TCS becomes the second Indian company to cross Rs 9 trillion m-cap

The market-capitalisation (m-cap) of Tata Consultancy Services Ltd surged past the Rs 9 trillion-mark for the first time, after its share price rose 1.5 per cent to hit a record high of Rs 2,408 in Monday's early morning trade.  The information techology (IT) giant is the second Indian company, after Reliance Industries (RIL), to achieve the milestone.

The IT bellwether's stock surpassed its previous high of Rs 2,389.50, hit on September 8, 2020. At 09:18 am, TCS' m-cap stood at Rs 9.02 trillion, the BSE data shows.

In the past week, TCS has outperformed the market by gaining 4 per cent, as comapred to 1.7 per cent rise in the S&P BSE Sensex. However, it has underpeformed during the last three months, by gaining 15 per cent, against 16.5 per cent upmove recorded by the benchmakr index.

While TCS posted a weak set of numbers in the April-June quarter (Q1FY21), analysts at Edelweiss Securities believe that the management’s outlook is encouraging, led by three key areas (1) Transformation/upgradation of the core, which was stress tested with the surge in online activity triggered by covid-19. (2) Significant spurt in enterprise spends in improving front-end consumer experience. (3) Spends by clients on developing zero-touch experience.

ICICI Securities expects TCS to report improved growth in coming quarters mainly led by receding challenges on the supply side, ramp up of deals, vendor consolidation opportunities and traction in BFSI. The company also expects cloud, customer experience, automation and cyber security related digital technologies to gain traction in the long term.

"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 ramp up of deal pipeline and acceleration in digital technologies", it said. The brokerage maintains 'buy' rating on the stock with a target price of Rs 2,650 per share.

"TCS, with its high 31 per cent BFSI exposure, is in a favourable 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," analysts at BOB Capital Markets noted.