TCS hits record high on strong Q1 results

By: | Published: July 12, 2018 3:20 AM

Shares of Tata Consultancy Services (TCS) soared 6.3% in intra-day trades hitting a record high on Wednesday after the software major reported better than expected results on Tuesday.

TCS, shares of TCS, Reliance Industries Limited, TCS stock, Sensex, Nifty, BFSITCS is India’s most valued company; its market capitalisation rose by Rs 39,281 crore on Wednesday to hit Rs 7.57 lakh crore. (Reuters)

Shares of Tata Consultancy Services (TCS) soared 6.3% in intra-day trades hitting a record high on Wednesday after the software major reported better than expected results on Tuesday. The stock ended Wednesday’s session at Rs 1979.60, which was 5.5% above its previous close. TCS is India’s most valued company; its market capitalisation rose by Rs 39,281 crore on Wednesday to hit Rs 7.57 lakh crore. Reliance Industries Limited is valued at Rs 6.56 lakh crore while HDFC Bank commands a market value of Rs 5.58 lakh crore. The stock is now trading at a one-year forward price-earnings multiple of 24 times compared with a multiple of 18.1 times for Infosys. The TCS stock has risen a remarkable 46.6% since the beginning of 2018 against a rise of 28% for Infosys and the Sensex’s gain of 6.5%.

It is the best-performing stock in 2018 in both the Sensex and Nifty. The second-best performing stock is Kotak Mahindra Bank in both the indices with gains of 37.3%. The IT major reported a consolidated net profit of Rs 7,340 crore, up 6.35% quarter-on-quarter (q-o-q) for the three months to June, against a Bloomberg consensus estimate of Rs 7,018 crore.

The company posted consolidated revenues of Rs 34,261 crore against a Bloomberg consensus estimate of Rs 33,979 crore. In a note to investors, Jefferies said, “TCS delivered a strong performance in q1 with q-o-q constant currency growth of 4.1% and EBIT margin of 25% ahead of our (and consensus) already high expectations. Management indicated better outlook for BFSI, with recovery even in North America, and greater visibility on return to overall double-digit y-o-y growth. Weak rupee is an additional tailwind.”

The note added that there was an uptick in performance and outlook on BFSI with the company indicating a recovery in North America which has been a drag in recent quarters. “Management said that the recovery is broad-based across small and large clients and across different sub-segments within BFSI and confirmed a better medium-term outlook for the vertical,” the note added.
Analysts are generally bullish on the stock. Of the 51 analysts who track the company on Bloomberg, 23 have a ‘buy’ rating, eight have a ‘sell’ rating while 20 have a ‘hold.’

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