According to Bloomberg data, TCS currently trades at 13.5 times one-year forward earnings, almost on par with Wipro, which trades at 13.1 times. HCL Technologies commands the highest valuation among large-cap IT players at 15.4 times forward earnings, while Infosys trades at a similar multiple to TCS.
Wipro’s valuation catch-up with TCS is particularly notable, given that the gap between the two exceeded 95% in May 2020. Similarly, TCS enjoyed a valuation premium of more than 32% over Infosys during the same period.
In contrast, HCL Technologies, which traded at a discount of about 45% to TCS in 2020, now commands a premium of 14.2%, according to Bloomberg data.
Accenture shares plunged 18% in Thursday’s session after the New York-listed IT major issued a weaker-than-expected revenue outlook for the fourth quarter. Analysts noted that slower bookings growth and moderating revenue in the third quarter have heightened investor concerns over the impact of artificial intelligence on demand for traditional IT services.
According to HSBC, Accenture’s guidance cut points to a continued soft demand environment, which is a negative read-through for Indian IT companies. Importantly, the weakness appears to be driven more by disruptions in the Middle East than by AI-led productivity pressures.
“While Indian IT companies continue to lack near-term growth triggers, sector valuations now appear close to trough levels,” HSBC said in a note to investors.
The Nifty IT index, the worst-performing sectoral index this year, has seen its combined market capitalisation shrink by ₹17.5 lakh crore from its December 2024 peak to ₹22.1 lakh crore. The index is down 28% so far this year, with TCS, Infosys and L&T Tech Services losing between 34% and 37%.
On Friday, the Nifty IT index recovered some losses after falling as much as 6.4% intraday, ending at 27,426.85, down about 4% from the previous close. Infosys was the biggest loser among major IT stocks, falling nearly 7%, followed by L&T Tech Services and TCS, which declined about 4% each. The benchmark Nifty 50 ended the day at 24,013.10, down nearly 1%.
