|Shares of information technology (IT) companies were in focus on Monday with the S&P BSE IT index hitting record high. The raly comes on the back of a surge in prices of sector majors - Tata Consultancy Services (TCS) and Infosys - that hit a new high on the BSE in intra-day trade.|
TCS hit a new high of Rs 1,871, up 1.6% on Monday, extending its Friday’s 2.7% gain the BSE after the company’s board approved a proposal to buy back up to 76 million equity shares worth about Rs 160 billion. The buyback price has been fixed at Rs 2,100 a share, a 14 per cent premium over its Friday’s closing price of Rs 1,841 market price. The promoters’ holding in the company now stands at 71.92%.
This is the second year in a row when the Mumbai-headquartered firm has decided to go ahead with a share buyback programme in a bid to return excess cash to its shareholders.
Infosys, too, hit a new high of Rs 1,291, up 0.8%, extending its previous day’s 3.3% gain on the BSE.
At 09:38 am; the S&P BSE Index up 0.1% at 13,965, hit a record high of 14,071 in intra-day trade today. On comparison, the S&P BSE Sensex was trading 0.09% lower at 35,586 points.
Thus far in the current calendar year IT index has outperformed the market by surging 24% as compared to 4.6% rise in the benchmark index.
Sharekhan maintain Buy rating on TCS with a revised price target of Rs 2,100. “Upgrade in price target can be attributed to healthy growth outlook for the digital business, driven by recent deal wins and benefits from rupee depreciation. We have revised our estimates upwards by 4-5% for FY2019/FY2020 and expect earnings to report a 14% CAGR over FY2018-FY2020,” the brokerage firm said in stock update.