TCS m-cap Soars High Touching Rs.12 Trillion

TCS's market capitalisation has touched Rs.12-trillion-mark for the first time. Thus, the shares of the Tata group flagship has closed at a record high of Rs.3,250.15 up by 2.9 percent valuing the company at Rs. 12.02 trillion.

The company has held second most valuable firm right after Reliance Industries (RIL), which has a mcap of close to Rs. 12.9 trillion that include m-cap of party paid up shares.

However, the IT services firm has staged a solid comeback in the second quarter momentum continued in Q3 as the firm beat street estimated on all the key parameters that include margin, revenue and profits.

Alongside the investors as well as excited over the stock returning to the double-digit growth trajectory in the next financial year on the back of a ramp-up in large contracts and a strong order pipeline. Furthermore, the company has also achieved double-digit growth on a year-on-year (YoY) basis in June 2019.

TCS’s 7.2 per cent YoY growth in net profit to Rs 8,701 crore came in Q3, which is seasonally weak for Indian IT companies. Growth in all key segments and geographies helped the company achieve the result. TCS said this was its best Q3 performance in nine years.

Emkay Global has raised its FY21, FY22 and FY23 earnings estimates by 2.8 per cent, 4 percent and 4.6 percent, respectively, factoring in the Q3 beat believe TCS is poised to benefit from the acceleration in Cloud adoption and digital transformation opportunities, considering its end-to-end capabilities. However, valuations are rich. Maintain ‘hold’, with a target price of Rs.3,150 (earlier Rs 3,000) at 26x FY23E earnings,” states Emkay Global in its review.

Sentiment towards Indian IT stocks has improved, with the companies benefitting from a pick-up in demand, advancement of digital transformation by clients, as well as increased deal wins.

Other brokerages have also raised their target prices. The average target price of 39 analysts, polled by Bloomberg, following the results announcement, now stands at Rs 3,320 per share.

While the stake sales helped investors arrive at market-driven valuations for the firm’s consumer businesses, the uncertain growth environment due to the pandemic saw increased demand for stocks such as RIL, which are perceived to be safe havens.