Tata Consultancy Services shares rose more than 3% on Friday after India’s largest software exporter reported quarterly revenue ahead of estimates, helped by steady demand from banking clients, a weaker rupee and growing AI-linked work.
The earnings beat did not erase concerns about slow discretionary spending across the sector.
But it showed investors that the worst-case view on India’s IT majors may have become too harsh after months of underperformance.
Revenue beat resets the mood
TCS reported consolidated revenue of ₹722.75 billion for the June quarter, above the ₹720.30 billion expected by analysts.
In dollar terms, revenue stood at $7.62 billion, flat from the previous quarter and up 2.7% from a year earlier.
Net profit rose 4.6% to ₹133.49 billion, even after a one-time legal settlement charge.
The stock reaction was strong because expectations were low.
Indian IT shares had been under pressure this year as clients delayed non-essential technology projects and investors worried that AI would disrupt traditional outsourcing models.
The Nifty IT index gained more than 2% after the results, helping lift the broader Indian market.
TCS’s move suggested investors were willing to reward stability, even without a sharp acceleration in growth.
Banking and AI provide visibility
The strongest support came from banking, financial services and insurance, TCS’s key business vertical.
Revenue from the segment rose 2.4% during the quarter, helped by large deal wins from the previous fiscal year and steadier client spending.
AI also became a bigger part of the story. TCS said annualised AI revenue crossed $2.6 billion in the first quarter, up from $2.3 billion in the previous quarter.
The company also reported total contract value of $9.5 billion, including an $800 million AI-led transformation deal with SKF and partnerships tied to ServiceNow and a Europe-based Fortune Global 50 client.
Analysts see the combination of deal wins, AI adoption and resumed hiring as signs that revenue visibility is improving.
TCS added about 9,300 employees in the quarter, its strongest net addition in more than three years.
Recovery still needs proof
The rebound is not a full sector reset yet.
TCS’s order book fell from $12 billion in the previous quarter, and clients in manufacturing, life sciences and consumer businesses remain sensitive to global uncertainty.
Brokerages also remain divided. CLSA analysts described revenue growth as better than feared and expect stronger sequential growth in the September quarter.
Others are likely to wait for clearer evidence that deal conversions and discretionary spending are improving across the sector.
For now, TCS has offered investors a reason to revisit the IT trade.
The next test is whether Infosys, HCLTech and Wipro can show the same mix of revenue resilience, AI traction and margin discipline.
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