TCS shares jump 5.5% post-Q4 earnings, m-cap rallies Rs 34,222 cr; investors anticipate demand recovery in Q3

New Delhi: Shares of Tata Consultancy Services (TCS) settled for the day with gains of nearly 5.5 percent on Friday, following which the market cap of the company rallied by Rs 34,222 crore after the company reported a marginal decline in March quarter earnings.

Market analysts said TCS outlined a balanced business outlook and investors are anticipating a recovery in demand conditions by the third quarter of the current financial year.

On BSE, the scrip of the company closed 5.32 percent higher at Rs 1,806.80 after advancing 7.94 percent to Rs 1,851.85 during the day.

Representational image. Reuters.

At the NSE, it rose by 5.47 percent to close at Rs 1,810. During the day it climbed 7.91 percent to touch an intra-day high of Rs 1,851.95.

Led by the rally in the scrip, the market valuation of the company jumped by Rs 34,221.87 crore to reach Rs 6,77,980.87 crore on the BSE.

In traded volume terms, 3 lakh shares were traded at the BSE and about 98 lakh shares on the NSE during the day.

TCS on Thursday reported a marginal dip in March quarter net at Rs 8,049 crore. The company had posted a net profit of Rs 8,126 crore in the year-ago period.

"In contrast to the cautious commentary from Wipro, TCS outlined a more balanced business outlook with hopes for a demand recovery by 3Q FY21," according to a report by JM Financial Institutional Securities Limited.

It further added that "while the near-term challenges are likely to be significant and broad-based across verticals TCS admitted to a potential QoQ decline in 1QFY21 similar to post the 2008 global financial crisis its scale should help gain market share over the medium term."

The Tata Group company promised all its 4.5 lakh employees that there will be no retrenchments but they will have to do without a salary hike for the year.

The company reported a 5.1 percent increase in revenue to Rs 39,946 crore for the reporting quarter, while the same for the full year FY20 was up 7.1 percent to Rs 1.57 lakh crore.

The company's chief executive officer and managing director Rajesh Gopinathan said the impact of the COVID-19 pandemic will be just like the global financial crisis, but exuded confidence that revenues will be back to the levels of March 2020 quarter by December 2020 or March 2021 quarter, after two quarters of impact.

From a long-term perspective, the business model is intact, Gopinathan said, adding that the aspirational operating profit of 26-28 percent will still be chased by the company once this period is over.