz/Economy/IN/en/cnbc-tv18/f-e550251d2f-29e7d138-5e82-5417-be64-95cce16fde1e","sourceUrl":"https://www.cnbctv18.com/access/tcs-q3-preview-flattish-revenue-steady-margins-expected-ai-monetisation-tcs-shares-ws-l-19817735.htm","bannerImage":"https://g-mob.glance-cdn.com/public/fc/image/Av3Z6oSRbZM0.webp","content":"Tata Consultancy Services is expected to report a muted but stable December-quarter performance, with the spotlight firmly on its AI-led growth push, capital allocation plans and margin resilience, when it announces FY26's third quarter results on Monday, January 12.\n
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Earnings expectations as per CNBC-TV18 poll\n
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For Q3 of FY26, TCS is expected to post flattish sequential revenue growth, reflecting a still-cautious global tech spending environment.

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Dollar revenue is expected to increase 0.3% QoQ at $7,482 million, compared with $7,466 million in Q2

Rupee revenue is estimated to rise 1.4% QoQ to ₹66,728 crore

EBIT is likely to come in at ₹16,800 crore, versus ₹16,565 crore in Q2

EBIT margin is expected to remain unchanged at 25.2%

Net profit (PAT) is seen up 5.8% QoQ at ₹12,771 crore

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Also read: HDFC Bank shares set for worst week since January 2024, shed ₹1 lakh crore in market cap\n
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Revenue growth: AI optimism vs near-term softness\n
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Constant currency

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(CC) revenue growth for the quarter is expected at around 0.5% QoQ. Brokerage views, however, remain divided. Kotak Institutional Equities expects flat CC growth, driven by 0.7% QoQ growth in the international business, partly offset by a 4.5% QoQ decline in the India business.

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CC	Q3FY24	Q4FY24	Q1FY25	Q2FY25	Q3FY25	Q4FY25	Q1FY26	Q2FY26
QoQ	1%	1.10%	2.20%	1.10%	0	-0.80%	-3.30%	0.80%
YOY	1.7%	2.2%	4.40%	5.50%	4.50%	2.50%	-3.10%	-3.10%

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Meanwhile, Ambit Capital cautions that TCS may revisit its earlier optimism on international revenue growth improving sharply in FY26, citing the steep ask rate of 1.5% CC compound growth in the second half of FY26. The company had earlier guided that FY26 international revenue growth would exceed FY25 levels.

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AI narrative takes centre stage\n
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Management commentary around AI monetisation is expected to be a key focus. At its December analyst meet, TCS, for the first time, disclosed quantifiable AI metrics, underlining renewed aggression in the space.

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The company has executed over 5,000 AI engagements, with AI-related services now generating about $1.5 billion in annualised revenue, accounting for roughly 5% of total revenues. AI revenues are also growing faster than the core business, rising 16.3% quarter-on-quarter and 38.2% year-on-year in constant currency terms.

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Also read: India’s 2026 market returns may stay muted, CLSA backs consumption and real estate\n
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Beyond AI, new-age services such as cybersecurity and allied digital offerings together contribute around $11 billion in annualised revenue, underscoring TCS’s push into higher-growth technology segments.

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During the second quarter, TCS had stated its ambition to become the “world’s largest AI-led technology services company”, a narrative investors will closely track amid intensifying competition.

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Investments, acquisitions and balance sheet strength\n
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\n The company has highlighted its readiness to build and acquire at scale. In Q2, TCS announced a phased $6.5 billion investment over 5–7 years in sovereign AI data centres in India, with capacity of up to 1 GW. In November 2025, it also partnered with TPG to raise additional funding of about $1 billion for HyperVault.\n
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\n With an investible surplus of over $6.3 billion, capital allocation, inorganic growth and returns to shareholders will remain in focus.\n
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Margins and exceptional items\n
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\n While margins are expected to remain broadly flat, several analysts flag downside risks. The two-month impact of wage hikes, effective September 1, could pressure profitability. Additionally, ongoing redundancy and restructuring costs may continue into Q3.\n
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\n Investors will also watch for clarity on a potential one-time hit from a $194 million penalty in the CSC IP infringement case. In Q2FY26, TCS had already taken a ₹1,135 crore one-time severance and restructuring charge.\n
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Deal momentum watch\n
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\n According to unconfirmed media reports, TCS may have secured a $1 billion, 10-year engagement with Telefonica UK. Any confirmation or colour on large deal wins could materially influence sentiment.\n
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\n Overall, while near-term growth is expected to remain modest, management commentary on AI monetisation, deal pipeline and margin sustainability will be critical for the stock’s direction post results.\n
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\n Shares of Tata Consultancy Services were trading marginally up (0.07%) at ₹3,206 as of 2.18 pm on Friday, January 9. The stock has dropped 5.25% in the past six months.","readDurationInMinutes":"8","author":{"name":"CNBC TV18","logo":"https://glance-mob.glance-cdn.com/public/bubble/jpeg/ecc3d19b-fc52-4a39-881c-5b0936ae723b.jpeg"},"ism":false,"analyticsResponses":[{"measurementId":"383191425","type":"COMSCORE"}],"pointerSummary":["TCS Q3 FY26: Flat revenue expected, focus on AI growth & margin resilience. $7,482M rev.","AI focus: $1.5B annual revenue, 16.3% QoQ growth. Eyes becoming AI leader.","Investments: $6.5B in AI data centers. $6.3B surplus may drive inorganic growth."],"tags":["TCS","TataConsultancyServices","Q3FY26","QuarterlyResults","AI","ArtificialIntelligence","AIRevenue","TechSpending","RevenueGrowth","MarginResilience","CapitalAllocation","DealWins","DollarRevenue","RupeeRevenue","EBIT","NetProfit","ConstantCurrency","KotakInstitutionalEquities","AmbitCapital","Cybersecurity","DigitalOfferings","HyperVault","TPG","TelefonicaUK","WageHikes","RestructuringCosts","CSC","IPInfringement","Investment","Acquisition"],"consent":true,"redirectionEnabled":false}

TCS Q3 preview: Flattish revenue, steady margins expected as AI monetisation takes spotlight

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