Once Tata Consultancy Services (TCS) goes public, it will become among the top five companies on the Indian bourses post listing.
To recap, TCS, the largest IT company in India, is offering 63.77 million shares in its IPO at a price, which is estimated to be between Rs 800-900 per share. At this price the company would be valued at about Rs406 billion making it one of the top 5 companies in
India by market capitalisation.
Of the 63.77 million shares offered in the IPO (including a Green Shoe Option of 8.32mn shares), 22.78 million shares are fresh issue and 32.68 million are offer for sale by existing shareholders. The offer, which is likely to be priced at Rs 800-Rs 900, will is expected to garner between Rs 18 billion and Rs 20 billion for the company.
Post issue the company will have 478.28 million shares outstanding and an equity capital of Rs 478million. The stake of Tata Sons, the promoters, will fall to 80.95 per cent (from 90 per cent). The market capitalisation of the company at IPO is estimated between Rs 382 billion and Rs 430 billion.
The billion-dollar revenue company has nearly 30,000 employees and operates across 32 countries through 149 sales offices and 31 delivery locations. While its services and domain-skills profile is similar to large Indian peers, TCS scores over others in its scale and truly global delivery capabilities.
In the nine-months ended Dec. 2003, the company achieved revenues of Rs50.85 billion and net profits of Rs11.43 billion from its over 402 active clients including six of the 10 and 37 of the 100 largest corporations in the world, several of whom are TCS's old clients
Over 147 clients provide billings of over a million dollars annually and four are billed over US$50million annually. Its largest clients apart from GE include, among others, P&O Nedlloyd, SegaInterSettle, Target, AIG, HP, JP Morgan Chase.
With 50 offices in the US and Canada and eight in the UK, it probably reaches every important region in its principal markets. While most Indian companies have a global sales and marketing presence, what differentiates TCS is that it also has true global delivery capability.
Apart from the presence in 14 Indian cities, TCS has delivery capability from 17 international cities in countries such as US, UK, China, Hungary, Uruguay, Ireland, etc.
TCS gets about 12.5 per cent of its total revenues (including CMC) from India. It says that its presence in India is strategic in nature, as it enables it to strengthen its capabilities especially related to large end-to-end mission-critical projects.
Some of its Indian clients include the NSE, BSE, NSDL, SBI, Tata Teleservices, etc.
TCS gets about 77.6 per cent of its revenues from application development and maintenance services. Infosys earns about 55.7 per cent and Satyam about 68.1per cent from such services. GE Relationship is the company's single largest in India. GE accounted for revenues of about Rs8.899 billion in the nine-months ending December 2003 (Rs1.1865 billion when annualised).
TCS's 11-year-old GE relationship is quite easily the largest single client relationship in the Indian technology sector. TCS serves several GE group entities across several geographies and across multiple service lines.