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Tata Consultancy Services Ltd

| Quarterly Financial Results Q4 FY 2025-26

Report Source

⬤9th Apr 26

Summary : TCS reports increased annual profit, recommends dividend, but faces significant legal provisions and restructuring costs.

Quarterly Report Analysis & Insights

Financial Disclosures

  1. Employee benefit expenses: INR 154,994 crore for FY26 (Consolidated).
  2. Cost of equipment and software licences: INR 4,399 crore for FY26 (Consolidated).
  3. Finance costs: INR 1,227 crore for FY26 (Consolidated).
  4. Depreciation and amortisation expense: INR 5,560 crore for FY26 (Consolidated).
  5. Other expenses: INR 35,230 crore for FY26 (Consolidated).
  6. Revenue from operations: INR 267,021 crore for FY26 (Consolidated).
  7. Revenue from operations: INR 220,938 crore for FY26 (Standalone).
  8. Net cash flows generated from operating activities: INR 52,094 crore for FY26 (Consolidated).
  9. Net cash flows used in investing activities: INR (12,845) crore for FY26 (Consolidated).
  10. Net cash flows used in financing activities: INR (42,133) crore for FY26 (Consolidated).
  11. Cash and cash equivalents at end of year: INR 6,417 crore for FY26 (Consolidated).
  12. Provision towards legal claim: INR 1,010 crore (Consolidated and Standalone).
  13. Re-structuring expenses: INR 1,388 crore (Consolidated) and INR 929 crore (Standalone).
  14. Statutory impact of new Labour Codes: INR 2,128 crore (Consolidated and Standalone).
  15. Total Assets: INR 1,82,372 crore for FY26 (Consolidated).
  16. Total Equity: INR 1,08,478 crore for FY26 (Consolidated).
  17. Total Assets: INR 1,49,268 crore for FY26 (Standalone).
  18. Total Equity: INR 84,676 crore for FY26 (Standalone).
  19. Both audited standalone and consolidated financial results are presented.
  20. Consolidated results include the Holding Company and its subsidiaries.

Corporate Overview

  1. Global presence through numerous subsidiaries including Africa, Asia Pacific, Belgium, Canada, Deutschland, Netherlands, Qatar, Sweden, Iberoamerica, Indonesia, China, Philippines, Thailand, Argentina, Mexico, Brasil, Chile, France, Uruguay, Luxembourg, Osterreich, Saudi Arabia, Switzerland, Ireland, Bulgaria, Guatemala, UK, Japan, Malaysia, Italia, South Africa, Portugal, Australia, Beijing, Morocco, North America.
  2. Significant legal claim from Computer Sciences Corporation (CSC) for misappropriation of trade secrets, resulting in court-ordered damages and injunctions.
  3. Impact of new Labour Codes (2019, 2020) leading to statutory impact expenses.
  4. Restructuring initiatives leading to termination benefits and associated expenses.
  5. Full stack Salesforce partner, specializing in Marketing Cloud, CRM, Data Cloud, Agentforce, and AI advisory services.
  6. Leading multi-cloud Salesforce consulting firm, specializing in enterprise-scale transformations, AI-led advisory, and business consulting.
  7. Formal and factual, primarily communicating financial results and board decisions.
  8. Banking, Financial Services and Insurance (INR 103,363 crore for FY26)
  9. Manufacturing (INR 26,614 crore for FY26)
  10. Consumer Business (INR 42,432 crore for FY26)
  11. Communication, Media and Technology (INR 39,474 crore for FY26)
  12. Life Sciences and Healthcare (INR 27,745 crore for FY26)
  13. Others (INR 27,393 crore for FY26)
  14. Acquisition of 100% ownership interest in ListEngage Midco, LLC for $69 million (INR 612 crore) to strengthen Salesforce capabilities.
  15. Acquisition of 100% ownership interest in Coastal Cloud Holdings, LLC for $707 million (INR 6,386 crore) to enhance multi-cloud Salesforce consulting.
  16. Incorporation of new subsidiaries in Saudi Arabia and Morocco.

Risk Factors

  1. Significant legal claim provisioned for CSC.
  2. Impact of new labor codes.
  3. Restructuring expenses incurred.
  4. Uncertainty regarding legal claim outcome.

Key Drivers

  1. Board recommended final dividend of INR 31.
  2. Auditors issued unmodified opinion on financials.
  3. Strategic acquisitions strengthen Salesforce capabilities.
  4. Consolidated profit for year increased.

Auditor’s Report

  1. Unmodified opinion on both standalone and consolidated annual financial results.

Board Commentary

  1. Board recommended a Final Dividend of INR 31 per Equity Share of INR 1 each for the year ended March 31, 2026.
  2. Total dividend for FY26 is INR 110.00 per share (FY25: INR 126.00 per share).
  3. Legal claim from CSC, with significant compensatory and exemplary damages awarded by court.
  4. Statutory impact of new Labour Codes on compensation and operations.
  5. Restructuring expenses related to termination benefits.
  6. Legal claim from Computer Sciences Corporation (CSC) alleging misappropriation of trade secrets, resulting in court-ordered damages and injunctions.
  7. Statutory impact of new Labour Codes (2019, 2020) on compensation and operations.
  8. Restructuring initiatives leading to termination benefits.
  9. Acquisition of ListEngage Midco, LLC for $69 million (INR 612 crore).
  10. Acquisition of Coastal Cloud Holdings, LLC for $707 million (INR 6,386 crore).
  11. Incorporation of new subsidiaries in Saudi Arabia and Morocco.

Management Discussion & Analysis

Risk Control Measures

  1. Company believes it has a strong case and will pursue legal remedies to overturn the CSC legal decision.
  2. Provision of US $112 million (INR 1,010 crore) for the legal claim and US $38 million (INR 342 crore) for pre and post judgment interest.
  3. Monitoring finalization of Central/State Rules and clarifications for Labour Codes to provide appropriate accounting effect.

Critical Risks

  1. Legal claim from CSC, with significant compensatory and exemplary damages awarded by court.
  2. Statutory impact of new Labour Codes on compensation and operations.
  3. Restructuring expenses related to termination benefits.
  4. Uncertainty regarding the final outcome of the legal claim appeal.