TCS Q1 net profit dips 2.7% to Rs 13,349 crore on legal charge

TCS reported a 2.7% QoQ fall in Q1 net profit to Rs 13,349 crore due to a Rs 668 crore legal charge. Revenue rose to Rs 72,275 crore, and the company highlighted strong demand for AI, securing a USD 9.5 billion order book.

Tata Consultancy Services (TCS) on Thursday reported a 2.7 per cent quarter-on-quarter decline in consolidated net profit to Rs 13,349 crore for the quarter ended June 2026, while revenue from operations rose to Rs 72,275 crore, according to the company's audited consolidated financial results.

Underlying Performance and Exceptional Costs

The decline in reported net profit came after the company recognised an exceptional charge of Rs 668 crore towards the settlement of its long-running legal dispute with Computer Sciences Corporation (CSC).

The company said profit attributable to shareholders stood at Rs 13,349 crore during the quarter, compared with Rs 13,718 crore in the March quarter.

The financial statements show that profit before exceptional items and tax increased to Rs 18,612 crore from Rs 18,362 crore in the previous quarter, indicating that the company's underlying operating performance remained resilient.

During the quarter, TCS also rolled out annual wage hikes, with employee benefit expenses rising to Rs 42,137 crore from Rs 40,143 crore in the preceding quarter.

Explaining the exceptional item, TCS said the charge relates to the CSC litigation in the United States. Following the US Supreme Court's decision in June to deny TCS' petition for review, the company provided an additional Rs 668 crore towards exemplary damages and costs awarded to CSC.

AI Demand and Strong Order Book

On the business front, TCS said it continued to see strong demand for artificial intelligence-led transformation projects.

"Q1 FY27 reflects continued growth momentum and the strength of our strategic positioning, despite geopolitical and macro-economic headwinds," TCS Chief Executive Officer and Managing Director K Krithivasan said.

He added that the company delivered a strong order book of USD 9.5 billion, including a marquee AI-led transformation deal with SKF, while scaling its AI business to a USD 2.6 billion annualised revenue run rate.

He said growing customer investments in AI, modernisation, cybersecurity and sovereign cloud position TCS well to deliver sustained growth.

President and Chief Operating Officer Aarthi Subramanian said the company "won multiple AI-led transformation deals" during the quarter and that these wins validate TCS' approach to "AI-led efficient ITOps, accelerated Software Engineering and Modernization, AI-first process redesign" and autonomous business services.

She also said TCS expanded its AI ecosystem through strategic partnerships with Anthropic and Mistral.

During the quarter, TCS announced a USD 800 million AI-led business transformation deal with SKF, a multi-million-dollar strategic partnership with ServiceNow, another multi-million-dollar engagement with a Europe-based Fortune Global 50 company, and several other AI-focused contracts across utilities, healthcare, retail and manufacturing.

Segment Growth and Shareholder Dividend

Among business segments, Banking, Financial Services and Insurance (BFSI), the company's largest vertical, reported sequential revenue growth to Rs 27,990 crore from Rs 27,021 crore in the previous quarter.

Communication, Media and Technology, Manufacturing and the "Others" segment also recorded sequential growth, while Consumer Business declined during the quarter.

The Board of Directors declared an interim dividend of Rs 12 per equity share for shareholders.

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