TCS Q2 results: Net profit rises 15% to ₹13,884 crore as AI business scales up

Tata Consultancy Services reported a 15 per cent rise in net profit for the second quarter, hitting ₹13,884 crore as its investments in artificial intelligence began to translate into multi-billion-dollar scale.

Revenue for the three months ending September 30, 2026, rose 11.2 per cent year-on-year to ₹73,188 crore. Sequentially, revenue growth was a quieter 1.3 per cent, reflecting a broader global environment where corporate clients remain cautious with their discretionary spending. The company’s board approved a second interim dividend of ₹12 per share, up from ₹11 a year earlier.

The AI milestone

For months, Indian IT firms have faced questions about whether generative artificial intelligence would disrupt their traditional service models or open up new business. TCS sought to answer that by announcing its annualised AI-led revenue has crossed $3.10 billion, representing more than 10 per cent of its total business.

Aarthi Subramanian, TCS's executive director, said momentum remains strong across AI-native solutions and enterprise transformations. The company is actively building out its physical infrastructure for this shift, recently launching an autonomous engineering lab powered by Nvidia in Bengaluru and a Gemini experience centre in Kolkata with Google Cloud.

Big deals and corporate partnerships

TCS signed $9.6 billion in total contract value during the quarter. Chief executive K Krithivasan highlighted two new "transformation partnerships" with Porsche and Best Buy as templates for how the firm wants to scale.

The Porsche deal involves a five-year strategic partnership and the acquisition of MHP, the German carmaker’s IT consulting subsidiary. With Best Buy, TCS is taking over the retailer's Global Capability Centre in India to transform it into an AI capability hub.

Other notable client wins during the quarter included technology modernisation work for Vodafone Business and SAP transformations for Honeywell.

Growth by sector and region

Performance across different sectors was mixed. Banking, financial services, and insurance (BFSI)—historically TCS's largest revenue engine—grew by 2.5 per cent sequentially in constant currency terms. Manufacturing and technology services both grew by 3.1 per cent. However, consumer business dropped by 0.7 per cent, and regional markets fell 5.8 per cent.

Geographically, the United Kingdom led growth with a 3.5 per cent sequential rise in constant currency. North America and Continental Europe remained sluggish, growing just 0.4 per cent each.

Workforce and cash reserves

TCS ended the September quarter with 598,056 employees, up slightly from 593,314 a year earlier. Attrition in IT services remained flat at 13.3 per cent.

The firm’s cash conversion remained highly efficient. Net cash from operations came in at ₹14,190 crore, which represents 102.2 per cent of its total net income. Chief financial officer Samir Seksaria said this financial strength allowed TCS to maintain its profitability margins—which stood at an operating margin of 24 per cent and a net margin of 19 per cent—while continuing to invest in niche acquisitions.