TCS Market -Capitalization Crosses 12 Trillion in Q3
Tata Consultancy Services is the first IT company and second listed company to cross 12 trillion market-capitalization post reporting a healthy set of numbers for the October-December quarter. However, the company's shares has hit a fresh record high of 3,224 which is a rise by three precent on the BSE in the early morning trade after brokerages maintained 'buy' rating on the stock. However, the company's Q3FY21 numbers were above analysts' estimates on all fronts.
In the past one month, TCS has excelled the market by surging 15 percent as compared to eight rise in the S&P BSE Sensex. TCS' quarter on quarter (QoQ) augmentation in revenues that has been led by a healthy demand in core transformation services and conversion from the previous deals.
US dollar revenues grew 5.1 percent QoQ to $5,702 million. On a constant currency basis, the revenue growth was 4.1 percent QoQ and 0.4 percent year-on-year (YoY). EBIT (earnings before interest and tax) margins expanded 42 basis points (bps) QoQ to 26.6 percent. TCS has declared an interim dividend of 6 per share.
In stock update, HDFC Securities says, "We maintain ADD on TCS, following a back-to-back stellar performance and positive commentary. Key positives included broad-based (verticals & services) growth outperformance (strongest 3Q in nine years) supported by better conversions, robust deal wins with total contract value (TCV) at USD 6.8 billion (ex-PBS Deutsche deal), 9MFY21 TCV higher by 23 percent and strong bookings/ramp-up expected in 4Q, margin outperformance supported by operating leverage & efficiencies."
However, Kotak Institutional Equities has a reduce rating on the stocks due to full valuation. It believes the positives are more than adequately discounted in the current market price. The bank states, "TCS impressed once again with all-round growth led by execution on digital priorities of clients and ramp-up of large deals. The company will be at the forefront of accelerating digital shift and core transformation for clients leveraging its full-service suite. We raise FY2021-23E EPS by two to six percent and fair value to 3,070 from Rs 2,920 earlier."