Market cap of most of the big IT companies in India plunged between 2021 and March 2026, with the leading firm valuation dropping by 36 per cent.
TCS, and reported declining market capitalisation numbers, as per data provided by Tracxn. While TCS’ m-cap slipped from 14.27 lakh crore in 2021 to 9.08 lakh crore in March 2026, Wipro reported the sharpest decline of 42 per cent with muted financials and lower deal bookings in recent quarters. Infosys too declined by 29 per cent. However, and bucked the trend by increasing m-cap by 14-18 per cent.
Experts speaking to businessline attributed Tech Mahindra’s performance to its new leadership and focused AI transformation while HCL Tech maintained its performance owing to its varied portfolio.
AI fears
In recent times, TCS has undertaken investments towards its AI transformation such as the ₹18,000 crore joint investment with TPG towards its data centre plans. However, most IT service provider stocks have been hit recently after the exaggerated response to Claude Cowork developments, Titus M, Practice Director, Everest Group told businessline.
“While impact is real, it will not replace providers like TCS, in fact, in the long run, it will increase the role of such providers,” he said.
Valuation de-rating
Further, TCS’ market cap has fallen mainly because of valuation de-rating, after trading at a premium during the post-Covid tech boom. As growth slowed and AI disruption fears increased, investors stopped paying that high multiple, as per Rajesh Palviya, SVP – Research at Axis Securities.
“Since TCS had the highest premium among Indian IT peers, it had the most to lose when sentiment turned negative. So, the fall reflects a reset in market expectations, especially for a mature large-cap IT company,” he said.
Big rewards
In contrast, Tech Mahindra underperformed in earlier years, leading to even moderate improvements getting rewarded by the market. In recent years, it improved its performance through margin recovery and sharper execution, especially under its turnaround initiative, Project Fortius.
The company has reduced costs, improved its employee pyramid, cut subcontractor dependence and become more disciplined in choosing deals. At the same time, it has focused more on AI-led transformation, telecom modernisation, engineering services and cloud opportunities. Further, the company has also shown better operational discipline, improved margins and stronger deal wins under new leadership.
“The change in direction and improvement in business quality has helped to gain attention to the company,” he said.
Diversified portfolio
Meanwhile, HCL Tech reaps the benefits of setting up a more diversified business mix compared to its peers with a strong exposure to Engineering & R&D services, software business. It has also delivered relatively better growth, maintained healthy margins and shown clearer traction in AI-led opportunities. This enables investors to bet on long-term growth of the company, said Palviya.
The NIFTY IT Index still shows an 8.86 per cent growth in its 5-year mark and 24.81 per cent decline year-to-date. However, Titus expects overall market to remain strained in the next 6 months until AI opportunities manifest into revenues for these companies.