TCS is no longer the most valuable tech company:Infosys, HCL Tech shares become cheaper, market value decreases by ₹4.5 lakh crore in one year

The domestic IT industry’s biggest company Tata Consultancy Services (TCS) has lost its most valuable company crown after 14 years. Now TCS’s share has become cheaper compared to its competitor companies Infosys and HCL Tech. Currently, TCS’s price to earnings ratio (PE ratio) is 22.5 times, which has fallen below Infosys’s 22.9 times and HCL’s 25.5 times. According to market analysts, this change is due to the company’s slow profit growth and declining market dominance, which has completely changed investors’ perspective. During these 14 years since 2011, TCS’s average P/E used to be about 15% higher than the industry average P/E. At the end of September last year, TCS’s PE ratio was 32.6 times. But now this story has reversed. TCS’s weightage decreased, 27% decline in market cap in 1 year The market weight of IT giant company TCS has also decreased. TCS’s share in the total market value of Nifty 50’s top 5 IT companies was 55% in March 2020, which has now reduced to 43.4%. TCS’s market value was approximately ₹11.3 lakh crore on Wednesday, while the total value of top 5 companies was about ₹26.1 lakh crore. Why did TCS suffer the most? After the coronavirus pandemic, there has been a decline in IT sector valuations, but TCS has suffered the most. TCS has lost about 27% market value from its record high last September. Then the company’s total market cap was Rs 15.44 lakh crore. This has brought TCS’s P/E ratio down to 22.5 times from the record level of 38.2 times in September 2021. Banking, Finance and Insurance sector’s weight in Nifty 50 reaches 35.4% After lagging for two years, the Banking, Finance and Insurance (BFSI) sector’s weightage in Nifty 50 is at its highest level in 3 years. The sector’s weightage in Nifty 50 has now reached 35.4%. At the end of December 2024, its weightage was 33.4% and in December 2023 it was 34.5%. However, this sector is still below its record weightage of 40.6% in December 2019. Expert View: TCS performance weak in last 4 quarters The main reason for the sharp decline in TCS’s valuation is the significant reduction in its profit growth. According to G. Chokkalingam, Founder and CEO of Equinomics Research and Advisory Services, “In recent quarters, TCS has shown a much sharper decline in profit growth and greater reduction in margins compared to its competitors.” Investors hope this trend will continue, which has led to a decline in TCS’s valuation. In the last four quarters, TCS’s net profit grew by just 4.4% year-on-year, while the total net profit of the top 5 IT companies grew by 6%. Analysts are cautious about TCS’s growth outlook for the upcoming quarter. ​