The impact of Brexit and a slowdown in discretionary spends by US customers could cause Tata Consultancy Services, India’s largest IT services company, to lose its standing as the mainstay of the Tata Group of companies in terms of financial performance and market capitalisation.

The company gave warning of stormy weather ahead, noting in a statement to the stock exchange on Thursday that cutback on spends by clients could lead to a loss of momentum in the second quarter.

“Based on data at the end of August, the company has characterised customer outlook as one marked by abundant caution, with some holding back of discretionary spending — particularly in the BFSI vertical in the US, resulting in a sequential loss of momentum,” it said.

The BFSI (banking, financial services and insurance) sector accounts for nearly 40 per cent of TCS’ revenues. TCS shares fell 4.62 per cent to ₹2,327.70 on the BSE on Thursday.

Analysts read this as a portent of grim times. “We see this... as incrementally negative for the company and the sector. The momentum in the second half of FY17 is expected to be weak anyways, due to seasonality and expected impact of Brexit. So overall, it paints a rather gloomy picture for FY17, in terms of both growth and margins,” said analysts at Philip Capital.

The impact of this could change the financial fortunes of the Tata Group of companies, given that TCS accounts for 80 per cent of the group’s adjusted net profit despite its 17.5 per cent share of the group revenues.

Over the past year, TCS’ market capitalisation as a share of the total market capitalisation of the Tata Group of companies has fallen by 8 percentage points from around 56 per cent. During this period, the total market capitalisation of the group companies rose about 20 per cent, largely on the strength of gains by other frontline companies, including Tata Motors, Tata Steel, Tata Power and Titan Company.

In FY16, Tata Motors and Tata Steel accounted for 63 per cent of the group’s revenues. According to Credit Suisse, the fortunes of the Indian steel sector are looking up, and companies such as Tata Steel will gain. Tata Motors’ car and light commercial vehicle volumes have risen 16 per cent and 9 per cent, respectively, in FY17 (till August).

“While Tata Motors will continue to outperform, Indian Hotels will do well in the next two-three years and Tata Communication should surprise positively,” said Sharad Awasthi, head of research, Spa Securities.