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The pyramid at the top of the Indian IT sector has become very narrow. Tata Consultancy Services (TCS) is now not only the leader in the BSE charts but it has a market capitalisation that surpasses the aggregate of the four IT majors — Infosys, Wipro, HCL Technologies and Tech Mahindra — making it a more valuable company than all of them combined. Last Wednesday for instance, amidst a revival in the US economy, falling rupee and volatile equity markets, while TCS closed with a market cap of Rs 4,04,352 crore, the aggregate market cap of Infosys, Wipro, HCL Tech and Tech Mahindra stood at Rs 4,02,020 crore.
However, in terms of revenue and profitability that is not the case. While TCS had a revenue and profit after tax of Rs 48,426 crore and Rs 12,786 crore respectively for the year ended March 2013, the aggregate revenue and PAT for the four companies stood at Rs 8,88,00 crore and Rs 19,122 crore which is significantly higher than TCS.
Share prices of all IT companies have surged significantly over the last four months since the rupee started its decline. TCS, however, has emerged as the biggest beneficiary at the stock markets among the five IT majors. Since May 2013, while TCS has witnessed a jump in its share prices by 48.8 per cent, Infosys and Wipro gained 37.7 and 39 per cent respectively. HCL Tech and Tech Mahindra too rose by 43.8 and 44 per cent respectively.
Industry experts say that the premium that market is giving to TCS is justified.
“It is not just about rupee dollar movement but TCS has several factors working for it. It is getting a bigger share of revenue in big deals where several global players are involved, it is getting more long term projects and also its business is well spread across various regions of the world,” said an IT expert who did not wish to be named as he works as a consultant with leading IT companies.
Market experts feel that even in a correction phase, TCS will perform better than the rest.
With the run TCS has had at the stock exchanges over the last four months, it has taken a significant lead in market capitalisation over Reliance Industries Limited which is the second largest company in terms of market capitalisation.