What to Expect from TCS Q2 Earnings: Revenue, Profit, and Deal Updates
Tata Consultancy Services (TCS), India’s largest IT services company, is set to announce its second-quarter (Q2 FY26) results on October 9, 2025. Investors and analysts are watching closely to see how the company performs in a tough global environment where IT spending has slowed. The focus will be on revenue growth, profit margins, and the size and quality of new deals.
While TCS continues to maintain its leadership in the IT sector, the pace of recovery in client spending and the impact of cost pressures remain key questions. Analysts expect moderate growth in revenue and a steady profit performance, with deal updates and management commentary likely to shape the market’s reaction.
Revenue Growth: Modest Expansion Expected
Revenue growth for TCS in the second quarter is expected to be modest. Analysts project the company’s dollar revenue to be around $7.45–7.67 billion, or about ₹64,000–₹65,700 crore. This represents a small increase from the previous quarter, but still reflects the slow recovery in global IT spending.
The company’s revenue growth has been supported by resilience in some key sectors, particularly Banking, Financial Services, and Insurance (BFSI), and the energy and manufacturing verticals. However, demand has been softer in consumer goods, retail, and life sciences, where companies continue to cut discretionary technology spending.
Currency movements have also played a role. The depreciation of the rupee against the US dollar is expected to slightly boost reported revenue in rupee terms, even though growth in constant currency terms remains moderate.
Profit and Margins: Wage Hikes and Investments Affecting Margins
Profitability remains a key area of focus. Analysts believe that operating margins could come under mild pressure this quarter. The company implemented salary hikes during Q2, which is expected to impact the operating margin by 10–30 basis points.
The margin is likely to stay near the 24% level, which is still strong but slightly below last year’s figures. The main reasons for this are higher employee costs, increased investments in training and new technologies, and lower utilisation levels compared to the previous year.
Net profit for the quarter is expected to come in between ₹12,350 crore and ₹13,050 crore, which would represent a modest increase from a year ago but remain flat sequentially. The company’s ability to maintain profit despite higher costs will depend on better project execution, higher offshoring, and efficient cost management.
Deal Wins: Quality of Deals More Important Than Size
TCS’s new deal wins and order pipeline will be another major area of interest. Analysts estimate total contract value (TCV) of $7–9 billion in Q2. This would be broadly in line with recent quarters, showing that TCS continues to win large and strategic deals.
However, the focus will be on the quality of these deals. Markets want to know whether the new contracts are long-term digital transformation projects, which offer steady revenue over time, or smaller, short-term cost-optimization projects that add less value.
The company’s commentary on deal pipeline, client decision timelines, and any delayed or cancelled deals from the previous quarter will be important. Investors will also look for insights into how quickly these new deals will start contributing to revenue and whether clients are willing to resume large-scale IT investments after months of cautious spending.
External Factors Affecting Results
A few external developments could influence TCS’s performance in the coming quarters.
H-1B Visa Fee Hike
Recent changes in US immigration policy, including higher H-1B visa filing fees, are likely to increase costs for Indian IT firms. TCS has been gradually reducing its dependence on visa-based deployment models by hiring more local talent in the US, but the new fees could still have some short-term cost impact. The company may discuss how it plans to manage these changes in the upcoming earnings call.
Tariffs and Trade Policy
Trade tariffs introduced by the US government have also raised concerns for Indian exporters, including IT companies. Although IT services are not directly hit by most tariffs, the overall geopolitical environment can affect client budgets and decision-making. TCS’s management is expected to comment on how the company is adjusting to such macroeconomic pressures.
Workforce Adjustments
TCS has taken steps this year to optimise its workforce and align it with current demand levels. This includes rationalising roles, slowing down fresh hiring, and improving utilisation. Analysts expect the company to provide an update on headcount changes and attrition, which has been stabilising after peaking last year.
Press Conference Cancelled but Analyst Call to Continue
For this quarter, TCS has cancelled its usual post-earnings press conference. The company has cited scheduling and compliance reasons for this change. However, the regular analyst and investor call will take place after market hours on October 9.
This call will become the key platform for management to discuss the company’s performance and future strategy. Investors will be looking for clarity on deal momentum, margin guidance, and the company’s plans to navigate global headwinds. The tone of this call will likely influence how the market reacts to the results.
Key Areas to Watch During the Earnings Call
One major area to watch will be revenue growth drivers. Analysts will seek details on which industries and regions contributed most to growth. Demand in North America remains crucial, but Europe and Asia-Pacific markets may have shown more stability this quarter.
The management’s remarks on utilisation levels and pricing trends will also be significant. If TCS reports improvement in utilisation and maintains pricing discipline despite client pressure, it would indicate stronger operational control.
Information on large deal wins and pipeline visibility will show how quickly growth could accelerate in the second half of FY26. The company’s strategy for managing cost pressures from visa fees, tariffs, and wage hikes will also attract attention.
Finally, any update on dividends, buybacks, or special payouts could impact investor sentiment in the short term.
Market Impact and Investor Outlook
The market’s response to TCS’s Q2 results will depend more on the company’s commentary about the future than on the reported numbers themselves. A stable performance with cautious guidance might lead to a neutral stock reaction, while strong commentary on deal momentum and margin recovery could boost confidence.
Most analysts agree that TCS remains in a solid long-term position due to its strong client relationships, large digital capabilities, and global delivery model. However, near-term challenges such as slower tech spending, geopolitical uncertainty, and cost inflation continue to weigh on performance.
The company’s focus on automation, AI-driven digital services, and cloud transformation projects should help improve growth in the coming quarters. The speed of recovery in enterprise tech spending will be the key determinant of how quickly revenue growth accelerates.
Final Thoughts
TCS’s second-quarter results are expected to show steady revenue growth, stable profits, and a strong order pipeline, even as near-term cost pressures persist. The company continues to balance investment in new technologies with the need to protect margins in a challenging environment.
Deal wins and management guidance will be the most critical factors for investors to assess whether the growth outlook for FY26 remains intact. With global uncertainty still influencing IT budgets, TCS’s disciplined execution and strong client base give it an advantage over peers, though the pace of acceleration in the second half of the year remains the key question.