Tata Consultancy Services (TCS), the country's largest IT company, is set to announce its first-quarter (Q1) results for the fiscal year 2025-26 on July 10, 2025. The market is closely watching the company's performance report for this quarter, which covers the period from April to June. The share experienced a slight decline the day before, and investors are now focused on the company's performance across various fronts.
Focus on Revenue Growth
TCS's revenue saw a significant boost in the previous quarter due to the BSNL project, but that deal has now concluded. According to experts, this could lead to a quarter-on-quarter decline in the company's revenue. Kotak Institutional Equities estimates a 0.4% decline in the company's constant currency (CC) revenue. BNP Paribas, on the other hand, anticipates a decline of approximately 1.3%.
ICICI Securities suggests that the end of the BSNL deal could result in a revenue reduction of up to $300 million. However, there's a possibility of some recovery due to the company's b performance in the BFSI (Banking, Financial Services, and Insurance) segment. TCS launched projects related to cloud, cybersecurity, and AI in several countries during this quarter.
Pressure on Margins Likely to Persist
Despite the weakness of the rupee and the benefit against the dollar, pressure on the company's operating margins is likely to persist. According to Kotak analysts, a slight year-on-year decline in EBIT margin is possible.
BNP Paribas expects the company's margin to decrease from 24.2% to 23.9%. A slowdown in growth, reduced leverage, and stable operating expenses could also impact margins. However, currency benefits could provide partial relief.
Focus on New Deals and Client Activity
The company has secured deals this quarter with companies such as Schneider Electric, Marathon de Paris, ICICI Securities, and Dhofar Insurance of Oman. In addition, there have been activities related to digital transformation with Virgin Atlantic and the 4G network project with BSNL.
The estimated total contract value (TCV) for this quarter is expected to be around $8 to $9 billion. Despite geopolitical uncertainty and trade tensions, the company has a b pipeline of deals. Investors will be keeping an eye on the future outlook and commentary related to this.
Changes in Wage Hikes and Hiring Policy
TCS had postponed the wage hike cycle, which was to begin in April. A significant change has also been observed in the company's HR policy this time. It is now mandatory for all associates to have 225 days of billing per year. This change emphasizes reducing bench time and increasing the utilization of people on projects.
Regarding freshers, the company has planned approximately 42,000 new hires for this fiscal year. The company's hiring and training policies are being closely monitored in the era of AI and automation.
Growth Trends in the Generative AI Segment
Gen AI (Generative Artificial Intelligence) is currently the most discussed topic in the IT sector. Brokerage firms like BNP Paribas and Elara Securities believe that companies like TCS and Accenture are at the forefront in this area. TCS has recently introduced several Sovereign AI and client-centric AI solutions.
However, most IT companies are still not generating direct revenue from this sector. Therefore, the market will closely watch the revenue and project information provided by TCS in this direction. Investors will also be focused on which new clients TCS is acquiring Gen AI projects from.
Market Focus on TCS's Commentary
Uncertainty prevails in the IT sector. Slowing demand, geopolitical tensions, and trade policies between the US and China are hindering the growth of companies. In such a scenario, the quarterly results of a giant like TCS will not only be an indicator of its performance but also a signal of the direction of the entire sector.
