TCS Q1 Results Preview: Tata Consultancy Services (TCS) is set to report its Q1FY26 earnings on July 10, and expectations suggest a muted start to the fiscal year. According to Zee Business research, the country’s largest IT firm is estimated to post modest top-line growth, but a contraction in operating margin is likely, mainly due to the falling contribution from the BSNL deal, reinvestments, and low utilisation of billable resources.

Revenue growth

TCS is likely to register Rs 65,290 crore in revenues, a 1.3 per cent quarter-on-quarter growth from Rs 64,479 crore, according to Zee Business research. In US dollars, that amounts to $7,547 million, representing 1.3 per cent sequential expansion. On a constant currency basis, however, revenues could fall by 0.5 per cent QoQ primarily because of the fall in BSNL revenues.

Despite BSNL's reduced revenue drag this quarter - Rs 484 crore compared to Rs 700 crore in Q4FY25 - EBIT margins are estimated to decline to 24.1 per cent from 24.2 per cent, according to the estimates.

The IT major's quarterly EBIT is pegged at Rs 15,749 crore, 1 per cent sequentially, according to the research.

The net profit, at Rs 12,214 crore, is practically flat compared with last quarter, while EPS could move higher marginally to Rs 34.2 from Rs 33.8.

Key things to watch

• Deal pipeline: Analysts expects deal wins between $700- 900 million, with probably no major mega deal visibility this quarter.

• Client spends: Commentary on discretionary spending trends, especially from US-based clients, will be critical amid macroeconomic concerns.

• BFSI vertical: The largest revenue generator for TCS, BFSI performance and management outlook will be closely tracked.

• Cost optimisation: Investors will look for updates on cost takeout projects and how they offset margin pressures from reinvestments.

Modest start, long-term strength

Although Q1FY26 should be soft operationally, the long-term thesis of TCS remains intact given its strength in brand, client diversity, and large deal pipeline. The BSNL contract, though a margin tailwind, remains strategically valuable. 

For investors, top-line commentary on the BFSI sector, macro volatility, and cues for pickup in client spending in the next few quarters will remain in focus.