TCS set for subdued June quarter

Indian IT services and consulting firm, Tata Consultancy Services (NSE: TCS) is expected to deliver a subdued start to FY2027 when it reports first-quarter results on Thursday, July 9, amid challenges facing India's IT sector as clients remain cautious on discretionary spending and AI reshapes enterprise technology budgets.

Visible Alpha consensus estimates point to revenue of ₹716 billion for the June quarter, up 1.3% sequentially and 13% from a year earlier. Operating profit is expected to slip 2% quarter-on-quarter to ₹175 billion, reflecting the impact of annual wage revisions, although it is still projected to rise 13% year-on-year.

The modest sequential growth reflects a demand environment that remains clouded by macroeconomic and geopolitical uncertainty, with clients continuing to delay project approvals and large-scale technology spending. The second phase of TCS's contract with Indian state-owned telecommunications operator BSNL is also yet to make a meaningful contribution to revenue, while continued investment in AI capabilities is weighing on margins across the sector.

Regionally, analysts expect the Americas and Europe to remain the company's strongest growth markets. India is also forecast to return to growth after last year's sharp decline.

Across industry verticals, the banking, financial services and insurance (BFSI) business, TCS's largest segment, is expected to grow 0.5% sequentially to ₹225 billion. The retail, distribution and hospitality segment is forecast to rise 0.7% to ₹112 billion, while healthcare and life sciences is expected to grow 0.9%.

Manufacturing revenue is projected to edge down 0.3% to ₹62 billion, reflecting continued weakness in industrial spending.

By contrast, the technology and services business is expected to lead growth with a 3% sequential increase to ₹61 billion, benefiting from continued cloud and AI-related demand. Energy, resources and utilities, along with communications and media, are forecast to post modest sequential growth of 1.5% and 1.6%, respectively.

This article was published by Visible Alpha, part of S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.