TCS: 2nd Indian Company to cross Rs. 9 Trillion m-cap

TCS (Tata Consultancy Services) is an India based multinational company in the field of IT (Information Technology), it is a subsidiary of the Tata Group. As per market capitalization, it stands on the second position after Reliance and is the world’s largest IT services provider.

Tata Consultancy Services has 285 offices that span across 46 countries and 147 delivery centers located in 21 countries.

On Monday, the TCS share surged creating a record high with its market capitalization pushing over Rs. 9 crores for the first time. A rally was seen across all IT stocks as HCL Technologies has for the September quarter, reformed their revenue and operating margin outlook. A jump of 5.5% was observed on the BSE (Bombay Stock Exchange). At present, the TCS stock is at Rs. 9.35 lakh crore while it went as high as Rs. 9.40 lakh crore.

What is further expected from the Company?

Even though a weak set of numbers were posted by TCS in the April-June quarter (Q1FY21), Edelweiss Securities analyst estimate that the management’s view is encouraging as per three areas:

  • Modification and enhancement of the fundamental, which had been stress tested with the rise in online activity due to the COVID_19 pandemic.
  • Remarkable shoot in business expenditure for the advancement of the consumer experience.
  • Development of Zero-touch experience i.e., AI and automation will anticipate the consumer needs and provide solutions in a blink. It will use previous data to create patterns and predict the need of the user even before them contacting support.

ICICI Securities also expect betterment in growth in the following quarters due to supply issues, the increment in the number of deals, and interest in BFSI (Banking, Financial Services, and Insurance). “We believe TCS could see a decline in FY21E revenues mainly due to a weak first quarter. However, we expect the company to register healthy growth in FY22E mainly led by the ramp-up of deal pipeline and acceleration in digital technologies”, stated the company.

“TCS, with its high 31 percent BFSI exposure, is in a favorable position to benefit from the vertical’s healthy growth dynamics, on the back of its comprehensive services portfolio, rich product offerings, robust scale and efficient, geographically-diverse delivery model,” mentioned BOB analyst.

Which other stocks rallied?

Most IT stocks rallied on Monday, Persistent Systems, Datamatics Global Services, Birlasoft, Mphasis, Firstsource Solutions, NIIT, Mastek, Ramco Systems, and Quick Heal Technologies from the S&P BSE IT index surged between 5 percent and 11 percent.

“The sector has seen a strong rally with Tier 1 IT stocks surpassing pre-COVID absolute stock prices. Most stocks have even re-rated and are now trading at much higher P/E multiples compared to pre-COVID levels. We believe the moderating pace of Stimulus in the USA could pose challenges in verticals like BFSI which has been more resilient in 1QFY21. Traditional retail, airlines, hospitality/energy, and some sub-segments of manufacturing can continue to pose headwinds in FY21,” mentioned analysts at Centrum Broking.


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