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TCS shares jump 24% in mkt debut

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CIOL Bureau
New Update

MUMBAI: Shares of Tata Consultancy Services Ltd. jumped 24 percent in their market debut, as investors flocked to the leader of the nation's $12.5 billion software services export industry.



TCS, which raised $1.17 billion in India's largest IPO, has grown with a boom in outsourcing of software design, call centers and back-office services by U.S. and European companies to India.



Confidence in the sector improved after TCS rivals Infosys Technologies Ltd. and Wipro Ltd. reported better-than-expected quarterly results last month and raised their forecasts on solid demand and a weakening of the Indian rupee.



Shares started trading at Rs 1,050 at the Bombay Stock Exchange, compared with an offer price of Rs 850 per share, valuing the company at $10.8 billion.



The offer of a 13.33 percent stake was subscribed 7.7 times and the strong debut reflected the improved outlook for the technology sector and pent-up demand for the issue.



At the opening price, the company added $10.8 billion to India's $239 billion market capitalization. It is now the third-largest company by market capitalization on the Bombay Stock Exchange, ahead of Infosys.



Software shares have rallied ahead of the TCS listing on expectations that the shares would start trading at a premium.



"The listing will enhance TCS's profile globally, and act as a currency for our growth plans and meeting employee expectations," Chief Executive S. Ramadorai told reporters.



"The great thing about this industry is not so much where we stand, but where we are going."



Part of the Tata conglomerate, India's second-largest private industrial group, TCS competes with NASDAQ-listed Infosys and New York Stock Exchange-listed Wipro. General Electric accounts for some 17 percent of its $1.3 billion in annual sales and TCS is GE's largest offshore IT services supplier.



Analysts expect TCS to report earnings per share of about Rs 42 for the year to March 2005, up 24 percent from the past year. Wednesday's opening price valued it at a forward price to earnings (PE) ratio of 25, in line with Infosys.

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