An IT giant with bond-like returns and room for more gains

Summary: This large-cap IT giant is now more like a 10-year government bond, offering similar assured returns but also further potential for growth and gains alike. Find how below. The Indian IT sector has been treading water. Clients are cutting discretionary spends and delaying decisions to rethink their AI investments. The Nifty IT index is down roughly 18 per cent year-to-date and even the largest firms have struggled to post consistent earnings momentum. Enter Tata Consultancy Services (TCS), the sector bellwether. At first glance, the stock appears unexciting—there is little fanfare and near-term growth seems subdued. Yet a closer look reveals a quiet but compelling investment case. A bond in disguise TCS trades at nearly 21 times earnings, implying an earnings yield near 4.8 per cent. Not a bargain by conventional standards but for a company that converts nearly all profits into cash and returns most of it to shareholders, it’s attractive. Over the past five years, TCS has returned nearly 90 per cent of profits through dividends and buybacks. Its cash-generation is solid with free cash flow making up 95 per cent of net profit