TCS Q2 Results 2025: Profit Rises 1.4%, AI Datacentre Announced, ₹11 Dividend Declared
TCS Q2 Results 2025: TCS posted a steady yet slightly below-expectation performance for the second quarter of FY26. India’s largest IT services company reported a 1.4% year-on-year rise in consolidated net profit to ₹12,075 crore, compared to ₹11,909 crore last year, missing Street expectations pegged at ₹12,528 crore. Revenue stood at ₹65,799 crore, up 3.7% sequentially and 2.4% YoY, beating revenue estimates of ₹65,114 crore.
The TCS Q2 Results 2025 also featured a bold strategic move — an ambitious 1 GW AI datacentre project in India as part of its plan to become the world’s largest AI-led technology services company. The company declared a second interim dividend of ₹11 per share, with October 15 as the record date and November 4 as the payment date.
TCS Q2 Results 2025: Financial Highlights
| Particulars | Q2 FY26 | Q1 FY26 | Q2 FY25 | Change (YoY) | Change (QoQ) |
|---|---|---|---|---|---|
| Revenue (₹ crore) | 65,799 | 63,437 (approx.) | 64,259 | +2.4 % | +3.7 % |
| Net Profit (₹ crore) | 12,075 | 12,760 | 11,909 | +1.4 % | –5.3 % |
| Operating Margin (%) | 25.2 % | 24.5 % | 24.1 % | +110 bps | +70 bps |
| Net Margin (%) | 19.6 % | 18.9 % | 18.5 % | +110 bps | +70 bps |
| TCV (USD billion) | 10.0 bn | 9.4 bn | 8.3 bn (approx.) | +20 % | +6 % |
| Cash Flow to Net Income (%) | 110 % | — | — | — | — |
Analysis:
TCS Q2 Results 2025 delivered modest growth with revenue beating expectations but profit missing due to restructuring costs of ₹1,135 crore, tied to an ongoing workforce optimization impacting over 12,000 employees. Operating margin improved 70 bps QoQ to 25.2%, showing better cost control and higher efficiency.
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Segment-Wise & Market Performance
TCS witnessed broad-based growth across verticals, though with varying intensity:
| Business Segment | QoQ Growth (Constant Currency) |
|---|---|
| Life Sciences & Healthcare | +3.4 % |
| BFSI | +1.1 % |
| Manufacturing | +1.6 % |
| Retail & Consumer | Flat |
| Technology & Services | Slight dip |
On the geographical front:
- India led growth with 4% sequential rise.
- Middle East & Africa jumped 5.9% QoQ.
- Continental Europe rose 1.4%, while North America and UK saw mild declines amid slower client spending.
The broad-based resilience in emerging markets balanced muted demand from the West.
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AI-Led Strategy & New Initiatives
TCS has doubled down on its AI-first transformation roadmap, unveiling a series of initiatives to embed artificial intelligence across operations and client offerings:
- The company will establish a 1 GW capacity AI datacentre in India, under a newly formed business entity.
- It also acquired ListEngage, a Salesforce-focused U.S.-based firm, to strengthen digital marketing capabilities.
- To foster an internal innovation culture, TCS launched the “Ideate and Build with AI” Hackathon, billed as the world’s largest such event with participation from 2.75 lakh employees.
CEO & MD K. Krithivasan said:
“We are on a journey to become the world’s largest AI-led technology services company. Our AI datacentre investments and large-scale hackathon reflect our long-term commitment to innovation.”
This marks one of TCS’s most ambitious strategic shifts since its digital transformation push in 2016.
Key Deals & Partnerships
During the quarter, TCS booked total contract value (TCV) worth USD 10 billion, including several marquee wins:
- $647 million, 7-year deal with Tryg, a Scandinavian insurer, to modernise operations in Denmark, Sweden, and Norway.
- A multi-hundred-million-dollar contract with a leading global healthcare firm for AI-driven transformation.
- Renewed long-term partnerships with ALDI South, Weatherford International, and The Warehouse Group for digital modernisation.
- New partnerships in Mexico, Finland, and the Philippines to accelerate cloud and AI expansion.
These deals reinforce TCS’s strength in multi-geography large-deal execution, providing healthy visibility for the coming quarters.
Market Reaction & Dividend Highlights
Ahead of the earnings release, TCS shares gained 1.14%, closing at ₹3,061.70 on the NSE on October 9.
Post TCS Q2 Results 2025, the market’s reaction was mixed — investors welcomed margin gains and AI announcements but expressed caution over the restructuring costs and muted North American demand.
Dividend Details:
| Type | Amount (₹/share) | Record Date | Payment Date |
|---|---|---|---|
| Second Interim Dividend | 11.00 | October 15, 2025 | November 4, 2025 |
This marks TCS’s continued commitment to shareholder returns, with an estimated payout exceeding ₹3,900 crore.
Management Commentary & Outlook
Management reiterated focus on AI, cloud transformation, and digital reinvention as the next growth levers.
CFO and COO commentary highlighted margin discipline and prudent cost management amid a changing demand environment.
The company remains cautiously optimistic about FY26, citing:
- Rising deal wins in BFSI and healthcare,
- Expanding AI services pipeline, and
- Strong cash flow conversion (110% of net income).
However, it flagged near-term headwinds like slower Western enterprise spending, visa cost pressures, and macroeconomic uncertainty.
Conclusion & Investor Takeaway
The TCS Q2 Results 2025 underline a transition phase — steady financials, strong cash flows, and bold bets on next-gen technologies.
Positives:
✅ Robust order book (USD 10 billion)
✅ Margin expansion to 25.2%
✅ Strong dividend and cash flow conversion
✅ Strategic AI datacentre and acquisitions
Challenges:
⚠️ Profit miss due to restructuring costs
⚠️ Continued softness in North America and UK
For Dalal Street investors, TCS remains a long-term compounder in India’s IT space — a defensive large-cap with innovation at its core. Analysts believe that the AI-led pivot could redefine its growth trajectory over the next decade.
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Disclaimer: The views and investment insights provided here are based on publicly available information and do not constitute financial advice. Readers are advised to conduct their own research or consult certified financial experts before making investment decisions.
