Infosys and TCS add ₹1.3 lakh crore to their market cap in just two sessions

The Nifty IT index may be 6% lower than its peak seen in January 2022, but the country’s largest two software firms –Tata Consultancy Services and Infosys – together have added close to ₹1.3 lakh crore in just two days.

Thanks to a roaring rally in software stocks, fueled by better-than-expected Q3 numbers, which surprised most investors alike. In absolute terms, Infosys added the most in market capitalisation in the last two sessions, which was followed by Tata Consultancy Services. While the market valuation of Infosys surged by ₹66,000 crore since Friday, the market capitalisation of TCS increased by ₹62,000 crore during the same period. HCL Technologies and Wipro witnessed their market cap swell by ₹28,000 crore and ₹24,000 crore, respectively in last two sessions.

While the ongoing pressure on discretionary IT spending forced Infosys to tweak its growth guidance for the third consecutive time in fiscal 2024, it's deal wins turned out to be a big positive for the stock. “Strong deal wins provide comfort on our expectation of 13% EPS CAGR over FY24-26,” foreign brokerage Jefferies wrote in an investor note.

On the other hand, shares of TCS have added as much as 5% in two sessions, after analysts raised price targets for the stock following positive management commentary post Q3 results. At least 10 brokerages including Morgan Stanley, Goldman Sachs, and HSBC increased their target prices for the stock after it reported Q3 earnings on Thursday. Morgan Stanley, which upgraded the stock to overweight from equal weight expects FY25 revenue growth to improve to 8-9% year-on-year along with 25% margins. “Valuation is not cheap, but in the event of improving growth momentum and earnings upgrade, premium is likely to be sustained,” wrote Morgan Stanley.

Interestingly, the six software stocks from the Nifty 50 pack added close to ₹2 lakh crore in two sessions, which is about 54% of the aggregate market cap addition seen by the entire Nifty 50 pack. The market capitalisation of top 50 companies in the country surged by ₹3.7 lakh crore, which stood at ₹175 lakh crore as of Monday’s close.