TCS market value crosses Rs 5 trillion;hits new high

Post Q1 results, the stock rallied 8% compared to 2% rise in S&P BSE Sensex and 4% gain in S&P BSE IT index.

Tata Consultancy Services (TCS) has become the first company entered into the Rs 5,00,000-crore market cap club fuelled by the surge in its share price after reported a strong earnings during the recently concluded quarter.

At 1005 hours, TCS scrip gained 1.3% at Rs 2,565, also its all-time high on the Bombay Stock Exchange (BSE). This has taken the market capitalisation of the company to Rs 5,02,414 crore.

Tata Group’s information technology company has rallied 7.7% from Rs 2,381 in past four trading sessions after reported net income (IFRS) of Rs 5,058 crore for this financial year’s first quarter, ended June, up 26.9% from Rs 5,297 crore in the same quarter last year.

On revenue, the company reported growth of 22.9% at Rs 22,111 crore over a year and 2.6% sequentially. In dollar terms, TCS reported revenue growth of 5.5%.

The benchmark S&P BSE Sensex gained 2.2%, while the S&P BSE IT sector index rose 4.4% during the same period.

Most of the analysts are bullish on the stock with target price between Rs 2,600 and Rs 2,800.

“We expect revenue momentum to peak in Q2FY15 (July-September) due to seasonality and Japan JV contribution. Moreover, earnings momentum will continue to play the role in H2FY15 as operating leverage kicks in. We retain our “BUY” rating with revised target price of Rs 2,680 (from Rs 2,600), 20x FY16E earnings estimate,” says Shashi Bhusan analyst at Prabhudas Lilladher.

Analyst at Angel Broking said, the Management reiterated that it expects FY2015 to be better than FY2014 on the back of strong deal pipeline and budget indications from clients. Over FY2014-16E, we expect TCS’ revenue to post a CAGR (compound annual growth rate) of 14.6% in USD terms and of 14.4% in INR terms. We maintain our Buy rating on the stock with a target price of Rs 2,760.