Tata Consultancy Services Q3 Results: TCS Logs 14% YoY Drop In PAT To Rs 10,657 Crore; New Labour Codes Impact

Tata Consultancy Services (TCS) reported a disappointing third quarter for FY26. In Q3, the largest Indian tech player's consolidated net profit nosedived by 11.74% QoQ and 13.91% YoY basis. In the bottom-line front, TCS missed market estimates. The profitability took a major hit due to the statutory impact of new labor codes to the tune of Rs 2,128 crore in the quarter. Unlike PAT, TCS posted single-digit growth in revenue, which is in line with estimates.

TCS Net Profit:

In Q3FY26, TCS reported consolidated net profit of Rs 10,657 crore which is attributable to the owners of the company. This is down by 11.74% from net profit of Rs 12,075 crore reported in Q2FY26. While PAT plunged by 13.92% from net profit of Rs 12,380 crore reported in Q3FY25.

Additionally, net margins stood at 20% in Q3FY26, which has expanded by 40 basis points on QoQ. While operating margins is at 25.2%, steady from the preceding quarter.

The cash flow from operations stood at 130.4% of the net income.

TCS Revenue:

In terms of top-line front, TCS garnered Rs 67,087 crore as revenue from operations in Q3FY26, registering a growth of 1.97% QoQ and 4.87% YoY.

TCS reported revenue of Rs 65,799 crore and Rs 63,973 crore in Q2FY26 and Q3FY25 respectively.

On constant currency basis, the revenue growth stood at 0.8% sequentially. Meanwhile, annualized AI services revenue came in at $1.8 billion, registering an upside of 17.3% QoQ in constant currency.

"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," said K Krithivasan, Chief Executive Officer and Managing Director.

He added, "Our AI services now generate $1.8 billion in annualized revenue, reflecting the significant value we provide to clients through targeted investments across the entire AI stack, from Infrastructure to Intelligence."

TCS Expenses:

In the quarter under review, TCS posted total expenses of Rs 50,736 crore in Q3FY26, higher from Rs 49,463 crore in Q2FY26 and Rs 48,550 crore in Q3FY25.

Notably, TCS faced statutory impact of Rs 2,128 crore in Q3FY26 due to new labor codes.

TCS Segment-Wise Growth:

TCS revenue was driven by constant currency growth of 2.2% each in life sciences & healthcare and energy, resources and utilities segment on year-on-year basis. While CC growth of 1.7% each was recorded in manufacturing and technology & services.

Also, BFSI posted CC revenue growth of 1.6% YoY for TCS. On the other hand, CC revenue declined by 2.7% YoY in consumer business, dropped by 1.6% Communication & Media business, and a sharp 19.4% decline in regional markets & others segment.

In geographical terms, India business revenue growth nosedived by 34.3% YoY in constant currency, while business declined by 3.2% CC in the UK market. Surprisingly, North and Latin American market posted 1.3% and 1.4% revenue growth in CC despite new H1-B visa rules and fees coupled with geopolitical tensions.

Overall, Aarthi Subramanian, Executive Director - President and Chief Operating Officer, said "We continued to see AI acceleration this quarter. We helped customers identify valuable AI opportunities through Innovation Days and deployed solutions faster with Rapid Builds. Our customers continue to invest in Cloud, Data, Cyber and Enterprise Transformations to build readiness for AI. We further strengthened our Salesforce capabilities with Coastal Cloud acquisition, building on our investment in ListEngage."

Also, Samir Seksaria, Chief Financial Officer, said, "Our sustained margin performance and strong cash conversion this quarter, reflects our disciplined execution and financial resilience. Backed by a robust balance sheet, we continue to invest confidently in strategic growth areas. Executing our five-pillar AI strategy at speed and scale is central to our transformation into an AI-first enterprise, and delivering long-term value for our stakeholders."

TCS Share Price:

TCS stock rebounded from early losses and ended at Rs 3235.70 apiece on BSE, up by 0.9% with market cap of Rs 11,70,704.58 crore. TCS stock price will react to Q3 results on January 13.