TCS rallies 4%, hits record high; market-cap nears Rs 13-trillion mark

TCS' market-cap hit Rs 12.87-trillion mark in the intra-day trade today and is just 1.01 per cent away to achieve the Rs 13-trillion m-cap feat

Shares of Tata Consultancy Services (TCS) rallied nearly 4 per cent to Rs 3,479.35 and hit a new high on the BSE in the intra-day trade on Friday. The stock of  the information technology (IT) consulting & software giant surpassed its previous high of Rs 3,399, touched on June 25, 2021.

A sharp rally in stock price propelled TCS' market capitalisation (market-cap) towards Rs 13-trillion mark, at Rs 12.87 trillion, in the intra-day trade today. Reliance Industries, with an m-cap of Rs 13.53 trillion, stands at number one position in the overall market-cap ranking.

TCS, part of the Tata group of companies, announced earlier today that the company has been named to the Microsoft Business Applications 2021/2022 Inner Circle, for the second consecutive year. This is based on TCS’ sales achievements that place it in the top echelons of Microsoft Business Applications’ global network of partners, resulting from the high standard of excellence in building innovative solutions that help customers achieve their growth and transformation objectives.

TCS is a Microsoft Gold Partner and has successfully delivered over 350 Dynamics 365 engagements for more than 300 global customers. Recently it also won two 2021 Microsoft Partner of the Year Awards – Azure Intelligent Cloud in France and Dynamics 365 Field Service in the US.

HDFC Securities maintains an 'add' rating on TCS with a target price of Rs 3,650 per share. Growth drivers for the company, it says, include calibrated focus on upstream/consulting business (larger share of G&T) increasing the addressable market/pipeline, increased outsourcing (Europe), core transformation deals and strong growth in public hyperscaler services, strong deal wins in retail & CPG vertical and increased deal volumes (not TCV) in BFSI, and near-term lift-off with recovery in regional market segment (India revenue).

"Increasing the supply-side pressure (attrition headed towards double digits, yet industry-best) and return of discretionary spend (ex-travel) will cap margin gains despite operating leverage and differential pricing," the brokerage firm said in a June quarter result update.

“TCS brand, culture of investing for the long run and low employee attrition should help company to grow better in coming quarters where demand is strong; while supply side possess the major challenge. In addition company deal wins also improved in past two quarters to $8.1bn/$9.2bn in Q1/Q4 versus $7.6bn in the past eight quarters driven by strong deal in retail vertical. Overall deal pipeline remain strong despite strong booking in past quarters and more towards clouds and automation work with around 50 per cent of the deals are now related to SaaS," analysts at Antique Stock Broking said in a company update.