TCS Share Price Sinks 1.13% to Rs. 3,100.30 Amid Layoff Concerns

Key Takeaways

• TCS share price fell 1.13% to Rs. 3,100.30 on July 28, triggered by a report of 12,000 upcoming layoffs.

• CEO K Krithivasan confirmed the job cuts are not due to AI automation but stem from skill mismatches.

• Analysts warn of execution risks, though TCS maintains strong fundamentals and long-term investor appeal.

Tata Consultancy Services (TCS), India’s largest IT services firm, saw its share price slide by 1.13% on July 28, trading at Rs. 3,100.30 at press time. The decline comes after Moneycontrol reported the workforce trimming plan, sparking concerns among investors and analysts. According to the reports, TCS plans to cut 12,000 jobs over FY2026.

TCS Shares: Current Performance

According to the Moneycontrol data, here’s how TCS shares are performing at press time:

TCS stock opened at Rs. 3,110.00, lower than its previous close of Rs. 3,135.80. During the trading session, it touched a high of Rs. 3,118.00 and a low of Rs. 3,081.60, indicating bearish sentiment.

The 24-hour trading volume stood at 1,613,187 shares, with a turnover value of Rs. 49,995.89 lakh. The volume-weighted average price (VWAP) was Rs. 3,098.64. TCS shares currently hold a market capitalization of Rs. 11.21 lakh crore and trade with a beta of 0.86. It indicates relatively lower volatility compared to the broader market.

The TCS share price chart on TradingView shows a loss of 1.01% at the time of writing:

Fundamental Snapshot and Valuation

From a fundamentals perspective, TCS shows a trailing twelve-month EPS of Rs. 136.19, reflecting a 5.18% year-on-year growth. The stock trades at a PE of 22.76, lower than the sector average PE of 28.26. This suggests a relatively modest valuation. The price-to-book (P/B) ratio is 11.84. Meanwhile, the dividend yield remains attractive at 4.07%, reinforcing its value for long-term investors.

However, investor confidence took a hit after CEO and MD K Krithivasan elaborated on the layoff plans in an interview to Moneycontrol. “This is not because of Artificial Intelligence giving some 20 percent productivity gains. We are not doing that. This is driven by where there is a skill mismatch, or where we think that we have not been able to deploy someone,” he said.

The CEO further added, “It is not because that we need less people. We will continue to look for high (quality) talent, acquiring talent, training talent. That continues to happen. This is more about where there is a feasibility of deployment.” The layoffs will primarily affect middle and senior-level employees, along with some entry-level associates who have been on the bench for extended periods.

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Analyst  Sentiments

Brokerage reactions were mixed. Jefferies expressed concern, stating that the decision could result in ‘near-term execution slippages and higher long-term attrition.’ The brokerage also emphasized that future growth would be driven by cost optimization and AI-led productivity improvements. In light of this, Jefferies expressed a preference for Infosys and HCLTech among large caps and Coforge and Mphasis in the mid-cap segment.

At the same time, Citi Research maintained its 'sell' rating on TCS, with a target price of Rs. 3,135. It highlighted sluggish performance in TCS' core markets during the June quarter and advised investors to closely monitor margin trends and cash flow movement going forward.

Despite the restructuring, TCS is taking steps to ease the transition for impacted employees. The company will offer notice period pay, severance packages, extended insurance coverage, and outplacement assistance. The job cuts will not target any specific geography or domain and will be implemented gradually over the next three quarters.

Market Outlook

The move follows recent changes to TCS’s HR policies, which now require employees to maintain a minimum of 225 billable days per year and limit bench time to 35 days. These measures aim to streamline operations and align the workforce with the evolving business needs of TCS. However, the market response indicates caution, as stakeholders await signs of improved execution and earnings resilience.

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FAQs

1. Why did TCS announce 12,000 job cuts for FY26?

TCS announced plans to lay off 12,000 employees in FY26 due to a mismatch between employee skillsets and project requirements. CEO K Krithivasan clarified that this move is not linked to AI or automation replacing jobs. Instead, it’s a restructuring aimed at aligning talent with current business needs.

2. How did the TCS layoff news impact its share price?

Following the layoff news, TCS share price fell 1.13% on July 28 to Rs. 3,100.30. Investors reacted to potential execution risks and employee sentiment issues. Despite this short-term decline, analysts believe TCS's strong fundamentals and consistent earnings may support a long-term recovery in stock value. 

3. Are TCS layoffs related to AI automation or productivity tools?

No, the layoffs are not due to AI replacing jobs. CEO K Krithivasan specifically mentioned that the 12,000 planned job cuts stem from a mismatch in skills, not automation. He emphasized that TCS continues to use AI and productivity tools for client delivery and internal efficiency, but this move is purely about aligning talent with evolving business demands. TCS is expected to upskill many employees as part of this transition to ensure continuity and capability in core projects.

4. How are analysts reacting to TCS’s layoff announcement?

Analysts have expressed concern over the potential impact of large-scale layoffs on TCS's delivery timelines and employee morale. While acknowledging the company’s solid earnings and strong order book, brokerages warn that abrupt workforce changes can disrupt project execution. However, with a price-to-earnings ratio of 22.76 and long-term growth prospects, many still recommend a ‘hold’ or ‘accumulate’ rating.

5. What does this mean for TCS investors in the short term?

In the short term, investors should brace for some volatility. The layoff announcement has introduced uncertainty around project execution and employee confidence. While TCS stock has dipped slightly, its fundamentals remain solid, with strong earnings, consistent dividend payouts, and global client wins. Long-term investors may see this restructuring as a necessary move to improve operational efficiency.