TCS Hits $100 Billion Milestone, Trumps Accenture In Market Value

Tata Consultancy Services or TCS today became the first Indian IT company to hit the $100 billion market capitalisation mark, after its shares extended gains to a third straight session. Advances in TCS followed a record quarterly profit reported by the IT major last week and amid weakness in the rupee against the US dollar. TCS also pipped rival Accenture in market capitalisation. The US-listed firm had a market value of $98 billion. TCS shares hit a record high of Rs 3,557 today. TCS had posted its biggest-ever quarterly profit last week. Mumbai-based TCS, which started trading in 2004, is a unit of Tata Group, one of India's oldest companies that now sells cars, power, tea and chemicals through its various subsidiaries.

"It's great news not just for TCS, even for the Indian equity market as a whole," said Urmil Shah, an analyst at IDBI Capital. "TCS has done most of the things right over a long-term... a stable management, adapted to industry changes better and invested in it at the right time."

"Growth outlook for TCS is in double digits over the next two years and that stands out when compared to its peers," Shah said.

(Also read: "Most Bullish In A Decade" On Indian IT: Why Some Analysts Are Positive)

Domestic brokerage Edelweiss Securities has reiterated its bullish call on the Indian IT sector. In a report, the brokerage cited many factors behind its bullishness on Indian IT. "Huge digital-led demand (2) potential margin improvement as digital gains scale and currency tailwind; and (3) consistent buy back. The above factors cumulatively indicate that earnings growth rate can jump almost 3x from a mere 3-5% over FY16-18 to 13-15% over FY21," Edelweiss analysts said in the report.

Last week, TCS said it expects a rebound in spending by its key banking, financial services and insurance (BFSI) clients this financial year, helped by strong demand for technology related to security, blockchain, and analytics. The fourth quarter profit of TCS rose to Rs 6,904 crore, beating analysts' average estimate of Rs 6,798 crore.

Out of the 45 analysts covering TCS, 19 have a "buy" or higher rating, 18 a "hold". The rest rate it "sell" or lower. TCS shares have risen 26 per cent so far this year.