Bharti Airtel surpasses TCS to become India's third-most-valuable company

The telecom major was valued at ₹11.45 trillion, while TCS' market capitalisation stood at ₹11.43 trillion

Bharti Airtel (Airtel) on Monday edged past Tata Consultancy Services (TCS) to become the country's third most valuable company.

 

At the last close, the telecom major was valued at Rs 11.45 trillion, while TCS' market capitalisation stood at Rs 11.43 trillion. Occupying the top positions were Reliance Industries and HDFC Bank with market capitalisations of Rs 19.3 trillion and Rs 15.34 trillion, respectively.

 

The two stocks have moved in opposite directions over the past year. While Airtel is up 30 per cent over the past year, TCS is down 26 per cent, leading to the 56 percentage point difference between the two over this period.

 

The gains for Airtel are on the back of subscriber premiumisation, fall in capex intensity and expectation of higher free cash flows going ahead. Jefferies in a recent report pointed out that at 42 per cent annual earnings growth and one-time price to earnings growth, Airtel is the cheapest stock among Indian consumer/largecap space. 

 

The brokerage expects strong growth and falling capex intensity to drive a 25 per cent annual growth in free cash flows and a 70 per cent rise in return on capital employed by FY28.

 

Airtel, according to the brokerage, is on track to $200 billion in market capitalisation (around $130 billion now) in two years given that mega-caps in telecom have emerged only from those countries that have high-population (300 million plus) and limited competition (<4 operators).

 

On the other hand, the country’s largest software company is struggling with falling growth and muted outlook. What has plagued the software sector and the company are delays in decision-making and project commencement amid heightened macro uncertainty. While the management expects FY26 to be better than FY25, aided by a recovery in the second half and led by a strong deal pipeline, near-term demand remains muted, mainly due to macroeconomic uncertainty and geopolitical factors.

 

“Much against the industry perspective that the worst was largely behind in Q4FY25, it looks like that uncertainty’s impact on demand intensified in Q1FY26, leading to even sectors like BFSI declining on a Q-o-Q basis,” BOB Capital Markets in a post Q1 note said.

 

The slowdown intensification has caught TCS by surprise, leading to lowering of utilisation and, therefore, impacting its margins adversely, said the brokerage, which has a hold rating.