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India's largest IT company Tata Consultancy Services (TCS) shares surged to a new high on Tuesday with its market capitalization hitting the 13 lakh crore mark. The Nifty IT index jumped over 1%, led by buying in Tech Mahindra, Coforge, TCS, Mindtree, Mphasis. 

Shares of TCS, the second largest Indian company by market capitalization, were trading more than 1% higher, rising to a high of 3,518 per share in Tuesday's early deals on the BSE, pushing its market value to 13.01 lakh crore. 

In this current leg of bull run, IT majors like TCS and Infosys are leading from the front. "Investors have confidence in IT since this segment is on an expansion cycle which is expected to last 3 to 4 years," says V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

For the quarter ended June 2021, TCS had reported a 28.5% rise in net profit at 9,008 crore as compared to 7,008 crore in the year-ago quarter. The company's revenue from operations in the June quarter grew 18.5% to 45,411 crore from 38,322 crore in the corresponding quarter of the previous fiscal. Dollar revenue for the quarter grew 21.6% from a year ago to $6.15 billion, helped by new orders from banking, financial services and insurance (BFSI) and retail clients.

Kotak Institutional Equities in a recent report on IT stocks said that the ingredients or drivers for increased technology spending will be present in the medium to long term. Public cloud adoption is in still in early stages. Only 15-20% of workloads have moved to public cloud—this can reach 60-70% in the next 3-4 years. Enterprises are geared up for accelerated digital transformation which will be a multi-year journey for most. 

“Though tight labor market conditions are making a dent in margin performance, growth visibility supports higher multiples. Large caps Infosys, TechM and TCS are attractive," the brokerage had said in a report earlier this month.

 

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