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Here's some good news for India Inc when it is going through one the most challenging times. Tata Group on Monday became the first Indian business house to cross the Rs 6-lakh-crore mark (at Rs 6.06 lakh crore) in market valuation. At this level, the valuation is more than double its nearest competitor Reliance Industries Ltd (RIL), which has gained 5.6 per cent this year to touch a market capitalisation of Rs 2.86 lakh crore.
These are the only two of the top five Indian business groups by market value that have gained. The other three - Vedanta, Aditya Birla Group and Bharti - have lost 4.36 per cent, 4.53 per cent and 0.14 per cent, respectively.
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Most group companies lose
The Tata Group's spectacular rise (the combined market cap of the Group has gone up 22.54 per cent) has, however, been largely on the back of a record gain by software behemoth Tata Consultancy Services (TCS). In fact, 27 of the 29 listed companies of the Group have lost market value this year. Group flagship companies Tata Steel and Tata Power have lost 32 per cent to Rs 28,111 crore and to Rs 17,667 crore, respectively, so far this year.
In contrast, the sharp depreciation of the rupee saw TCS, India's largest information technology (IT) exporter, record a 62.7 per cent gain in market value this year to Rs 4 lakh crore. The BSE's IT Index saw a 41 per cent gain in this period. TCS now accounts for 66 per cent of the total market valuation for the 29 listed companies of Tata Group.
"Manufacturing and infrastructure-related sectors have been doing badly this year, while the IT industry has been fundamentally doing well," says Alok Ranjan, head (portfolio management service) at domestic brokerage Way2 Wealth. "The true conglomerate nature of the group has saved it on aggregate basis amid the economic downturn."
The 20 per cent decline in the rupee's value to 66 against the dollar this financial year has boosted prospects of higher profits for Indian IT exporters, which have the largest number of clients in the US and report their earning in the US dollar.
"It has been an all-round performance with strong revenue growth across markets led by the US," said N Chandrasekaran, chief executive and managing director, TCS, after reporting a six per cent sequential rise in net profit to Rs 3,831 crore for the quarter ended June. This came on the back of a 9.5 per cent jump in consolidated sales to Rs 17,620 crore.
"Strong momentum in our business, the right cost structure, a customer-centric approach and our increasing investments in new digital solutions and services position us well to post another year of strong business growth," he said.
