Indian Origin tech leader Tata Consultancy Services (TCS) competing closely with global giants IBM and Accenture in terms of market capitalization ( Total Value of Shares traded on the stock market). Recently it surpassed IBM( International Business Machines), the company’s market cap reached over $122 billion.
Revenue is less But Market Cap is high.
TCS’ revenue is only around 26% of IBM’s total revenue. For Fy 2019 TCS reported revenue of $20.9 billion (1,46,463 Crore) while IBM reported revenue of $79.6 billion. But in terms of market cap competing at par with the IBM.
What’s the reason for the high market cap of TCS?
TCS’ revenue increased by around 19% and profits increased by 21.9% in FY 2019. The company’s core sources of revenue are digital business and Banking, Financial and Insurance outsourcing -application services (BFIS) contracts. Company is expanding its strong foothold in U.K and European markets. The company maintains its traditional clients and invests in developing innovative technologies like automation and AI ( artificial intelligence). Which helps to increase the client base and contract margin for the company.
TCS brand value increased by 447% since 2010 and reached $12.8 billion in 2019. It is the 3rd most valued It services company in the world as per the report of Brand Finance- leading brand valuation firm.
Thus, the expertise of the core and adapting and investing consistently in offering innovative tech solutions, help TCS in becoming a global tech leader.