Impact of TCS Layoffs on India's Real Estate Sector: Market Concerns and Future Outlook
Mumbai: India's real estate stocks plummeted on Monday as layoffs at the country's largest IT services firm, Tata Consultancy Services (TCS), cast a shadow over housing demand from software professionals. The selloff in real estate was widespread, with all 10 index constituents ending in the red. Lodha Developers was the biggest laggard, falling 6.31%, followed by Godrej Properties (-5.44%), Brigade Enterprises (-4.41%), and DLF (-4.30%).
Sneha Poddar, VP - Research, Wealth Management at Motilal Oswal Financial Services, stated, 'If layoffs do materialise, it could significantly impact real estate sales, especially in IT-driven markets like Bengaluru.' TCS plans to reduce its workforce by approximately 2%, or 12,000 employees. Investors are worried that other IT giants may follow suit.
Historically, whenever the IT sector has faced slowdowns or job losses, the real estate market in these regions has seen a corresponding dip. The Bengaluru market is likely to feel the most immediate impact, with a possible ripple effect across other metro cities like Mumbai and Hyderabad, Poddar added.
Vikram Kasat, head - advisory at PL Capital, noted that the Nifty Realty Index has already corrected more than 26% from its peak, making it one of the most vulnerable sectors in 2025. He advised investors to focus on blue-chip developers with strong fundamentals and use any weakness as a buying opportunity. He also cautioned that realty firms in South India could be hit harder due to their dependence on IT-driven demand.
While many companies have a strong pipeline of projects and new launches, analysts said the actual conversion into sales and cash flow has fallen short. This is especially concerning for the industry because pre-sales and collections are among the most critical metrics for assessing real estate health.
Some analysts remain optimistic about the sector's prospects. Pankaj Kumar, VP-Fundamental Research at Kotak Securities, expects residential developers to post strong results in Q1FY26. He said valuations are attractive, with most listed developers trading at 8-11 times adjusted Enterprise Value (EV) to EBITDA, a key profitability metric used to compare companies on operating earnings relative to their valuation. The outlook could further improve following RBI's recent 50 basis point interest rate cut.
