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TCS: Records resilient Q4; Healthy deal TCV and AI traction strengthen outlook for FY27

ICICIdirect Research 10 Apr 2026 DISCLAIMER

TCS reported a steady set of Q4FY26 numbers largely in line with our estimates, with revenue up 1.5% sequentially and 2.1% YoY in US$ terms, although growth remained muted in constant currency terms (-0.6% YoY CC). EBIT margins held firm at 25.3%, up 10 bps QoQ supported by improvement in realization (+40 bps) and currency tailwinds (+110 bps).
Coming to the annual performance, for the full year, revenue declined 2.4% YoY CC, reflecting macro softness, but margins improved by ~70 bps to 25%, highlighting strong cost discipline.
The key highlight this quarter was strong deal momentum where it reported TCV of US$12 billion, up 29% QoQ, led by three mega deals. This takes FY26 TCV to a record US$40.7 billion, providing strong visibility ahead for FY27 as well. At the same time, AI continues to emerge as a meaningful growth driver, with annualised AI revenues crossing US$2.3 billion, now forming over 7.6% of the revenue mix.
Management expects limited impact from geopolitical tensions, largely confined to travel and transportation segment in areas such as Hospitality, Airlines and Tourism. We saw that in Q4 there was a direct impact of 15 bps on the topline due to these geopolitical tensions.
On the outlook, management remains constructive on the back of a mega deal led strong TCV and a robust pipeline supported by AI-led transformation and large deal wins. Thus, robust deal wins, rising AI revenues and strategic partnerships (OpenAI, AMD, ABB) position TCS well for improved growth visibility and sustained momentum going into FY27 with normal seasonality playing out leading to a stronger H1. On the margins front, near-term margins may see some pressure from wage hikes (150-200 bps) and continued re-investments in AI, partnerships, & capability building. However, with most of the pain priced in, risk-reward remains favorable and we continue to maintain BUY rating with a TP of ₹3,050

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