TCS shares jump 3% ahead of Q2 results. 5 things investors should watch out for

Tata Consultancy Services (TCS) shares jumped around 3% on Thursday ahead of the company’s September-quarter results, with investors looking for signs of demand recovery, margin stability and fresh commentary on artificial intelligence-led business.

The shares of the IT major jumped to Rs 2,138 apiece on Thursday morning. The country’s largest IT services company is however expected to open the Q2 earnings season on a cautious note.

The country’s largest IT services company is expected to open the Q2 earnings season on a cautious note.


According to the average of seven brokerages, TCS revenue is likely to grow about 13% YoY, while profit may rise around 9%. Sequential growth, however, is expected to remain modest, with most analysts pencilling in constant-currency revenue growth of 0.5-0.6%.

The board is also expected to consider a second interim dividend along with the quarterly results.

TCS shares and the broader IT pack have been under pressure this year as investors worry about weak discretionary spending, muted client budgets and the possible impact of AI on traditional IT services revenue. The Nifty IT index has lagged the Nifty sharply in 2026, making TCS management commentary as important as the headline numbers.

Here are five things investors will watch in the Q2 report card

Revenue growth

The first watchpoint will be whether TCS can show even a modest pickup in revenue growth. Motilal Oswal expects the company to report 0.5% quarter-on-quarter constant-currency revenue growth, helped by steady execution in BFSI and technology and services. The brokerage expects weakness in the consumer vertical to offset some of that support.

Also Read: TCS Q2 Results Preview: Can the IT bellwether show enough growth to calm investors?

Jefferies expects slightly better constant-currency growth of 0.6%, led by the UK, Europe and India regions. JM Financial expects 0.5% constant-currency growth, but a 20-basis-point cross-currency headwind may limit dollar revenue growth to 0.3%.

Kotak Institutional Equities also expects modest 0.5% revenue growth, driven by the international business. It has not factored in any revenue contribution from the new BSNL contract for the quarter.

Margin performance

Margins will be closely watched because the wage-hike impact is now behind the company. Motilal Oswal expects EBIT margin to expand by about 100 basis points sequentially to around 25%, largely because of the reversal of the annual wage-hike impact. Emkay Global expects a 50-basis-point quarter-on-quarter margin expansion, helped by operating efficiencies.

JM Financial expects only marginal improvement, as wage-hike benefits may be partly offset by investments in the business. Kotak is more cautious, forecasting stable sequential margins but a 100-basis-point YoY decline due to wage revisions, acquisitions and pricing pressure.

The Street will watch how much of the operating benefit TCS allows to flow into margins and how much it reinvests in AI, talent and partnerships.

Deal wins

Deal momentum will be another key test. Kotak expects total contract value of $10-11 billion, helped by the Porsche mega-deal. Jefferies expects deal wins in the $9-10 billion range, while JM Financial expects $8-10 billion.

Investors will also look for more details on the Porsche partnership and the profitability of large recent deals. Any commentary on pricing pressure, productivity concessions and contract renewals will matter because large deals can protect revenue visibility, but may also come with thinner margins.

AI and new services

AI will be one of the biggest discussion points in TCS’ post-results commentary. Motilal Oswal expects annualised AI services revenue to continue its strong momentum after rising 13.6% quarter-on-quarter in Q1. Demand is expected to come from AI-led modernisation, autonomous global business services, cybersecurity and sovereign cloud.

Investors will want to know whether AI is creating fresh revenue or pressuring existing billing. Management commentary on AI-led revenue deflation, new service lines, talent hiring and partnerships with large technology companies will be closely tracked.

BSNL, BFSI and second-half outlook

The BSNL contract will remain a major watchpoint, though analysts do not expect much contribution in Q2. Kotak has not built in BSNL revenue for the quarter, while JM Financial expects the ramp-up to begin in Q3. Beyond BSNL, investors will look for demand trends in BFSI, retail, hi-tech, manufacturing and communications. BFSI is expected to support growth, while consumer and retail may remain soft.

The most important takeaway may come from the second-half outlook. If TCS signals that furloughs will be manageable and discretionary spending is stabilising, the stock may find support. If commentary stays cautious, investors may continue to wait for clearer proof of recovery.

Disclosure: This article has been written by Podishetti Akash, who is not a SEBI-registered Research Analyst or an Investment Adviser. Podishetti Akash and his ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclosures here.