Technical Analysis

52 Week Blockbuster - TCS

K. Venkatasubramanian | Updated on July 16, 2011

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Tech major TCS has been the top performing stock in the Sensex basket for the past one year.

By outpacing its peers such as Infosys and Wipro substantially over the last couple of years in terms of both revenues as well profits growth, it has led the IT space.

Even in the recent June quarter, while revenues grew by 6.3 per cent to Rs 10,797 crore, net profits fell 8 per cent sequentially to Rs 2,415 crore. The fall in profits has been due to a 12.9 per cent increase in wage costs to Rs 4,206 crore, as a part of the annual salary hikes to employees.

The results clearly beat market expectations. Some analysts are of the opinion that TCS is witnessing a ‘structural' re-rating vis-à-vis Infosys.

Both Infosys and Wipro have done a series of changes while restructuring their organisation as a result of exits in their senior management. It remains to be seen how this plays out in terms of greater aggression in driving growth.

Meanwhile, TCS clearly stole the march over the last couple of years by recording higher volume growth, driving a higher utilisation regime and yet maintained relatively stable pricing.

There is also heartening developments in the form of a strong revival in the telecom vertical, and increased traction in its manufacturing and retail segments.

This even as it's BFSI vertical continues to be robust, thus giving a broad-based growth trajectory for the company.

Published on July 16, 2011

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