TCS valuation falls below Infosys and HCLTech for the first time in 14 years

Tata Consultancy Services has lost its long-held valuation premium over peers Infosys and HCLTech for the first time in nearly 14 years, The Communication reported. The IT major, once regarded as the industry’s benchmark for performance and pricing power, is now trading at a lower earnings multiple than its closest rivals.

TCS’s trailing price-to-earnings (P/E) multiple has slipped to 22.5 times, below Infosys’ 22.9 times and HCLTech’s 25.5 times. For over a decade, between 2011 and early 2025, TCS commanded an average P/E multiple of 25.5 times, 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. The fall stems from TCS’s slower profit growth and margin contraction relative to peers. According to The Communication, the company’s market share among the top five listed IT firms has also eroded. TCS now accounts for about 43.4 per cent of the group’s combined market capitalisation, down from 55 per cent in March 2020.

TCS’s market capitalisation currently stands at ₹11.3 trillion, compared with the ₹26.1 trillion combined valuation of the top five IT firms. The company has lost nearly 27 per cent of its market value since reaching a record high of ₹15.44 trillion in September last year. In comparison, the group’s overall market capitalisation has fallen about 20 per cent from its December 2024 peak.

The company’s valuation derating has outpaced that of its peers. Its trailing P/E multiple has dropped from 32.6 times in September 2024 and 38.2 times in 2021 to 22.5 times this year. By contrast, the average P/E ratio for the top five IT firms has fallen from 30.4 to 23 times over the same period.

G Chokkalingam, founder and chief executive officer of Equinomics Research & Advisory Services, said TCS’s valuation slide reflects investor concern over its earnings outlook. “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,” he told The Communication.

In the trailing 12 months to September 2025, TCS’s net profit rose 4.4 per cent year-on-year to ₹50,294 crore, compared with 6 per cent growth for the combined top five IT firms. Analysts at Motilal Oswal Securities said management’s guidance for stronger growth in FY26 remains “somewhat fuzzy”, given the broader slowdown in client spending and a cautious macro environment.

The IT services sector has seen a valuation correction after the post-pandemic surge in demand. However, TCS’s steeper decline highlights the challenge facing India’s largest software exporter as it seeks to regain momentum amid intensifying competition and muted digital transformation budgets.