TCS continues to shine

there has been a popular infographic making the rounds on social media of late. one that compares the estimated worth of the oil sales of Saudi Arabia in 2021 to that of Indian software services exports for the year. for those that haven’t come across it yet, it may come as a surprise which one is greater, as a survey from none less than the RBI indicated that the latter would likely win at $148.3 billion vs the former’s $145.3 billion. as this suggests, the previous year was a stellar one for Indian IT companies. 

now TCS, the largest of them all, sees its stock touching new all time highs, crossing the landmark of Rs 4,000/share and achieving a market cap of almost Rs 15 lakh crore on January 17.

crunching the numbers

one major factor that spurred its rally was a strong quarterly report for Q3 FY22. it posted a consolidated net profit of Rs 9,769 crore for the quarter, a 12% jump from the corresponding period a year ago. its operational revenue for the quarter came in at Rs 48,885 crore, a 16% increase over Q3 FY21.
by virtue of its size, TCS has been one of the largest beneficiaries of multi-year growth (15-20%) in digital technologies. demand for services such as cloud modernization, connected enterprise & product innovation, customer experience and digital workplace transformation has shown an uptick. it has also benefited from an increase in outsourcing in Europe, where it is actively seeking expansion, and vendor consolidation. it also signed deals worth $7.6 billion in the quarter, and its pipeline is expected to lead to revenue CAGR (compounded annual growth rate) of 13% over FY21-24.

market moves

the other factor is that the IT giant has announced one of its largest share buybacks in recent times, amounting to Rs 18,000 crore. it will acquire up to 400 lakh shares at a price of Rs 4,500/share, which at the time of the announcement was a premium of Rs 643 over the market price. this difference may also have resulted in purchase of shares on the open market to try and sell at a premium to the company. or it could be by investors following TCS’ indication of what it sees as a fair value for its shares.

with a strong pipeline of deals under its belt, TCS is continuing on its growth path for employees as well. it is on track to end FY22 with over 1 lakh fresher hires, its highest ever in a financial year. if the company’s belief in itself is anything to go by, its share price may still have some fuel left to burn and propel it to further heights.