For IT giant Tata Consultancy Services Ltd (TCS), the March quarter (Q4FY26) marked the third straight quarter of sequential revenue growth. Sequential constant currency (CC) revenue rose 1.2%, slightly above Bloomberg’s 1% estimate.
Growth was broad-based across key geographies and segments, except BFSI (banking, financial services and insurance) and CMT (communication, media and technology).
Even so, investor sentiment remains fragile. Fears of AI-led deflation, the recent new product launch by Anthropic, and geopolitical tensions have weighed on IT stocks. TCS shares slipped another 3% on NSE in early trade on Friday.
TCS exited FY26 with CC revenue down 2.4% year-on-year, reflecting muted international business and continued client caution. Weak organic growth remains a key irritant.
“FY26 was an exceptionally weak year for TCS from a growth perspective, but with solid margins and a stable deal-win showing,” said a Nuvama Research report dated 9 April.
Management expects international revenue growth to be higher in FY27 versus FY26, aided by a strong pipeline and recent wins.
Total contract value (TCV) stood at $12 billion in Q4FY26, up 29% sequentially, taking FY26 TCV to $40.7 billion versus $39.3 billion in FY25. The order pipeline continues to be driven by vendor consolidation deals, with the order book mix at 55:45 between renewals and new programmes.
Nuvama expects growth to recover over the next few quarters as TCS regains lost ground, contingent on macro conditions and generative AI trends gradually turning favourable.
TCS said AI projects are moving from ‘proof of concepts’ to ‘large projects’. AI now accounts for about 8% of revenue, or roughly $2.3 billion annualized. The company expects AI revenue to grow faster over time, helping offset structural decline in traditional services.
TCS anticipates a return to normal seasonality in FY27, with stronger sequential growth in the first half than the second, backed by strong client engagement, a healthy order book and strategic AI investments.
That said, management flagged risks from any sharp macro deterioration or second-order impact of a prolonged West Asia war. Geopolitical conflicts are directly affecting travel and transportation, while delaying decisions in key verticals such as BFSI.
The BFSI vertical reported 2.9% growth in USD in FY26, which could create a headwind in FY27, cautioned PL Capital. In this segment, client spending remained technology-led and outcome-focused, management said.
Q4FY26 Ebit margin came in at 25.3%, an eight-quarter high, up 10 basis points sequentially. Gains from better realizations and currency tailwinds were largely reinvested in capability building, in line with TCS’s build-partner-acquire strategy.
Salary hikes rolled out from April are expected to dent Q1FY27 margins by 150–200 bps. For FY26, Ebit margin improved to 25% from 24.3% in FY25. TCS reiterated its long-term Ebit margin aspiration of 26%.
Some brokerages have marginally raised EPS estimates post Q4. However, confidence in the sector remains weak. TCS stock is down 22% so far in 2026, underperforming the Nifty IT index, and trades at a FY28 price-to-earnings multiple of 15.35x, according to Bloomberg data.
Harsha Jethmalani is a Deputy Editor at Mint with over a decade of experience covering stock markets and corporate India. As a key member of the Mark to Market team, she specializes in delivering cutting-edge commentary on market trends, the economy, and corporate financial reports.<br><br>Born and raised in Mumbai, Harsha’s entry into business journalism was a serendipitous pivot. Graduating during the 2008–2009 financial crisis, her initial goal of becoming a research analyst at an MNC was rerouted. However, what began as a chance career move quickly became a conscious choice; she discovered that financial journalism is a powerful storytelling tool capable of influencing and empowering the financial decisions of a massive audience.<br><br>Harsha began her career in 2009 at IRIS Business Services (Myiris.com), tracking mutual funds and interviewing fund managers. In 2011, she joined the Network18 Group, writing extensively on equity market trends for Moneycontrol.com and hosting pre- and post-market audio updates. Following a stint covering personal finance at Dalal Times, she joined Mint in 2016 as a Content Producer, steadily rising through the ranks to her current editorial position.<br><br>A defining highlight of her tenure at Mint was her extensive coverage of India's historic Goods and Services Tax (GST) reform. She chronicled the massive indirect tax overhaul from its initial conceptual and execution hurdles to its eventual streamlining. Her impactful reporting earned official recognition when her article exposing a spike in gold smuggling ahead of the GST rollout was formally acknowledged by the Office of the Director General of Audit (Central), Kolkata. Currently, Harsha closely tracks the IT, cement, real estate, and paint sectors. Her sharp news sense and ability to spot emerging trends consistently bring fresh, actionable perspectives to market analysis.<br><br>She holds a postgraduate degree in financial markets from Indira Gandhi National Open University and a Bachelor of Management Studies from Vivekanand Education Society, Chembur, Mumbai.