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Tata Consultancy Services (TCS) reported a sharp decline in profit for the December quarter, weighed down by one-time provisions, even as revenue posted modest growth.
TCS’s consolidated profit after tax (PAT) fell 13.9% year-on-year (YoY) to Rs. 10,657 crore in Q3FY26, compared with Rs. 12,380 crore in the year-ago period. Sequentially, profit dropped 11.7% from Rs 12,075 crore in the September quarter.
Revenue, however, grew nearly 5% YoY to Rs. 67,087 crore from Rs. 63,973 crore in Q3FY25. On a quarter-on-quarter basis, revenue rose 2%. In constant currency terms, revenue growth stood at 0.8%, reflecting continued demand softness in key markets.
The company said the earnings were impacted by exceptional items booked during the quarter. Among such provisions, those concerning new labour codes implementation, legal issues, and restructuring expenses were included.
TCS took care of the statutory effect of labour codes, which amounted to Rs. 2,128 crore. The breakdown of the amount is Rs. 1,816 crore for gratuity and Rs. 312 crore for long-term compensated absences. The charges stem from changes in wage definitions under the new labour framework.
In addition, the organization made a Rs. 1,010 crore provision for a legal claim filed in 2019 by Computer Sciences Corporation (CSC) in a US court, alleging misappropriation of trade secrets.
Nevertheless, the net income was still influenced by the profit, but it increased by 8.5% YoY to Rs. 13,438 crore, with the net margins getting better at 20%, which is an increase of 60 basis points over the last year and 40 basis points over the previous quarter.
Also Read: TCS Q3 Results on Jan 12: Interim Dividend Decision in Focus
TCS’s quarterly total contract value (TCV) came out to be $9.3 billion, which was lower than the analysts’ expectations of $10-11 billion.
The company also announced a bumper dividend of Rs. 57 per share, comprising a third interim dividend of Rs. 11 and a special dividend of Rs. 46. The payout will be made on February 3, 2026, with January 17, 2026, fixed as the record date.
