TCS hits $100 bn in market cap, overtakes RIL as India's most valuable firm

Tata Consultancy Services (TCS) has become the first Indian $100 billion- dollar company in terms of market capitalisation after the stock of India's information technology leader hit a new high on Monday.

The stock hit a new high of Rs3,499, up 2.7 per cent in intra-day trade, extending its Friday's 6.7 per cent surge, as the company reported better-than-expected March quarter earnings in post market hours on Thursday.

The $100 billion market cap puts TCS in an elite club, as globally there are only 63 other companies in this league, including Amazon and Facebook.

The figure equals the GDP of as many as 128 countries, and is bigger than the total market capitalisation of all the stocks listed on Pakistan Stock Exchange. It equals almost one-third of India's total Budget expenditure for FY19, according to The Economic Times. It is also equal to the defence budgets of India and Japan combined.

Now the most valued firm in India, TCS accounts for 4.43 per cent of BSE's total market cap, which is Rs151 lakh crore as of today. Its nearest competitor Reliance Industries Ltd needs to rally 13 per cent to become the most valued firm. At present, RIL has a market cap of Rs5.94 crore, which is less than that of TCS by over Rs70,000 crore.

TCS announced 1:1 bonus shares, ie one bonus shares of Re1 face value each for every share held in the company to its investors.

In terms of market capitalisation, TCS ranks ahead of Reliance Industries, HDFC Bank, ITC, Hindustan Unilever, HDFC, Maruti Suzuki and Infosys.

Most analysts are now bullish on the stock and have revised their target price. At least half a dozen foreign brokerages increased their price target for the stock by over 15 per cent post the results announcement last week, according to Business Standard.

Brokerages see TCS' positive commentary on banking and financial services staging a comeback and higher growth in digital services as a huge momentum to their double digit growth plans for FY19.

In its recent report, analysts at Nomura, however, have maintained a reduce rating on the stock with a target price of Rs2,750.

"We retain Reduce as we find valuations expensive at ~20x FY20F and see risk to street expectations of ~double-digit constant currency (CC) revenue growth and flattish margins. Our caution stems from: 1) large segments US/BFSI remaining weak, growing at low- to mid-single digits y-y, with clarity on BFSI still a quarter away amid risks from insourcing at large US Banks," Ashwin Mehta and Rishit Parikh of Nomura said in a recent report.