Weak rupee and robust Q4 earnings helped country's largest software services exporter TCS hit the historic $100-billion mark in market capitalisation on Monday after its stock touched an all-time high of 3,557 level in early morning trade. "This is the start of the next big run for TCS . TCS has enormous potential and we are extremely proud of the achievement", chairman of Tata Sons N Chandrasekaran told a business news channel.
The firm's market capitalisation in rupee terms zoomed to Rs 6,79,332 crore. The stock is the top gainer on Sensex and Nifty in trade today. At 10:30 am, the stock was trading 4.07% or 138 points higher at Rs 3,545 level. The stock is up more than 10% since the firm announced its Q4 earnings.
The Mumbai based-IT firm has crossed the market capitalisation of NYSE-listed fortune 500 company Accenture ($98.60 bn).
The stock rallied on Friday after the IT firm reported a 4.4 per cent rise in March quarter net profit on April 19 (after market hours) and guided towards a better show in fiscal 2019. On April 20, the stock closed 6.55 per cent to hit its 52-week high of Rs 3,399.90 on BSE.
The sharp rally in the stock added more than Rs 40,000 crore to its market capitalisation to reach Rs 6.51 lakh crore, just 1.5 percent shy of hitting its $100 billion MCap. Motilal Oswal in a note said: The stock already trades at 19 times FY20E earnings, and continued single-digit growth rate will not make a case further expansion in valuation multiples.
The sharp fall in rupee also boosted sentiment for the stock. The rupee fell further for sixth session by 4 paise today to trade at a fresh 13-month low against the US dollar, hit by a resurgent dollar, firming crude prices and a more hawkish tone of the Reserve Bank.
On Friday, the rupee fell 32 paise to 66.12 level. The currency dropped by more than 1 per cent in April and by 3.52 per cent this year so far.
On NSE, shares of the company surged 6.54 per cent to its one-year high of Rs 3,399.90. On Thursday, the Bengaluru-headquartered firm reported a 4.48 per cent year-on-year (YoY) rise in consolidated net profit at Rs 6,904 crore for the March quarter. The board recommended a 1:1 bonus share issue.
Revenue growth came at 8.2 per cent (YoY). Its FY18 Q4 revenue was at Rs 32,075 crore. TCS' commentary that despite the blip in retail, it should grow in double-digits in FY19 led to positive sentiment around the stock.
TCS doled out a 120 per cent payout of the target variable pay for its employees after Q4 earnings defied estimates. The company also announced a salary hike of two to six per cent depending on the geography.
It also announced a 1:1 bonus of shares and a dividend of Rs 29 a share, taking the total payout to shareholders at Rs 50 for the year. It has given out close to Rs 26,000 crore to the shareholders in dividends and bonuses in the year.
"With robust deal wins and green-shoots in banking, financial services and insurance (BFSI) sector, there is definite possibility of double-digit revenue growth. With growth acceleration, scale up in digital and support from currency, margins are ready for uptick as well, implying return of double-digit revenue/earnings growth after 3 years," Edelweiss Research said in a note.
Commenting on Q4 earnings, TCS Chief Operating Officer and Executive Director N Ganapathy Subramaniam said strong deal wins and a good pipeline positions TCS very well in the new fiscal. Digital revenue accounted for 23.8 per cent of the revenue, up 42.8 per cent year-on-year.