TCS Reports 14% Profit Decline in December Quarter
Tata Consultancy Services, India's leading IT services company, announced its financial results for the third quarter ending December 2025. The company faced a significant drop in net profit compared to the same period last year.
Financial Performance Details
The consolidated net profit for TCS fell by 14 percent year-on-year. It dropped to Rs 10,657 crore from Rs 12,380 crore recorded in the December quarter of the previous year. This decline occurred despite a rise in revenue during the same period.
Revenue showed positive growth, increasing by 4.58 percent year-on-year. It reached Rs 68,205 crore compared to Rs 65,216 crore in the corresponding quarter last year. The company maintained steady sequential growth throughout this challenging period.
Substantial Dividend Announcement
TCS declared a generous dividend of Rs 57 per share for its shareholders. This includes a special dividend component of Rs 46. The record date for receiving this dividend is set for January 17, 2026.
A significant portion of this dividend payment will benefit Tata Sons, the holding company. Tata Sons owns 71.77 percent stake in TCS, making it the primary beneficiary of this distribution.
Factors Impacting Profitability
Several exceptional charges contributed to the profit decline during the quarter. Restructuring expenses amounted to Rs 253 crore for the three months ending December 2025. This followed higher restructuring costs of Rs 1,135 crore in the previous quarter ending September 2025.
The implementation of new labour codes created a statutory impact of Rs 2,128 crore. This affected both the three-month and nine-month periods ending December 31, 2025. Additionally, the company set aside Rs 1,010 crore as provision toward a legal claim during these same periods.
Management Perspective on Performance
K Krithivasan, Managing Director and CEO of TCS, commented on the company's performance. He stated that the growth momentum from the second quarter continued into the third quarter. The company remains committed to its ambitious goal of becoming the world's largest AI-led technology services provider.
Krithivasan revealed that TCS now generates $1.8 billion in annualized revenue from AI services. This reflects substantial value delivered to clients through strategic investments across the entire AI technology stack.
Market Response and Strategic Focus
TCS shares closed 0.86 percent higher at Rs 3,235.70 on the Bombay Stock Exchange on Monday. The market responded positively despite the profit decline, possibly influenced by the dividend announcement and future growth prospects.
Aarthi Subramanian, Executive Director and Chief Operating Officer, highlighted continued AI acceleration during the quarter. The company helped customers identify valuable AI opportunities through Innovation Days and deployed solutions faster using Rapid Builds methodology.
Samir Seksaria, Chief Financial Officer, emphasized the company's financial resilience. He noted sustained margin performance and strong cash conversion during the quarter. These results reflect disciplined execution and confidence in strategic growth investments.
The company continues to strengthen its capabilities through strategic acquisitions. The recent Coastal Cloud acquisition enhances TCS's Salesforce offerings, building upon previous investments in ListEngage.
TCS maintains its focus on executing a comprehensive five-pillar AI strategy. This approach aims to transform the company into an AI-first enterprise while delivering long-term value to all stakeholders.
