TCS crosses $200 billion market capitalization

TCS had been India’s most valuable company for a long time till Reliance regained the mantle last year in the midst of its digital shift. On 15-Sep, TCS finally crossed the $200 billion market cap level and got pretty close to Reliance’s market cap of $205 billion. Here is a quick look at the journey of TCS over the years and how it compares with global IT giants.

TCS has a pedigree of more than 50 years. Formed in April 1968, TCS was the pioneer in the Indian IT industry. However, between 1968 and 2004, TCS continued as a closely held company, predominantly owned by Tata Sons. It was only in 2004, that the company came out with a public issue and listed on the stock exchanges.

At the time of listing in 2004, TCS had a market cap of $6.15 billion. It has since grown to $200 billion over the last 17 years. That translates into compounded annual returns of 22.75% over last 17 years, beating the Sensex and Nifty by 800 bps. However, the journey was not smooth all through.

The stock went into stagnation after 2013 when global IT demand shifted from BFSI to SMAC consisting of social networks, mobility, analytics and cloud. TCS took the lead with a rapid shift in strategy to ensure that digital accounted for more than half of its revenues. A focus on high-value clients resulted in TCS recording OPM in excess of 25%.

How does TCS compare with global peers?

If you leave out the 3 IT companies in the $2 trillion bracket viz. Apple, Microsoft and Alphabet, TCS does rank fairly high in terms of market cap with other global IT majors. TCS market cap at $200 billion is only lower than Adobe at $314 billion, Salesforce at $251 billion and Oracle at $241 billion.

However, in terms of market value, TCS scores above SAP at $171 billion, Intuit at $156 billion, IBM at $123 billion and Schneider at $102 billion. In terms of pure software plays, TCS ranks fourth in the world. That is quite a feat for a homegrown Indian IT company.