TCS Q1 results: Net profit rises 4.7% to ₹13,420 crore, AI revenue tops $2.6 billion

TCS reported an annualised AI revenue run-rate of $2.6 billion, secured $9.5 billion in order bookings, including a marquee AI deal with SKF, and declared an interim dividend of ₹12 per share. | Photo Credit: Dado Ruvic/Reuters

Tata Consultancy Services (TCS) net profit grew 4.7 per cent to ₹13,420 crore for the first quarter of the financial year 2026-27, led by positive annual growth across most verticals and AI-transformation-focused deals. Net profit declined 2.6 per cent on a sequential basis, owing to exceptional costs like the settlement of a legal claim. Excluding exceptional items, profit came in at ₹13,849 crore with an annual growth of 8.5 per cent.

“Q1 FY27 reflects continued growth momentum and the strength of our strategic positioning, despite geopolitical and macro-economic headwinds. We delivered a strong order book of $9.5 billion, including a marquee AI-led transformation deal with SKF, while continuing to add clients across key revenue bands and scaling our AI business to a $2.6 billion annualized revenue run rate. As customers accelerate investments in AI, modernization, cybersecurity, sovereign cloud and platform simplification, our strong deal conversion, improving client mining and expanding ecosystem partnerships position TCS well to translate opportunity into sustained growth,” said K Krithivasan, Chief Executive Officer and Managing Director.

Revenue grew 14 per cent to ₹72,275 crore annually, and 2.2 per cent on a quarterly basis, led by growth across most segments. Annualised AI revenue run-rate stood at $2.6 billion, a sequential increase of 13.6 per cent.

The Board of Directors also declared an interim dividend of ₹12 per Equity Share of ₹1 each of TCS.

Total contract value (TCV) fell by 20 per cent to 9.5 billion, winning three mega-deals in Q1. Operating margin declined to 24 per cent.

“Q1 was characterised by strong growth across several services. We won multiple AI-led transformation deals with our dual commitment to AI-led optimisation as well as innovation-led outcomes. These wins validate our approach to AI-led efficient ITOps, accelerated Software Engineering and Modernisation, AI-first process redesign and implementation of SaaS solutions and Autonomous GBS. We signed strategic partnerships with Anthropic and Mistral expanding our AI ecosystem,” Aarthi Subramanian, Executive Director - President and Chief Operating Officer.

Overall TCS results performed marginally better than expectations, as per Sandeep Shah, Director Equity Research at Equirus Securities.

The workforce grew by 9,729 employees to 593,798, a sequential growth rate of 1.58 per cent, after muted additions in the last financial year. The sequential growth is also the highest addition in the last 15 quarters, said Shah.The company reported a ‘Voluntary’ LTM attrition of 13.6 per cent.

“This quarter, we completed annual salary increments for all associates globally and aligned salary structures with the new India Labour Code requirements. We continue to invest in AI infrastructure, next-generation skill development platforms, to enable our people to be futureready, while fostering a workplace where every associate feels safe, valued, trusted and empowered to grow,” said Sudeep Kunnumal, Chief HR Officer.

In Q1, regional markets fell by 0.6 per cent on-year and grew 1.2 per cent sequentially. The Indian market reported 22.9 per cent annual growth and 7.6 per cent sequential growth. Latin America dropped 2.1 per cent annually, and grew 0.6 per cent sequentially. Meanwhile, the UK market fell 0.6 per cent annually and grew 0.3 per cent sequentially. West Asia and Africa grew 7.6 per cent annually but declined 1.8 per cent sequentially.

All verticals, aside from the consumer business, showed positive annual growth. Regional markets led the growth, including energy, resources, utilities, and life sciences, on an annual basis. However, on a sequential basis, the energy, life sciences, and manufacturing verticals declined by 0.5-4 per cent.