Mumbai: Software major Tata Consultancy Services Ltd (TCS) on Wednesday become India’s second company to cross Rs6 trillion market capitalisation after its shares rallied over 14% so far this year.
The stock touched a record high of Rs3,145 on the BSE, and gained as much as 1.4% in intraday trade. Currently, its market cap is at Rs6.01 trillion. Since 15 January, the stock has added nearly Rs75,000 crore to its market capitalisation which is higher then Tech Mahindra Ltd’s market cap of Rs55,780 crore.
Oil-to-telecom behemoth Reliance Industries Ltd is nation’s first company to cross Rs6 trillion achievement.
However, TCS is far behind among global technology firms in terms of market capitalization. It holds the 17th position among the topmost valued international technologies firms.
Apple Inc. is the biggest company by market cap of $900.41 billion, followed by Alphabet Inc., Microsoft Corp., Amazon.com Inc. and Tencent Holdings Ltd with $814.89 billion, $708.97 billion, $656.57 billion and $573.94 billion, respectively.
Among the all listed global companies, TCS ranks 118th, while RIL is at 119th rank.
The recent surge in TCS was due to three new orders won by the company since it announced its December quarter earnings.
The first contract was an outsourcing deal with an over $2 billion, 10-year contract from a unit of Dutch insurer Aegon NV, market research firm Nielsen, a $690 million contract from a Prudential unit, and one more from retailer Marks & Spencer for an undisclosed sum.
“The announcement of three big business deals is positively impacting investor sentiment,” said Satish Kumar, research analyst at fundamental research desk of Choice Broking. “In addition to that IT is only among the few sectors which offers value in this bull run with stretched valuation of many sectors. Further, IT companies are also likely to remain beneficiary of big tax cut in USA. All these factors have increased interest of investors towards IT sector and a leader like TCS will attract customers,” Kumar added.
IT stocks are gaining since the start of this year after brokerage firm Morgan Stanley Research predicted that Indian IT services stocks may be set for a turnaround in 2018.
So far this year, TCS has advanced 15%, Infosys Ltd has risen nearly 10%, Wipro Ltd 2.4%, HCL Technologies Ltd 8.6%, Tech Mahindra Ltd 13.04%, Mindtree Ltd 23%, Mastek Ltd 19% and Cyient Ltd is up 9%.
“Large cap stocks have underperformed the Sensex for the last three years. Valuations are at or below long-term averages and an improving global macro could spur tech spending, which could re-rate stocks, in our view,” said a Morgan Stanley report, dated 15 January.
The brokerage house has upgraded Infosys, Tech Mahindra and HCL Technologies to overweight as valuations are at or below long-term averages. The firm expects that an improvement in banking, financial services and insurance and retail verticals will help TCS and hence it upgraded it to “equalweight”.
Of the 50 brokers tracking the TCS stock on Bloomberg, as many as 12 recommended a “buy” rating, 10 asked its investors to “sell” the stock and 28 have a “hold” rating.
On 11 January, TCS reported dollar revenue of $4.79 billion, a 1% rise from the preceding three months and up 9.1% from the year-ago period. Profit rose 1.1% sequentially to $1.01 billion (Rs6,531 crore), up 1.2% from $1 billion in the year-ago period. Its margin improved 10 basis points sequentially to 25.2% from 25.1% in the July-September period but was 80 basis points narrower than 26% in the year-ago period.livemint