TCS Q2 Earnings Preview: Analysts Expect Soft Growth, Investors Eye H1-B Cost Impact

Tata Consultancy Services (TCS), India’s largest IT services company, will kickstart the second quarter earnings season on Thursday, with results expected after market hours.

According to multiple reports, the IT bellwether is likely to post a 1 - 3% sequential rise in revenue in Q2. Revenue is expected to come between ₹65,140 crore and ₹65,220 crore, compared to ₹63,437 crore in the previous quarter.

Growth is expected to remain modest due to the ramp-down of the BSNL project, although foreign exchange gains may provide some cushion. The impact of wage hikes could weigh on margins.

Net profit is projected to rise 1–2% sequentially to around ₹12,550-₹12,700 crore, with EBIT margins expected to remain flat at 24.3–24.5%. Deal wins are forecast between $7 billion and $9 billion, highlighting steady client demand despite macro uncertainties.

Impact of H-1B Visa Fee Hike

Investors will track management commentary on U.S. tariff policies and the recent H-1B visa fee hike, both of which could influence TCS’s cost structure. The company came under the scanner recently after US Senators Charles Grassley and Richard J. Durbin questioned the company’s decision to hire thousands of H-1B visa workers, while conducting “massive layoffs” globally.

Brokerage Views

Nomura kept the stock’s rating unchanged at ‘neutral’ while slashing its price target to ₹3,330 from ₹3,780. Nomura expects large caps to report modest revenue growth in a seasonally strong quarter, with revenue growth (in constant currency terms) of 0.2% for TCS and a flat sequential EBIT margin.

Centrum expects TCS to post 1% constant currency (CC) revenue growth sequentially, driven by the BFSI and Hi-Tech verticals on a low Q1FY26 base. EBIT margins are likely to expand by around 24 bps due to cost optimization, while management commentary on demand trends and the deal pipeline will be crucial.

Nuvama expects TCS to post a 0.2% QoQ CC/USD revenue growth, with the India business flat after BSNL ramp-down. Margins may rise 20 bps QoQ despite wage hikes, while outlook on US macro conditions and employee restructuring will be key monitorables.

HFDC Securities believes that the recent H-1B visa fee increase is unlikely to disrupt operations in the near term but may gradually shift delivery models by raising onsite costs and boosting offshoring. Rupee depreciation is expected to support margins this quarter, partly offsetting selective wage hikes, while overall hiring in the sector remains subdued.

Stock Watch

Ahead of the earnings, TCS shares closed 1.94% higher at ₹3,031.5. Over the past three months, the stock has declined by over 11%.

Retail sentiment has remained ‘bearish’ for a month. It was ‘bullish’ a month back.

Year-to-date, the stock has lost a fourth of its value.

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