TCS expands margins, but shares fall 2.5% after Q4 results
Revenue growth outpaced expense growth, lifting operating margin 0.94 percentage points year on year, while the initial stock decline exceeded its usual post-results move.
Filed 09 Apr 2026, 15:55 IST · after market close · Tata Consultancy Services Ltd (TCS)
Key takeaways
- Consolidated operating margin rose 0.94 percentage points year on year as revenue grew 9.65%, faster than expenses at 8.26%.
- Net profit increased 12.13% year on year to Rs 13,784 cr, while other income accounted for 4.12% of pre-tax profit.
- The stock fell 2.5% on the first session after results, a larger move than its 1.85% median absolute reaction to the past eight results.
Price around the results
Revenue growth lifted operating profit
Consolidated revenue grew 9.65% year on year and 5.38% sequentially, taking operating profit growth to 13.52% and 5.51%, respectively. Expenses rose more slowly than revenue in both comparisons, by 8.26% year on year and 5.33% sequentially. That mix lifted operating margin by 0.94 percentage points year on year and kept it broadly stable sequentially, with a 0.04-point improvement.
Sequential profit benefited from lower interest
Pre-tax profit rose 30.43% sequentially, helped by a 50.74% fall in interest costs and the swing in other income from negative Rs 2,273 cr in Q3FY26 to Rs 757 cr. Other income was 4.12% of current-quarter pre-tax profit, so it supported reported profit but was not the main operating driver. The year-on-year tax-rate change was limited to a 0.12-percentage-point decline, offering little evidence that the net-profit increase was mainly tax-led.
Margin recovered after one-quarter dip
Operating margin moved from 27.32% in Q2FY26 to 27.23% in Q3FY26 and 27.27% in Q4FY26, indicating a modest recovery rather than a continuing decline. TCS remained 7.58 percentage points above the 19.69% median margin of the 19 Information Technology peers that had reported. Its margin was the 18th from the bottom in that peer set.
Initial market reaction was weaker than usual
The stock declined 2.5% on the first session after the results and was down 4.5% by the next session, underperforming the market benchmark by 3.66 percentage points on day one. The initial fall was larger than the 1.85% median absolute move across the past eight results, although the five-session decline narrowed to 0.36%.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹70,698 cr | ₹67,087 cr | +5.38% | +9.65% |
| Other income | ₹757 cr | ₹-2,273 cr | — | -26.36% |
| Expenses | ₹51,422 cr | ₹48,818 cr | +5.33% | +8.26% |
| Operating profit | ₹19,276 cr | ₹18,269 cr | +5.51% | +13.52% |
| Operating margin (%) | 27.27% | 27.23% | — | — |
| Interest | ₹265 cr | ₹538 cr | -50.74% | +16.74% |
| Depreciation | ₹1,406 cr | ₹1,380 cr | +1.88% | +1.96% |
| Profit before tax | ₹18,362 cr | ₹14,078 cr | +30.43% | +11.95% |
| Tax | ₹4,578 cr | ₹3,358 cr | +36.33% | +11.41% |
| Net profit | ₹13,784 cr | ₹10,720 cr | +28.58% | +12.13% |
| EPS (₹) | ₹37.92 | ₹29.45 | +28.76% | +12.22% |
Operating margin of 27.27% compares with a Information Technology sector median of 19.69% across 19 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -2.50% | -3.66% |
| Next session | -4.50% | — |
| 5 sessions | -0.36% | -2.84% |
| 15 sessions | -6.25% | — |
| 30 sessions | -12.08% | — |
Volume on the results session was 2.59× its 20-day average.
What to watch
- Whether operating margin holds above 27.27% after the sequential 0.04-percentage-point improvement.
- Whether expenses continue to grow more slowly than revenue after the year-on-year gap of 8.26% versus 9.65%.
- Whether other income remains close to 4.12% of pre-tax profit rather than becoming a larger profit contributor.