TCS Q4 results today: AI impact, 4 other things to watch
TCS Q4 results: Nomura India said the IT firm continued its investments into AI initiatives and expects deal wins should exceed $10 billion in the seasonally strong quarter.
- Apr 9, 2026,
- Updated Apr 9, 2026 8:49 AM IST
The Mumbai-headquartered Tata Consultancy Services Ltd is all set to kick start earnings season with its March quarter results on Thursday. Analysts largely expect the K Krithivasan-led firm to report deal wins in $8-10 billion range. They believe the outlook on restructuring, client discretionary spending, the impact of AI, commentary on data centres, cost takeout projects, and the BFSI vertical will be keenly followed. Besides, all eyes would be on the final dividend payout for the financial year 2025-26.
Commentary on AI All eyes would be on TCS commentary on AI. Nirmal Bang Institutional Equities in a note said the timeline for AI to change the current IT services business model is 18-24 months away and any early adoption or scale up of AI initiatives may pose a risk to the current business models, especially for a large player like TCS, which may take longer to adapt.
ICICI Securities said it would track any commentary on the deflationary impact of sharing AI productivity gains with clients. ICICI Securities said it would want to know the impact on decision making or the elongation of the pipeline-to-TCV conversion, as clients implement large-scale AI programs.
TCS had announced AI revenues of $1.8 billion for the December quarter, up 17.3 per cent YoY.
Deal wins Nomura India, which expects EBIT margin to improve 10 basis points sequentially, said the IT firm continued its investments into AI initiatives and expects deal wins should exceed $10 billion in the seasonally strong quarter. Kotak Institutional Equities sees wins in the $9-10 billion range, down on YoY comparison. HDFC Institutional Equities, which has an 'Add' rating and target of Rs 3,000 on TCS, said it sees the Tata group firm reporting total contract value (TCV) of $8-10 billion.
Data centre Nirmal Bang noted that data centre investments have been spiking and the share of the same in IT spending globally has increased from 6.4 per cent in FY24 to 9 per cent in FY25. This is the highest percentage increase in the past 5 years and considering the spiking capex investments in data centres, this is expected to further grow to 17 per cent in FY28.
TCS, it noted, will be taking on debt for the data centre business with an expected investment of $5-7 billion over the next 5 years. "So far it has created a JV called HyperVault with the TPG group and secured $1 billion in investments. There are still questions about the expected annuity revenue from this business," Nirmal Bang said.
Top, bottom line growth Kotak Institutional Equities anticipated Q4 profit rising 7.4 per cent YoY to Rs 14,058 crore on 9.2 per cent rise in sales at Rs 70,434 crore. Ebit margin is seen at 25.3 per cent, up 108 basis points YoY. HDFC Institutional Equities sees TCS Q4 net profit rising 10.7 per cent YoY to Rs 13,528 crore on 7.9 per cent YoY rise in sales at Rs 69,563 crore. It pegged Ebit margin at 25.2 per cent. Nuvama anticipated Q4 profit at Rs 13,916.20 crore. A couple of brokerages expect TCS to lead revenue growth in constant currency (CC) terms among Tier-1 IT players.
Final dividend for FY26
The board of TCS will consider and recommend a final dividend, if any, for the financial year ending March 31, 2026. The dividend proposal will be approved by shareholders at the ensuing 31st Annual General Meeting.
The Mumbai-headquartered Tata Consultancy Services Ltd is all set to kick start earnings season with its March quarter results on Thursday. Analysts largely expect the K Krithivasan-led firm to report deal wins in $8-10 billion range. They believe the outlook on restructuring, client discretionary spending, the impact of AI, commentary on data centres, cost takeout projects, and the BFSI vertical will be keenly followed. Besides, all eyes would be on the final dividend payout for the financial year 2025-26.
Commentary on AI All eyes would be on TCS commentary on AI. Nirmal Bang Institutional Equities in a note said the timeline for AI to change the current IT services business model is 18-24 months away and any early adoption or scale up of AI initiatives may pose a risk to the current business models, especially for a large player like TCS, which may take longer to adapt.
ICICI Securities said it would track any commentary on the deflationary impact of sharing AI productivity gains with clients. ICICI Securities said it would want to know the impact on decision making or the elongation of the pipeline-to-TCV conversion, as clients implement large-scale AI programs.
TCS had announced AI revenues of $1.8 billion for the December quarter, up 17.3 per cent YoY.
Deal wins Nomura India, which expects EBIT margin to improve 10 basis points sequentially, said the IT firm continued its investments into AI initiatives and expects deal wins should exceed $10 billion in the seasonally strong quarter. Kotak Institutional Equities sees wins in the $9-10 billion range, down on YoY comparison. HDFC Institutional Equities, which has an 'Add' rating and target of Rs 3,000 on TCS, said it sees the Tata group firm reporting total contract value (TCV) of $8-10 billion.
Data centre Nirmal Bang noted that data centre investments have been spiking and the share of the same in IT spending globally has increased from 6.4 per cent in FY24 to 9 per cent in FY25. This is the highest percentage increase in the past 5 years and considering the spiking capex investments in data centres, this is expected to further grow to 17 per cent in FY28.
TCS, it noted, will be taking on debt for the data centre business with an expected investment of $5-7 billion over the next 5 years. "So far it has created a JV called HyperVault with the TPG group and secured $1 billion in investments. There are still questions about the expected annuity revenue from this business," Nirmal Bang said.
Top, bottom line growth Kotak Institutional Equities anticipated Q4 profit rising 7.4 per cent YoY to Rs 14,058 crore on 9.2 per cent rise in sales at Rs 70,434 crore. Ebit margin is seen at 25.3 per cent, up 108 basis points YoY. HDFC Institutional Equities sees TCS Q4 net profit rising 10.7 per cent YoY to Rs 13,528 crore on 7.9 per cent YoY rise in sales at Rs 69,563 crore. It pegged Ebit margin at 25.2 per cent. Nuvama anticipated Q4 profit at Rs 13,916.20 crore. A couple of brokerages expect TCS to lead revenue growth in constant currency (CC) terms among Tier-1 IT players.
Final dividend for FY26
The board of TCS will consider and recommend a final dividend, if any, for the financial year ending March 31, 2026. The dividend proposal will be approved by shareholders at the ensuing 31st Annual General Meeting.