TCS profit rises 14.86% as annual margin pressure persists
Revenue grew 11.23% year on year, but faster cost growth reduced operating margin by 1.61 percentage points.
Filed 08 Oct 2026, 15:40 IST · after market close · Tata Consultancy Services Ltd (TCS)
Key takeaways
- Consolidated net profit rose 14.86% year on year to Rs 13,934 cr, helped partly by other income contributing 7.17% of pre-tax profit.
- Operating margin fell 1.61 percentage points year on year because expenses grew 13.70%, faster than revenue growth of 11.23%.
- Sequential momentum was steadier, with revenue up 1.26% and operating margin improving 0.04 percentage points to 25.71%.
Price around the results
Annual growth came with weaker operating leverage
TCS reported consolidated revenue growth of 11.23% year on year, but operating profit rose only 4.66%. Expenses increased 13.70%, outpacing revenue and narrowing operating margin by 1.61 percentage points. Interest expense also rose 10.04%, adding to the pressure below operating profit.
Sequential margins stabilised after the Q1 drop
Quarter on quarter, revenue grew 1.26% while expenses rose 1.22%, allowing operating margin to edge up 0.04 percentage points. This follows a decline from 27.27% in Q4FY26 to 25.67% in Q1FY27, so the latest quarter shows stabilisation rather than a full reversal of the recent margin reduction.
Other income supported pre-tax profit
Other income was Rs 1,337 cr, compared with negative other income of Rs 268 cr a year earlier and Rs 900 cr in the preceding quarter. It accounted for 7.17% of pre-tax profit, making reported profit growth less reflective of operating performance. The tax rate was 25.24%, up 0.74 percentage points year on year, so tax did not flatter net profit growth.
No immediate stock reaction after the filing
The consolidated results were filed after market close, so there was no market reaction to report yet. In the stock's eight prior result reactions, it rose three times and fell five times, with a median absolute move of 1.85%.
Q2FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹73,188 cr | ₹72,275 cr | +1.26% | +11.23% |
| Other income | ₹1,337 cr | ₹900 cr | +48.56% | — |
| Expenses | ₹54,373 cr | ₹53,719 cr | +1.22% | +13.70% |
| Operating profit | ₹18,815 cr | ₹18,556 cr | +1.40% | +4.66% |
| Operating margin (%) | 25.71% | 25.67% | — | — |
| Interest | ₹252 cr | ₹273 cr | -7.69% | +10.04% |
| Depreciation | ₹1,262 cr | ₹1,239 cr | +1.86% | -10.69% |
| Profit before tax | ₹18,638 cr | ₹17,944 cr | +3.87% | +15.99% |
| Tax | ₹4,704 cr | ₹4,524 cr | +3.98% | +19.48% |
| Net profit | ₹13,934 cr | ₹13,420 cr | +3.83% | +14.86% |
| EPS (₹) | ₹38.37 | ₹36.90 | +3.98% | +14.98% |
What to watch
- Whether operating margin holds above 25.71% after the decline from 27.27% in Q4FY26.
- Whether expense growth remains below revenue growth after the quarter's 1.22% versus 1.26% sequential comparison.
- Whether other income remains near Rs 1,337 cr and its 7.17% share of pre-tax profit.