TCS Q3 Results: IT major posts 14% YoY fall in profit to ₹10,657 crore on one-time impact of labour codes

TCS Q3 Results: India's biggest information technology (IT) services company, Tata Consultancy Services (TCS), on Monday posted a decline in its profit after tax (PAT) for the third quarter of the financial year, even as revenue rose in the low single digit.

TCS posted a 13.9% year-on-year (YoY) decline in its consolidated net profit (attributable to shareholders) to ₹10,657 crore. The figure stood at ₹12,380 crore in the same period last year. On a sequential basis, PAT was lower by 11.7% from ₹12,075 crore posted in the preceding September quarter of FY26.

This was despite a marginal growth of almost 5% YoY in the company's topline during the period under review to ₹67,087 crore from ₹63,973 crore in Q3FY25. On a sequential basis, TCS has seen a 2% rise. Meanwhile, in constant currency terms, its revenue growth stood at 0.8%.

What impacted TCS's Q3 profit?

The company’s bottom line was impacted after it provided for certain exceptional items during the quarter, including the provisions for a one-time charge related to the labour code and legal claims, along with restructuring expenses.

TCS stated that the statutory impact of new labour codes of ₹2,128 crore comprised ₹1,816 crore towards gratuity and ₹312 crore towards long-term compensated absences, primarily arising from changes in the wage definition under the new labour code.

TCS also made a provision towards a legal claim of ₹1,010 crore pertaining to a 2019 claim filed by Computer Sciences Corporation (CSC) against the company in the US District Court for the Northern District of Texas, Dallas Division, alleging misappropriation of trade secrets and other confidential information belonging to CSC.

Meanwhile, the net income stood at ₹13,438 crore, a growth of 8.5% YoY with net margins rising to 20%, a growth of 60 bps for the year and 40 bps sequentially.

The total contract value (TCV) stood at $9.3 billion, but missed estimates of $10-11 billion that brokerages had pegged for Q3.

TCS announces bumper dividend

TCS announced a bumper payout of ₹57 per share as a dividend. It included a third interim dividend of ₹11 and a special dividend of ₹46.

“The third interim dividend and the special dividend shall be paid on Tuesday, February 3, 2026, to the equity shareholders of the Company, whose names appear on the Register of Members of the Company or in the records of the Depositories as beneficial owners of the shares as on Saturday, January 17, 2026, which is the Record Date fixed for the purpose,” TCS added.

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