TCS Q1 Results Preview: Expecting a Decline Due to BSNL Deal Impact

Tata Consultancy Services (TCS) Ltd., the Tata Group IT giant, will kick off the Nifty 50 earnings season for the June quarter on Thursday, July 10. The company is expected to report a 1.4% sequential decline in constant currency (CC) revenue growth for the first quarter of financial year 2026. In US dollar terms, revenue is likely to rise 0.6% quarter-on-quarter to $7,513 million, up from $7,465 million in the previous quarter. This uptick is largely due to a currency tailwind of around 200 basis points, resulting from the sharp depreciation of the US dollar against major global currencies like the British Pound, Euro, and Japanese Yen. In rupee terms, revenue may decline 0.4% to ₹64,206 crore, compared to ₹64,479 crore in the March quarter. The revenue drag is attributed to the ramp-down of the BSNL deal.

TCS is expected to report earnings before interest and tax (EBIT) of ₹15,623 crore, marginally higher than ₹15,601 crore in the previous quarter. EBIT margin is estimated at 24.3%, compared to 24.2% in Q4FY25. Net profit for the quarter may dip 0.8% sequentially to ₹12,127 crore, from ₹12,224 crore in the previous quarter.

Key Points to Watch:

• International business growth: Q4 CC growth was 0.6% QoQ. Can the trend improve?
• FY26 outlook: The company previously told CNBC-TV18 that international markets would outperform FY25, supported by two consecutive quarters of strong deal TCV. Will this optimism hold?
• BSNL deal ramp-up: The company recently signed a major deal with BSNL. When will it start contributing meaningfully to revenue, and could it pressure margins?
• Wage hikes: With hikes deferred from Q1, clarity on timing and impact on margins will be key. How soon can TCS move toward its aspirational EBIT margin band of 26-28%?
• Fresher hiring plans: TCS said in Q4 that FY26 hiring could be equal to or higher than FY25's 42,000 freshers. Will that be reiterated?
• Tariff uncertainty: Its impact on demand across verticals, especially manufacturing and retail, will be monitored closely.
• Enterprise GenAI adoption: Progress and the deflationary impact of GenAI adoption across clients remain a key area of interest.

Shares of Tata Consultancy Services Ltd. are trading 0.84% lower on Wednesday at ₹3,377.50. The stock has declined nearly 18% so far this year.

According to the source: CNBC TV18.