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Tata Consultancy Services (TCS) opened the Q2 FY26 earnings season with results that were largely in line with market expectations.

Revenue growth remained steady, while operating performance showed a slight positive surprise. Margins improved to around 25%, compared to the expected 24%.

Zee Business Managing Editor Anil Singhvi noted that the topline was steady, but the real positive surprise came from operating margins, which improved due to effective cost control.

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Management also highlighted healthy growth momentum across all business verticals, showing resilience in demand despite global uncertainties.

The spotlight of the quarter was TCS’s announcement to invest nearly Rs 50,000–60,000 crore ($6.5–7 billion) in building AI-powered data centres with a 1 GW capacity.

Speaking about this, Anil Singhvi noted that the positive aspect of this move is that TCS is finally thinking beyond its traditional approach of dividends and buybacks, and is making a significant investment in a new growth area, demonstrating its intent to stay relevant in emerging technologies.

At the same time, he pointed out the concerns for investors, explaining that the return on equity for these data centres is expected to be only around 12–15 per cent, much lower than TCS’s current ~50 per cent in its core business, and that the company is entering a competitive space later than others.

Also Read: TCS brokerages—Should you buy, sell or hold TCS shares? How analysts view Q2 results

On what investors should do, Singhvi advised caution. He said that in the short term, TCS may trade in a range. If the stock opens higher, profit-booking is likely, while if it opens lower, some recovery can be expected.

In the medium term, he suggested that investors consider creating an IT basket instead of holding only TCS. This basket could include Infosys and some quality midcap IT stocks such as Persistent or LTI Mindtree, which have shown stronger growth.

According to Anil Singhvi, while TCS’s Q2 results are satisfactory and the AI data centre investment shows ambition, the stock may not deliver significant near-term moves.

For now, it is a wait-and-watch situation, and investors should monitor how TCS manages this large investment and maintains its strong return ratios.

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Anubhav Maurya is a Senior Sub-Editor at Zee Business, focusing on the stock market, personal finance, corporate news, and related sectors.

He has previously worked with Republic Business ...LATEST NEWSBy accepting cookies, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.