Tata Consultancy Services (TCS) has announced a significant reduction in its dividend payout, dropping to ₹39,820 crore for the fiscal year 2025-26 (FY26), which is a 12.7% decrease from the previous year and the lowest payout in four years. This marks the second consecutive year that TCS has cut its dividends, now down 16% from a record ₹47,467 crore in FY24. The decline in payouts is attributed to TCS's strategic shift towards retaining earnings to fund investments in artificial intelligence (AI) and data centers, with the payout ratio decreasing to 81.1%, the lowest since FY17. Despite a 4.6% increase in consolidated net sales to approximately ₹2.67 trillion, net profit growth was modest at 1.1%, amounting to around ₹49,000 crore. TCS's retained earnings have surged to ₹9,300 crore, up from ₹2,950 crore the previous year. The company has made substantial investments, including a $700 million acquisition of Coastal Cloud, aimed at enhancing its AI capabilities. This strategic pivot may strain Tata Sons' finances, as TCS is a primary source of dividend income for the holding company, which relies on these funds to support its various ventures, including loss-making subsidiaries like Air India.