Tata Consultancy Services (TCS), India's premier IT services exporter, has kicked off the third-quarter earnings season for FY26 on a robust note. The company announced a significant rise in its net profit alongside a generous interim dividend for its shareholders, demonstrating resilience in a complex global demand landscape.
Strong Financial Performance Amid Challenges
For the quarter that concluded on December 31, 2025, TCS posted a net profit of Rs 13,438 crore. This figure marks a healthy 8.5% increase compared to the same period in the previous year. The company's revenue for the quarter stood at Rs 67,087 crore, showing a sequential growth of 2.0%. When measured in constant currency terms, which removes the impact of foreign exchange fluctuations, the quarter-on-quarter growth was 0.8%.
The company's profitability metrics remained sturdy. The operating margin held steady at 25.2%, identical to the previous quarter. More impressively, the net margin saw an improvement, climbing by 40 basis points to reach 20.0%. A highlight of the quarter was the exceptional cash generation, with cash flow from operations standing at a remarkable 130.4% of the net income.
Shareholder Reward and AI-Driven Growth
In a move that will delight investors, the TCS board declared an interim dividend of Rs 57 for each equity share for the financial year 2025-26. This payout comprises a third interim dividend of Rs 11 and a special dividend of Rs 46. The company has set January 17, 2026, as the record date to determine eligible shareholders, with the payment scheduled for February 3, 2026.
The quarter also underscored TCS's accelerating journey in the artificial intelligence domain. The company's annualised revenue from AI services has now reached a milestone of $1.8 billion. This segment witnessed a powerful 17.3% growth quarter-on-quarter in constant currency terms, indicating rapidly scaling client adoption. Furthermore, the total contract value (TCV) of deals secured in Q3 FY26 was a robust $9.3 billion.
Leadership Commentary on Future Ambition
Commenting on the quarterly performance, K Krithivasan, Chief Executive Officer and Managing Director of TCS, stated that the growth momentum from the second quarter continued into the third. He emphasised the company's strategic focus on harnessing artificial intelligence.
"We remain steadfast in our ambition to become the world’s largest AI-led technology services company, guided by a comprehensive five-pillar strategy," Krithivasan said. He attributed the success in AI to "targeted investments across the entire AI stack, from infrastructure to intelligence," which is delivering significant value to clients and translating into substantial revenue.
The results from TCS set a positive tone for the Indian IT sector, showcasing an ability to grow profits and invest in future technologies even when overall revenue expansion faces headwinds from cautious global spending. The strong dividend announcement reinforces the company's commitment to returning value to its shareholders.
