Tata Consultancy Services (TCS) kicked off India's earnings season on October 8 with a standout Q2 FY27: net profit jumped nearly 15% year-on-year to $1.67 billion, revenue rose 11.2% to $8.82 billion, and artificial intelligence now drives more than 10% of total sales. The numbers beat Bloomberg and CNBC-TV18 estimates, and on October 9 the stock surged about 5% in early trade, pulling the entire IT sector — and the Sensex — out of a sharp sell-off.
Profit up 15%, margins hold at 24%
TCS reported a consolidated net profit of $1.67 billion for the July–September quarter, up 14.9% from the same quarter last year and 4% sequentially. Revenue from operations climbed 11.2% year-on-year to $8.82 billion — a 1.3% sequential gain, or 0.5% in constant currency. Operating margin held steady at 24% with net margin at 19%, though analysts noted margins remain below the company's aspirational 26–28% band. International markets drove the growth; the India business was weaker sequentially, down 10.3% in constant currency.
AI is now a $3.1 billion business
The real headline for investors was artificial intelligence. TCS's annualized AI revenue run rate hit $3.1 billion — up 19% quarter-on-quarter and more than 10% of total revenue, up from $2.6 billion three months earlier. CEO K Krithivasan pointed to broad-based growth across international markets and most segments, with banking and financial services up 2.5% and manufacturing and technology services each up 3.1% in constant currency. Deal momentum stayed strong: total contract value (TCV) stood at $9.6 billion, in line with expectations.
Porsche, Best Buy, and a $0.14 dividend
Two landmark wins marked the quarter. TCS signed a five-year strategic partnership with Porsche AG — including the acquisition of Porsche's Germany-based IT consulting subsidiary MHP, pending regulatory approvals — and a deal to convert Best Buy's India capability center into an AI capability center. The board also declared a second interim dividend of about $0.14 per share, payable October 30 to shareholders on record as of October 14. Headcount rose by 4,258 to 598,056 employees, with IT attrition at 13.3%.
Sensex snaps losing streak as IT stocks rally
The results electrified the market on October 9. TCS closed 3.85% higher at about $26 a share after spiking roughly 5% intraday, the Nifty IT index gained 3%, and the Sensex surged 879 points to close at 72,472 — bouncing back from Thursday's steep fall. Infosys and HCL Technologies climbed too. Analysts remain split: Axis Securities and Anand Rathi kept Buy ratings while Citi held a Sell. TCS also said the US suspension of PERM labor applications for Indian IT firms would not materially affect its workforce strategy. In the day's other AI headline, Hexaware shares jumped over 12% to an intraday high after announcing a multi-year partnership with Anthropic as a Preferred Partner in its Claude Partner Network.
Music in this post's reel: Kevin MacLeod - Lightless Dawn (incompetech.com), licensed under CC BY 3.0
Takeaway: TCS's quarter shows India's IT giants finally learning to monetize the AI boom — $3.1 billion of AI revenue at a 10% share of sales is a real milestone, not a slide-deck promise. The market's verdict was immediate: a 5% pop and a market-wide rally. But with margins capped and underlying constant-currency growth still modest, TCS must now prove AI can drive incremental growth quarter after quarter, not just flatter the headline numbers.
Sources: TCS Q2 results: net profit up 15%, revenue rises 11.2% — Business Standard; TCS Q2 results: AI now makes up over 10% of revenue — CNBC TV18; TCS earnings lift IT stocks as demand recovery hopes boost market mood — Business Standard; Hexaware shares jump over 12% after Anthropic partnership — NDTV Profit