TCS Reports First-Ever Decline in Dollar Revenue Growth in FY26
Tata Consultancy Services Reports First Decline in Dollar Revenue Growth
Tata Consultancy Services (TCS) has reported a 0.5% year-on-year decline in dollar revenue for FY26, reaching $30,017 million. In constant currency terms, the decline was 2.4%, marking the first time the company has reported a decline in dollar revenue growth in any fiscal year.
According to the company's report, growth in four of the last five financial years prior to FY26 has been in single digits. Even during the Covid-hit fiscal year 2021, the company posted a marginal increase of 0.6%. The company's rupee revenue growth, however, was a different story. For the fiscal year ended March 31, revenue in rupee terms rose 4.6% YoY to ₹267,021 crore, while constant currency growth stood at 1.2%.
| Quarter | Dollar Revenue Growth | Constant Currency Growth |
|---|---|---|
| FY26 | -0.5% | -2.4% |
| FY25 | 2.2% | 2.5% |
| FY24 | 3.1% | 3.4% |
| FY23 | 9.4% | 9.6% |
The Indian rupee fell 4% against the US dollar during the March quarter, sliding to record low levels. This typically benefits software services companies like TCS, as they bill in foreign currencies while incurring most costs in rupees, boosting reported earnings when dollar revenues are converted. The $315 billion sector, employing about 5.9 million people, last reported double-digit revenue growth in the March 2023 quarter.
The company's financial performance for the March-ended quarter was largely in line with Street estimates. TCS posted a net profit of ₹13,718 crore for the quarter ended in March, marking a 12.22% increase from the ₹12,224 crore reported in the same period last year. The same for FY26 improved marginally by 1.35% to ₹49,210 crore, as against ₹48,553 crore in FY25.
TCS also announced a dividend of ₹31 per equity share. Earlier in January, the Tata Group company paid a dividend of ₹57 per share, which included a special dividend of ₹46 and an interim dividend of ₹11 per share. The company's shares have dropped about 20% this year so far, declining from ₹3,215 apiece to ₹2,589, while eroding ₹2,26,465 crore in market value and bringing its total market capitalisation down to ₹9,36,722 crore. This reflects significant underperformance compared to the 9% fall in the benchmark NSE Nifty 50 Index.
Sentiment around the tech services giant has been weighed down by AI developments, including Meta Platforms Inc.'s latest model launch and Anthropic's new tools for building AI agents.
Investor Takeaway
TCS has reported its first decline in dollar revenue growth, which may impact investor sentiment.
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