Turning The Tide: Fixing India's FII Exodus

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You have read and seen all over conventional media that FII's are ditching the Indian market for better opportunities especially the Asian Peers to invest in AI/Data Centre theme such as Taiwan or Hong Kong. Even the are gravitating towards China because the valuation is quite cheap as compare to India. As of mid 2025, the Nifty was trading around 22-23x forward PE, while China (10-11x), Hong Kong (7-8x), and Indonesia (11-12x) offer significantly cheaper entry points. Earlier when the valuations were attractive in India the FII's followed “Sell China, Buy India” but now they have reversed this to “Sell India, Buy China”. This is apparent in the return of the markets on YTD basis Nifty has return of -9.1% while South Korea leads and has a YTD return of 55%, followed by Taiwan which delivered YTD return of 48%, Brazil gave a 9.1% return, China has -5.2% return, Hong Kong has -5.22% return. When global macro pressures rise (such as high U.S. bond yields, a strong dollar, or shift...
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TCS: The Illusion Of Growth!

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I welcome you one again in this interesting article, we will discuss about TCS results and the hidden reality behind it.

Its because if you see the headlines it will say TCS revenue has jumped by almost 14% if you compare year on year basis. June quarter 2025 revenue was 63,467 CR while June quarter 2026 the revenue is 72,275 CR, which is marked by colour YELLOW on the consolidated results page.

If you dive deeper you will see that the revenue has increased by 14% in terms of rupees but in USD terms it's just increased by 3.5% which is neutral to negative. As during this period USD/INR depreciated by more than 10%. So this is why I always say dive deeper because the devil lies in the details.

For Quarter on Quarter basis i.e. from March 31st 2026 to June 30 2026 the revenue jumped from 70,698 to 72,275 which is roughly 2.25% but actually in the USD terms its less than 0.5% growth.

You all might be wondering why I am taking figures in USD rather than rupee because if you see the revenue concentration of TCS then almost 40% of the total revenue is from BFSI sector( Banking Financial Services and Insurance). As well as majority of the clients are from outside India.

TCS's major clients includes Goldman Sachs, JPMorgan Chase, Citibank, Bank Of America, American Express and its has also presence in UAE where its clients includes Banks like Emirates NBD and various banks in middle East. It has also presence in Malaysia, Nigeria etc so all these conglomerates pay in USD this is why consideration of USD based income is very much important.

Shrinking Net profit Margin:

Net profit margin simply means how much an organization is able to take away home after accounting for all the expenses and Tax.

The formula for Net profit margin is given by (Net income)/(Total Revenue)*100.

For the Quarter June 30 2025 the Net Profit Margin is 19.70%

For the Quarter June 30 2025 the Net Profit Margin is 18.56%

So you can see there is significant drop in profit margin, this is due to legal settlement of 668CR but even if we discount this one time phenomenon then the Net Profit Margin is still flat to slightly there is no growth in it, even if you compare this from the Quarter ending on March 31 2026.

Peaking EPS:

If you see the EPS then its 36.90 for the Quarter ending June 2026 and if you Notice the EPS from 2024 to 2026 then is hovering from 34-37 per Quarter, and there is not much growth in the EPS since the last 2 years which is definitely reflected in the share pricing. It has corrected itself by more than 50% since its life high.

Dividend and Buy Backs:

TCS has have declared an interim dividend of INR 12 per Equity Share of INR 1 each of the Company. Payout date is Friday, July 31, 2026 while the record date is Wednesday, July 15, 2026. 

While distribution of dividend is not a bad thing per say but this money would be more effectively utilised in R&D purposes in AI and machine learning.

Buy Backs means company buys a chunk of the shares from the open market by using its money, so that the free-float of the shares are decreased from the market, which slowly causes the deficit of the shares thus artificially inflating the prices. Many prominent companies do that most famous is APPLE. TCS periodically offers Buy Back via Tender Offer, last time this was done in December 2023.

FII's reducing stake:

If  you see the FII holding pattern in TCS then the they are reducing the stake in  TCS while their selling is absorbed by the DII's. 

Bottomline:

TCS revenue and Net Profit margin remains flat, there is not much growth in it. The profit guidance for TCS is never below 20% but giving out guidance and converting this number to reality are different things. Till Indian IT companies invest in making AI and ML architecture we will not see good growth. This stock will 

TCS has said that it would deploy 1-1.5% of the current workforce as FDE (Forward Development Engineers), who will work with clients to accelerate AI adoption and TCS is also looking for AI, cybersecurity, data security acquisitions, let's see whether this is just talk or will convert to action.

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