TCS Q1 results explained with a breakdown of financials, business segments and market performance

TCS has announced its Q1 FY26 results, and we’re going to break them down step by step.
We’ll look at how the company performed in terms of profit, margins, and cash flows. Then we’ll go deeper into how each business vertical and geography contributed, assess the deal wins and future visibility, and finally, review the management commentary. Let’s start.

What TCS Q1 Results Hold

TCS reported a net profit of ₹12,760 crore for the quarter ended June 30, 2025. This marks a 6.0% increase from ₹12,040 crore in Q1 FY25. Revenue rose 1.3% year-on-year to ₹63,437 crore, compared to ₹62,613 crore a year ago.

However, the underlying business growth was weak. In constant currency (CC) terms, revenue declined 3.1% year-on-year. This points to lower client spending and a slowdown in demand across key markets.

Profitability, Margins, and Cash Flow

Despite revenue pressure, TCS delivered steady profitability. Operating margin stood at 24.5%, up 30 basis points from Q4 FY25. Net margin improved by 90 basis points year-on-year, reaching 20.1% in Q1 FY26.

Cash generation remained strong. Net cash from operations came in at ₹12,804 crore, which is 100.3% of net income. The company also declared an interim dividend of ₹11 per share, with a record date of July 16 and payment scheduled for August 4, 2025.

How TCS Makes Money: Performance by Vertical

TCS earns revenue across multiple business verticals. Here's how each performed in constant currency terms in Q1 FY26.

• The Life Sciences & Healthcare segment, which accounted for 10.2% of TCS’s total revenue, declined 9.6% year-on-year. 
• Communication & Media, contributing 5.8% of revenue, also dropped 9.6%. 
• The Consumer Business segment, which makes up 15.6% of revenue, fell 3.1%.
• Manufacturing, responsible for 8.7% of revenue, slipped 4.0%. 
• The company’s largest segment, BFSI (Banking, Financial Services & Insurance), contributed 32.0% of total revenue and grew just 1.0% year-on-year.

A few segments managed to grow despite the broader slowdown. 

• Energy, Resources & Utilities contributed 5.9% of total revenue and grew 2.8%. 
• Technology & Services, which made up 8.4% of revenue, expanded by 1.8%.

Overall, this points to widespread weakness across core verticals, with only a few areas showing resilience.

Where TCS Makes Money From: Performance by Geography

TCS also reports revenue by region. In Q1 FY26, large markets saw pressure, while smaller regions supported overall growth.

• North America remained the largest contributor, accounting for 48.7% of revenue. However, it saw a decline of 2.7% year-on-year in constant currency terms. 
• The UK, with an 18.0% revenue share, declined 1.3%. 
• Continental Europe, which made up 15.0% of revenue, saw a sharper decline of 3.1%. 
• India contributed 5.8% of total revenue but recorded the steepest fall at 21.7% year-on-year.

Among the smaller regions, 

• Asia Pacific contributed 8.4% of revenue and grew 3.6%. 
• Latin America held steady at 1.9% and grew 3.5%. 
• Middle East & Africa (MEA) increased its revenue share to 2.2%, with growth of 9.4%.

Overall, the decline in large markets like North America, the UK, and Continental Europe weighed on performance, even as some smaller geographies provided moderate support.

$9.4 Billion in Deal Wins: What It Means

TCS closed $9.4 billion worth of Total Contract Value (TCV) in Q1 FY26. These included large wins across areas like cloud transformation, enterprise AI, and cybersecurity.

This means the company has secured committed business worth $9.4 billion, offering revenue visibility for future quarters, even as near-term demand remains cautious.

The company also highlighted continued traction in areas like AI & Data, TCS Interactive, and Cybersecurity. Its AI platform, WisdomNext™, saw wider adoption, and the number of employees with advanced AI skills crossed 114,000.

New offerings like TCS SovereignSecure™ Cloud, TCS DigiBOLT™, and TCS Cyber Defense Suite were also launched, underscoring its focus on AI-led enterprise transformation.

Management Commentary: Cautious Demand, but Strong Transformation Pipelines

CEO K Krithivasan acknowledged that “continued global macro-economic and geo-political uncertainties caused a demand contraction.” However, he emphasized that “all the new services grew well” and pointed to “robust deal closures” as a positive signal for the future.

COO Aarthi Subramanian noted a shift from exploratory use cases to “ROI-led scaling of AI,” while CFO Samir Seksaria highlighted “steady margins and industry-leading profitability” that enable TCS to invest for long-term growth.

Final Word on TCS Q1

TCS’s Q1 FY26 performance reflects margin stability and strong deal momentum. But the 3.1% decline in constant currency revenue and weakness across key verticals and geographies remain clear concerns.

AI and transformation capabilities continue to strengthen, but a broader recovery in enterprise tech spending — especially in North America and BFSI — will be critical for top-line revival.

For now, the quarter appears stable but not strong. Investor focus will likely remain on deal conversion rates and future demand trends in discretionary tech budgets.

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