TCS hits all-time high, up 2%; market cap nears Rs 15-trillion mark

The current market cap of TCS stood around Rs 14.93 trillion on the BSE, as of 10:56 am, the exchange data showed.

Shares of Tata Consultancy Services (TCS) hit an all-time high of Rs 4,038.40, up 1.7 per cent on the BSE in Monday’s intra-day trade. In the past three sessions, the stock of the information technology (IT) services major was up nearly 5 per cent, after TCS beat the Street estimates on growth for the quarter ended December 2021 (Q3FY22).

The company has also announced a buyback of Rs 18,000 crore (40 million shares at Rs 4,500 per share). The amount is 12.5 per cent higher than historical buyback. The company also declared an interim dividend of Rs 7 share to be paid on February 7, 2022. TCS has fixed January 20, 2022 as the record date for the purpose of payment of third interim dividend. The stock will turn ex-date for interim dividend on Wednesday, January 19, 2022.

The stock price of the company surpassed its previous high of Rs 3,990 touched on October 8, 2021. At 10:56 am; TCS was up 1.6 per cent at Rs 4,033.40, as compared to 0.20 per cent rise in the S&P BSE Sensex. The counter has seen huge trading volumes, with a combined around 1.9 million shares changing hands on the NSE and BSE.

With the current upward movement in stock price, TCS is set to become the second listed company to enter the Rs 15 trillion market capitalisation (market cap) club. Currently, the company has a market cap of Rs 14.93 trillion on the BSE, the exchange data showed. Reliance Industries is at number one position in the overall market cap ranking with Rs 17.30 trillion market cap, the BSE data showed.

Post Q3 results and buyback approval, most of the brokerage houses increased their respective target price on TCS, considering steady deal wins and consistent execution.

“TCS is key beneficiary of multi-year growth (15-20 per cent) in digital technologies. The increase in outsourcing in Europe, vendor consolidation and deal pipeline leading to revenue CAGR of 13 per cent over FY21-24E. We expect margins to be under pressure, at least in FY23E, before stabilising at 25.8 per cent in FY24E, resulting in margin improvement of only 50 bps in FY21-24E. The double-digit return ratios, strong cash generation and healthy payout,” analyst at ICICI Securities said in Q3 result update. The brokerage firm retains ‘buy’ rating on the stock with target price of Rs 4,600 per share.

TCS continued to see robust demand as key themes, such as cloud modernization, connected enterprise & product innovation, customer experience and digital workplace transformation, gained traction. It has signed deals worth USD7.6 billion in Q3, with a book-to-bill ratio of 1.2x. Management indicated that the deal intake remained well-balanced across deal sizes in Q3, with the strongest deal pipeline. Management remains confident of delivering double-digit revenue growth in FY22, considering healthy deal wins/deal pipeline and broad-based growth, analyst at Emkay Global Financial Services said with maintain ‘buy’ rating on TCS and target price of Rs 4,150 per share.