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Earnings expectations as per CNBC-TV18 poll
For Q3 of FY26, TCS is expected to post flattish sequential revenue growth, reflecting a still-cautious global tech spending environment.
- 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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Revenue growth: AI optimism vs near-term softness
Constant currency (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.
| 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% |
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.
AI narrative takes centre stage
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.
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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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.
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.
Investments, acquisitions and balance sheet strength
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.
With an investible surplus of over $6.3 billion, capital allocation, inorganic growth and returns to shareholders will remain in focus.
Margins and exceptional items
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.
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.
Deal momentum watch
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.
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.
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.
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