After holding the IT industry’s bellwether position for more than a decade, now the information-technology (IT) major Tata Consultancy Services’ (TCS’) equity valuation has slipped below its rivals like Infosys and HCLTech.
TCS Loosing Valuation Premium To Its Peers
It appears that the country’s industry major, Tata Consultancy Services, has lost its long-held valuation premium compared to its peers for the first time in nearly 14 years.
There was a time when IT major was regarded as the industry’s benchmark for performance and pricing power but it has changed as the company is now trading at a lower earnings multiple than its closest rivals.
Cobsidering the latest trend, TCS’s trailing price-to-earnings (P/E) multiple has slipped to 22.5 times again below Infosys’ 22.9 times and HCLTech’s 25.5 times.
This is much below that it’s earlier performance as for over a decade, TCS commanded an average P/E multiple of 25.5 times between 2011 and early 2025 which is roughly a 15 per cent premium to the industry average of 22.2 times.
This reversal marks a significant shift in India’s IT landscape from the experts point of view.
The fall stems from TCS’s slower profit growth and margin contraction relative to peers.
Affecting Market Share & Capitalization
Not only this, the company’s market share among the top five listed IT firms has also eroded as per the media report.
Presently TCS accounts for about 43.4 per cent of the group’s combined market capitalisation, which is much down from the earlier 55 percent during March 2020.
Movie ahead, TCS’s market capitalization stands at ₹11.3 trillion at present in comparison with combined valuation of the top five IT firms at ₹26.1 trillion.
The IT major has lost nearly 27 per cent of its market value after reaching a record high of ₹15.44 trillion during September last year.
The group’s overall market capitalisation has fallen about 20 per cent from its December 2024 peak.
Considering the latest revelation, TCS’s valuation derating has outpaced that of its peers.
TCS’s valuation slide reflects investor concern over its earnings outlook said G Chokkalingam, founder and chief executive officer of Equinomics Research & Advisory Services.
Further adding, “In recent quarters TCS reported a much sharper slowdown in profit growth and margin contraction than its peers. Investors expect this trend to continue, leading to a decline in TCS valuation.”
