TCS market capitalisation jumped over three-fold under N Chandrasekaran

TCS outperformed its peers with its m-cap increasing by Rs 3.90 lakh crore to Rs 4.43 lakh crore

N Chandrasekaran’s tenure at the country's largest software services firm, Tata Consultancy Services (TCS), was marked by its outperformance over peers Infosys and Wipro on all fronts, be it IT giant's stock price appreciation or fundamentals such as top and bottom line growths, which jumped two-fold during his tenure.

On Thursday, Chandrasekaran stepped down as TCS’ managing director and chief executive office (MD & CEO) after being elevated as the Chairman of Tata Sons -- the group's holding company. 

N Chandrasekaran took over as the CEO of TCS on October 6, 2009. Prior to that, he was chief operating officer (COO) and executive director at the IT firm.

Rajesh Gopinathan, the company's chief finance officer (CFO) will now step into Chandrasekaran’s shoes.

The announcement came soon after the Mumbai-based IT firm, reported 2.9% sequential jump in net profit at Rs 6,778 crore in the December quarter.

Company	Price	M-cap	Price	M-cap
	in Rs	Rs crore	% chg	Change
TCS	2249.30	443,208	733.1	390,364
Infosys	975.80	224,136	194.8	148,289
HCL Technologies	850.25	119,987	1571.1	113,172
Wipro	484.65	117,812	229.2	81,862
Price on NSE as on January 13, 2017.
% chg, change over March 31, 2009

Standing tall among peers

TCS stock appreciated a massive 733 per cent since March 31, 2009, compared with 195 per cent jump in peer Infosys and 229 per cent in Wipro.

HCL Technologies, the fourth largest IT firm, remained the only close peer (up 1571 per cent) which raced past the IT major on return front.

TCS remained the most valued firm on BSE in Chandrasekaran’s tenure. TCS’ market capitalisation swelled by a whopping Rs 3.90 lakh crore under Chandrasekaran to Rs 4.43 lakh crore at close on Friday. TCS was the first Indian company to cross the Rs 5 lakh crore mark in market capitalisation on July 23, 2014.

HCL Technologies and Infosys have seen less than Rs 1.5 lakh crore gains in their respective m-caps, while Wipro’s m-cap was up Rs 81,862 crore.

TCS’ consolidated net profit increased more than four-fold from Rs 5,256 crore in financial year 2008-09 (FY09) to Rs 24,292 crore in FY16. Infosys and Wipro’s net profit more than doubled during the same period.

TCS posted consolidated net profit of Rs 19,735 crore in first nine months (April to December) of the current financial year 2016-17 (FY17), while Infosys reported profit of Rs 10,749 crore in the same period.

On Friday, TCS stock settled 4% lower at Rs 2,249 as the change in management overshadowed the robust earnings growth in Q3.

Brokerage view on Q3 and management change

Brokerage HDFC Securities expects the stock to remain range bound in the near-term as leadership rejig and relative stability in BFSI segment may restrict meaningful upside or downside in the stock.

"Incoming CEO and current CFO Rajesh Gopinathan has wide experience ranging from business to finance within TCS. However, filling in Chandra's shoes will be a challenging task," said analysts at Antique Stock Broking.

Brokerage Reliance Securities believes management change at this juncture is not prudent.

"In a time marked with multiple challenges and key headwinds impacting the IT sector, this is not an apt moment to rock the boat for TCS, especially considering Chandrasekaran’s vast expertise and CEO and board-level connect with major clients. Though we realise this is a strategic decision taken with a view to stabilising the turbulent waters at Group level, we remain concerned about the consequential impact on TCS,” said the brokerage.

Vaibhav Agrawal, head of research, Angel Broking, said, “TCS, under Chandrasekaran’s leadership, consistently reported strong financials, return ratios and has become most valuable company in India. This is something that indicates successful track record of the new Chairman at Tata Sons.” 
 

Company	Revenues (Rs crore)		Net profit (Rs crore)		Revenues	Net profit
	FY09	FY16	FY09	FY16	9 months	9 months
TCS	27,813	108,646	5,256	24,292	88,324	19,735
Infosys	21,693	62,441	5,988	13,678	51,364	10,749
HCL Technologies*	7,563	30,781	1,051	5,643	NA	NA
Wipro	25,700	51,248	3,900	8,960	NA	NA
*FY09 - ended June 2008, FY16 results for nine months ended March 2016.
# 9 months (April - December) of FY17.
Source: CapitalinePlus                                                           Data compiled by BS Research