India's largest IT company, TCS, has seen its market value decline from ₹15.44 lakh crore to ₹11.32 lakh crore in one year. With this 27% drop, the company has fallen behind its competitors Infosys and HCLTech.
TCS Stock: India's largest IT company, Tata Consultancy Services (TCS), is facing increasing pressure. Once considered the market's most valuable company, TCS now lags behind its competitors Infosys and HCLTech in terms of valuation, profitability, and market share. Experts state that the company's performance has weakened, and conditions may become even more challenging in the coming months.
TCS Value Declines After 14 Years
From 2011 until the beginning of 2024, a span of 14 years, TCS consistently traded at a higher valuation than other IT companies. During that period, its average valuation was 25.5 times, which was 15% higher than the sector average. However, the situation has now reversed. Currently, TCS shares are trading at a P/E of 22.5 times, which is lower than both Infosys (22.9 times) and HCLTech (25.5 times). This marks the first time TCS's valuation has fallen below that of its two main rivals.
Diminishing Dominance in the IT Sector
TCS's market share in the IT sector is continuously declining. The company now holds only 43.4% of the total market capitalization of the five largest IT companies in the Nifty 50, compared to 55% in March 2020. As of Wednesday, TCS's market value stood at approximately ₹11.3 lakh crore, while the total value of the five major IT companies was about ₹26.1 lakh crore. This clearly indicates that while the IT sector faced increased pressure post-COVID, TCS was the most significantly impacted.
TCS Market Cap Falls Post-Pandemic
While IT company shares saw a b surge during the pandemic, the sector has experienced a derating (value decline) over the past two years. TCS has been most affected by this decline. Its market cap reached a high of ₹15.44 lakh crore in September 2024, which has now fallen to ₹11.32 lakh crore. This means the company's value has decreased by approximately 27%. In contrast, the total market cap of the five largest IT companies dropped from ₹32.67 lakh crore in December 2024 to ₹26.1 lakh crore, a decline of 20%.
Sharp Decline in Valuation
TCS's valuation has now declined more rapidly compared to other IT companies. The company's P/E multiple was 32.6 times in September 2024, and has now dropped to 22.5 times. In September 2021, it was at a high of 38.2 times. Conversely, the average P/E of the five largest IT companies has fallen from 30.4 times in September 2024 to 23 times. This indicates that the valuation decline has been more pronounced for TCS.
Slow Earnings Growth Becomes a Major Problem
TCS's earnings growth rate has now weakened. Over the past four quarters, the company's net profit has grown by only 4.4% year-on-year, while the combined profit of the five largest IT companies increased by 6%. For the 12 months ending September 2025, TCS's net profit was ₹50,294 crore, compared to ₹48,158 crore last year. According to experts, the company's margins have decreased, and investors are no longer willing to buy its shares at a premium price as before.
