TCS Q3 net profit falls 13.9% YoY; company sees over ₹2,000 crore statutory impact of new labour codes
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Tata Consultancy Services (TCS) on Monday reported its financial results for the quarter ended December 2025. The information technology behemoth reported a 13.9% fall in its consolidated net profit attributable to shareholders at ₹10,657 crore in Q3 FY26, down from ₹12,380 crore in Q3 FY25. Revenue for the quarter rose 4.9% to ₹67,087 crore as against ₹63,973 crore reported during the year-ago period.
Exceptional items impact profit
During Q3 FY26, TCS’s bottom line was majorly impacted by exceptional charges on three counts totalling ₹3,391 crore.
Restructuring costs: The company incurred re-structuring expenses of ₹253 crore in the quarter ended December 31, 2025, following expenses of ₹1,135 crore in the preceding quarter.
Labour codes impact: TCS noted a statutory impact of ₹2,128 crore arising from the notification of India's four new labour codes. This provision primarily covers gratuity and long-term compensated absences due to changes in wage definitions.
Legal provision: TCS provided ₹1,010 crore towards a legal claim filed by Computer Sciences Corporation (CSC). While the company has not yet "paid" this amount as stated in earlier drafts, it has made a provision on a conservative basis after the US Fifth Circuit Court affirmed liability but vacated a prior injunction. Additionally, TCS disclosed ₹342 crore under "Other interest costs" towards pre- and post-judgment interest.
Operating performance and deal wins
On the operational front, the company reported an operating margin of 25.2% (calculated from Segment Results/Revenue). The Banking, Financial Services, and Insurance (BFSI) vertical remained the largest revenue contributor at ₹25,889 crore, followed by Consumer Business at ₹10,581 crore.
The quarter also saw expansion, with TCS signing a definitive agreement to acquire Coastal Cloud Holdings, LLC, a Salesforce summit partner, for $700 million (approx. ₹6,294 crore). This follows the completion of the ListEngage acquisition earlier in the quarter.
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Dividend announced
The TCS board has declared a total dividend of ₹57 per share, comprising a third interim dividend of ₹11 and a special dividend of ₹46 per equity share. The record date has been fixed as Saturday, January 17, 2026, with payment scheduled for Tuesday, February 3, 2026.
TCS shares ended 1.10% higher at ₹3,243 on the national stock exchange on Monday ahead of the results. However, the stock remains a laggard in the broader market; it has declined nearly 20-25% over the past year, underperforming the benchmark Nifty 50 index, which gained approximately 12% during the same period.