TCS Joins $100 Billion Club: 97th Most Valued In The World And More

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Tata Consultancy Services (TCS) continues to be the most stellar flagship company for the Tata Group. The Indian multinational IT behemoth has proved to be the most potent cash cow and its contribution can be gauged by the fact that it accounts for 85% of the Tata Group’s profit, which itself is worth near INR 10 trillion (exactly USD 144.8 billion) by market cap. On its road to success, TCS has set another milestone by becoming the first Indian company to breach the market cap of $100 Billion. The crown jewel of salt-to-software conglomerate Tata Group clocked this number in morning trade on Monday. TCS experienced an upsurge in shares which was triggered by earnings beyond expectations on Thursday after 13 quarters of under-performance. The stock jumped more than 4.39% from Rs 3429 at the time of market opening on Monday to hit the intra-day high of Rs 3,557 on BSE.

The incumbent achievement comes as TCS shares soared to an all-time high buoyed by the strong surge of 4.5% in its Q4 net profit. The company reported that the net profit grew by 5.7% to $1.07 billion in its fiscal Q4 2018 (ended in March) from $1.01 billion in the preceding quarter. This benchmark has catapulted the country’s largest software exporter to an elite club. Now, TCS is behind 63 companies in the world with the market value of $100 Billion or above. To put things into perspective, being a part of this league is not a cakewalk – it includes giants like Apple, Amazon, Facebook, Microsoft, etc. Also, TCS stands 97th in world’s 100 largest and valuable organisation. It overtook outsourcing and consultancy giant Accenture which had a market cap of $98.2 billion to become the second most valued IT services firm after IBM which continues to lead with an m-cap of $133.48 billion.

The Mumbai-headquartered TCS has a lot more to boast about. The company with its 58 subsidiaries has a presence in 46 countries. It is one the most famous mass recruiter and currently has 3,71,519 employees worldwide. The company has been ranked as the fastest growing IT brand in the world in 2018. According to an assessment done by Brand Finance, TCS has a total brand value of US $10.391 billion, up 14.4% from last years $9.081 billion.

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In homegrown competitors, Mukesh Ambani led Reliance Industries Ltd. had already touched the $100 billion mark but the current m-cap is estimated to be $89.36 Billion, according to Bloomberg. Infosys Ltd., another Indian IT solutions firm, happens to be the closest rivals of TCS and is also the second largest IT company after the former. Infosys’ m-cap lies at $37.75 Billion. The company reported a 7.2% growth in dollar revenue at an operating margin of 24.3% and clocked a net revenue of $10.94 billion in fiscal 2018. On the other hand, TCS revenue grew by 8.6% YoY to $19.1 billion in fiscal 2018, at an operating margin of 24.8%. Wipro, Bangalore based IT firm, stands at an m-cap of $23.71 billion, even though it was founded long before TCS.

TCS Market Cap

“TCS continues to execute solidly for a company of its size. Its recent deal wins have also been strong, and it appears to be transitioning to digital services well. However, even with growth acceleration in FY19, we expect earnings CAGR of around 10-11%,” said Credit Suisse in a 19 April note.

Interesting Facts about 100-billion mark.

  • TCS’ market cap at $100 billion is roughly 1/4th of India’s Forex Reserves as of April 13 which was worth $426 Billion.
  • The current TCS m-cap is bigger than the total market cap of all stocks listed on Pakistan Stock Exchange.
  • TCS’ m-cap at 6.7 lakh Cr is about 27% of Indian Budget expenditure for FY2019.
  • The $100 Billion figure equals the GDP of as many as 128 countries of the world. Countries like Sri Lanka, Kenya, Belarus, Jordan, Costa Rica, and more have GDPs of $100 billion or less.

On Aug 25, 2004, when the IT major got listed, it had a market cap of Rs 47,232 crore which rose to a mammoth Rs 6.7 lakh crore as of 23 April 2018. Between this period of almost 14 years, TCS has provided a whopping 1341% return to the investors.

TCS, in its journey to the pinnacle, had to face impediments of kinds. Though India’s over $150 billion IT sector will always be the home ground for the company, more than half of its revenue is generated by North America. The business in North America remained cold due to falling demand in banking, insurance(BFSI) and retail services. The IT giant’s total net profit for Q4 2017 (Fiscal Q3 2018) dropped to INR 65.31 billion from INR 67.78 billion a year earlier. Continental Europe and UK still showed better business and fueled growth for the company.

 

TCS has also achieved some major breakthroughs recently. The country’s leading IT exporter has bagged $2.25 billion outsourcing contract from TV rating measurement firm Nielsen. The partnership signed in October last year is a renewal of TCS’ existing collaboration with Nielsen. In the additional 5 year agreement, Nielsen commits to purchase services from TCS.

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TCS, founded in 1969, has got a great reason to celebrate its golden jubilee year. The company deserves to be in the $100 bn league because of one to many reasons. Perhaps, TCS has always strived to find the right balance between growth and profitability and still does.

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