TCS Q2 Profit Rises 15% to ₹13,884 Crore; AI Revenue Tops $3 Billion

Tata Consultancy Services opened the September-quarter earnings season with a profit beat. Underneath it, though, growth in constant-currency terms barely moved, and margins narrowed. India’s largest IT services company reported a consolidated net profit of ₹13,884 crore for the second quarter of FY27, up 14.98% from ₹12,075 crore a year earlier, according to figures reported by Upstox and IANS after the results on Thursday, 8 October 2026.

Revenue from operations rose 11.2% year on year to ₹73,188 crore, from ₹65,799 crore. Sequentially, revenue grew 1.3% from ₹72,275 crore and profit rose 4.01% from ₹13,349 crore. In constant currency, which strips out exchange-rate movements, revenue grew just 0.5% over the June quarter.

The board declared a second interim dividend of ₹12 per share, with a record date of 14 October and payment due on 30 October. Business Today put the total payout at roughly ₹4,341 crore.

Profit ahead of estimates, margins under pressure

Analysts had pencilled in revenue of ₹72,950–73,200 crore and profit of ₹13,550–13,670 crore. TCS cleared the profit range comfortably and landed at the top end on revenue.

Profitability told a less flattering story. EBITDA came in at ₹18,815 crore, with the EBITDA margin slipping 162 basis points to 25.70% from 27.32% a year ago, Upstox reported. Operating margin stood at about 24%; Angel One put the EBIT margin at 23.98%, against 25.17% earlier. Net margin was 19.0%.

Cash generation remained strong. Cash from operations was ₹14,190 crore, or 102.2% of net income, which supports the company’s steady dividend record even in a soft demand cycle.

The sequential profit comparison also benefits from a low base. TCS’s June-quarter profit had included a one-time exceptional loss of ₹668 crore linked to the settlement of a legal claim.

AI business crosses $3 billion

The most closely watched number was the size of TCS’s artificial intelligence business. The company said AI-related services now run at an annualised $3.1 billion, more than 10% of revenue. That is the clearest signal yet that AI work is moving from pilots to contracts large enough to show up in the headline numbers.

Chief executive and managing director K Krithivasan framed the quarter around that shift. TCS and its clients, he said, are building platforms that “will industrialise AI at scale.” He added that growth was “broad-based” across international markets and most industry segments.

Total contract value of deals won during the quarter was $9.6 billion. Among the larger engagements were a five-year partnership with Porsche AG, which includes TCS acquiring consultancy MHP; the transfer of Best Buy’s India captive centre to TCS; an SAP S/4HANA transformation for Honeywell; and partnerships with Aareal Bank and Vodafone Business.

Chief financial officer Samir Seksaria pointed to acquisitions, partnerships and investment in “niche talent” as levers the company continued to pull during the quarter.

Headcount and attrition

TCS added 4,258 employees on a net basis, taking its workforce to 5,98,056. Last-twelve-month attrition in IT services was 13.3%. Net hiring at this scale, in a quarter of near-flat constant-currency growth, suggests management is positioning for deal ramp-ups rather than cutting to protect margins.

Why it matters for investors

The results arrive against a weak backdrop for technology stocks. TCS shares closed at ₹2,075.25 on the BSE before the announcement, down 0.42% for the day and about 35.7% lower so far in 2026, giving it a market value of roughly ₹7.5 lakh crore. The stock’s 52-week range is ₹1,976 to ₹3,336.70. Business Today noted that the broader IT index was hovering near 52-week lows, with the rupee close to a record low.

That currency context matters for reading the quarter. Double-digit rupee revenue growth set against 0.5% constant-currency growth implies that a large part of the reported expansion came from a weaker rupee and from acquisitions, not from clients spending more. For investors, the question is whether the deal pipeline, and the AI book in particular, can lift underlying growth before currency tailwinds fade.

There are reasons for cautious optimism. A $9.6 billion order book gives revenue visibility for the coming quarters. Large, multi-year engagements such as Porsche and Best Buy also move TCS beyond pure cost-take-out work, which has dominated technology budgets through the recent slowdown. A cash conversion ratio above 100% gives the company room to keep rewarding shareholders while it invests.

The margin trend is the main worry. A 162-basis-point fall in EBITDA margin year on year, despite rupee depreciation that usually helps exporters, points to pricing pressure, integration costs and investment in AI capabilities. Brokerages will be watching whether management guides to a recovery in the second half.

Read-through for the sector

As the bellwether, TCS often sets the tone for the rest of the sector. HCLTech, Infosys and Wipro are due to report later in October. Their numbers will show whether TCS’s pattern of modest dollar growth, firm deal wins and thinner margins is shared across the industry, or specific to TCS’s client mix.

The broader earnings season carries high expectations. Profits of Nifty 50 companies are forecast to grow around 21% for the quarter, which means IT, a heavyweight in the index, could weigh on aggregate growth if peers disappoint.

What happens next

Friday’s trading session will be the first test of how the market reads the mix of a profit beat and margin slippage. Shareholders on the register as of 14 October will receive the ₹12 dividend on 30 October. The Porsche–MHP transaction still has to close, and its integration will be a factor in margins over the next few quarters.

Analysts will also look for more detail on the AI business: how much is new revenue and how much is relabelled existing work, and what margins it carries. With the stock down more than a third this year, investors appear to have priced in a long slowdown. The coming quarters will show whether the AI book can change that view.

Note: Some outlets reported net profit of ₹13,934 crore, up 14.86% from ₹12,131 crore; the difference appears to reflect total profit versus profit attributable to shareholders. This article uses the attributable figure of ₹13,884 crore.