TCS Q1 Results: From Revenue, Margin To Deals, Headcount — Key Things To Watch

Tata Consultancy Services Ltd. is scheduled to report its April–June quarter results on Thursday, with analysts expecting the company to post muted sequential growth as headwinds from the BSNL deal ramp-down offset gains in international markets.

The IT giant, in the last quarter of the previous fiscal, posted a 1.26% decline in net profit to Rs 12,224 crore, while revenue fell 0.79% sequentially to Rs 64,479 crore. EBIT was down 0.36% to Rs 15,601 crore and margin contracted to 24.19%.

Here are a few things to watch out for from the TCS results.

TCS shares have posted a quarterly decline for the third straight quarter with the stock declining 2.5% in the first quarter of this year. In the last quarter, the shares declined 12.31%, whereas in the quarter ended December, the shares declined 4.5%.

Brokerages say the stock is trading at a discount to both its five-year average and sector peers and value TCS at 23–25 times one-year forward earnings and adjust their multiples to reflect a convergence in growth with other large IT firms.

“At 23 times 12-month forward price to earnings, TCS is trading at a discount to its five-year average and to the sector average,” Goldman Sachs said in its note.

Amid heightened uncertainty and geopolitical tensions investors will closely watch the revenue figures by the Tata Group company. The IT firm’s consolidated revenue is seen flat sequentially at Rs 64,627.9 crore, according to Bloomberg's consensus. JPMorgan expects the revenue to decline 0.5% on a sequential basis with the company facing headwinds on growth in the financial year 2026.

The profit is also expected to be flat at Rs 12,251 crore, in comparison to Rs 12,217 crore posted in the previous quarter.

Investors will also be looking for data on important deal wins in the quarter under review. This comes after the company posted a total contract value of $12.2 billion in the last quarter, higher than $10.2 billion recorded last quarter. For fiscal 2025, TCV stood at $39.4 billion.

The banking, financial services and insurance vertical saw a 0.7% year-on-year growth, lower than the 0.9% recorded last quarter. Consumer business hiked 0.3%, manufacturing rose 2.9%, and the energy and resources and utilities vertical grew 5.1%. However, the communication and media vertical dipped the highest at 9.5% year-on-year. Life sciences and healthcare and technology and services verticals dipped 1.6% and 1.3%, respectively.

The EBIT margin is expected to remain stable or see a slight improvement, driven by the near completion of the BSNL project, partial deferral of wage hikes, and continued growth in international markets.

JPMorgan expects margin to modestly expand, driven by growth in international markets, BSNL nearing completion, deferral of wage hike partially offset by lower employee utilisation.

Another important aspect to watch includes employee headcount. The employee headcount at the end of the previous year stood at 607,979, an increase of 625 employees. Attrition rate in the quarter inched up to 13.3% from 13% in the last quarter.

Apart from these key points investors will also be watching for commentary on discretionary spending, vertical performance, and any updates on employee costs.