TCS cracks $100 billion market-cap code

Gladys Abbott
April 24, 2018

Tata Consultancy Services (TCS), the country's biggest software services exporter, created history by becoming the first Indian listed company to cross the crucial $100 billion market capitalization figure or Rs 6,60,000 crore on the BSE in intraday trade.

Meanwhile, markets ended with mild gains on Monday after yet another choppy session as investors kept their faith in consumption stocks amid an encouraging start to the earnings season. These new converging technologies have pushed the customers away from the labor-intensive back-office programming functions, thereby making it more challenging for TCS to run its IT business operations more effectively. It ranks 64th on a list of companies with market caps of $100 billion or more and, as per Economic Times, has become a part of possibly the most elite corporate club in the world. TCS stock had surged more than 6 per cent on Friday.

TCS announced 1:1 bonus shares, ie one bonus shares of Re1 face value each for every share held in the company to its investors. It is one the most famous mass recruiter and now has 3,71,519 employees worldwide. Industry analysts have stated that the share price of TCS has increased by 26% this year, as compared to that of Infosys that gained almost 13% at the end of this financial year.

The spike in m-cap has come within days of strong performance reported by the company, which posted 4.3 per cent jump in annual revenue for FY18 to Rs 1.23 lakh crore.

"Delivering a superior, personalized experience to customers across a multitude of channels is an imperative for any enterprise seeking to differentiate itself in a Business 4.0 world", said Sunil Karkera, Global Head - TCS Interactive.

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Of course, there are things to like about TCS and based on the median of about 44 price targets compiled by Bloomberg, it deserves a valuation that's at least four-fifths of the $100 billion mark.

The sharp fall in rupee also boosted sentiment for the stock. Its nearest competitor Reliance Industries Ltd needs to rally 13 per cent to become the most valued firm. It has given out close to Rs 26,000 crore to the shareholders in dividends and bonuses in the year.

"With robust deal wins and green-shoots in BFSI, there is definite possibility of double-digit revenue growth".

"We retain Reduce as we find valuations expensive at ~20x FY20F and see risk to street expectations of ~double-digit constant currency (CC) revenue growth and flattish margins".

As part of its "Business 4.0" strategy, TCS is looking at new age-technologies like automation, cloud and Internet of Things (IoT) driving digital revenues of the company to over Dollars 5 billion this year.

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