Mumbai, July 16: Buoyed by strong first quarter financials, Tata Consultancy Services (TCS) on Friday went past Infosys to become India’s most valuable tech firm. TCS saw its stock price shoot up six per cent on Friday, which has pushed up the company’s market capitalization to Rs 1.62 lakh crore.
The market capitalisation of Infosys stood at Rs 1.59 lakh crore on Friday. Wipro, which is the third largest player in India’s tech sector, weighs in with a total value of Rs 98,527 crore.
On Thursday, TCS had announced its first quarter financial numbers. The company saw its net profit increase to Rs 1,906 crore – well above the market’s expectations. At the moment, TCS is also the top stock pick for IT sector analysts. Leading brokerage houses such as JP Morgan, HSBC, Goldman Sachs and Merrill Lynch have ‘overweight’ or ‘buy’ ratings on the stock. These four brokers have price targets on the company ranging from Rs 900-950, well above the market price of Rs 832, inspite of the jump on Friday.
Amongst Indian IT firms, Infosys has always received a better valuation for its stock compared to TCS. This gap could now narrow, feels JP Morgan. “TCS should close the P/E gap relative to Infosys on the back of continued strong performance and consensus upgrades,” the brokerage says.
TCS has also raised its hiring target for financial year 2011 from 30,000 to 40,000 versus 36,000 for Infosys, indicating stronger revenue growth expectations, says brokerage house Goldman Sachs. Revenue pipeline for the IT sector remains robust, the brokerage adds, in spite of concerns about Europe.