Why TCS shares have hit 52-week high

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Shares in Tata Consultancy Services, India's biggest software services exporter, jumped to 52-week high after global brokerage major Bank of America- Merrill Lynch retained its "buy" rating on the stock.

The stock hit an intraday high of Rs. 1,343.30, which is the highest level in 52-weeks. At 1.45 p.m., TCS shares traded 1.6 per cent higher at Rs. 1,340.15, outperforming the BSE IT index, which traded with 1 per cent gains.

Here are the reasons for the gains in the stock.

1) BofA-ML cited gains in market share across its service line and geography for the call. TCS is gaining market share thanks to "strong client relationships" and "rapidly growing brand power and agility," BofA-ML said.

2) TCS chief N Chandrasekaran had on Monday said that the company's wins have been secular and TCS was growing in all the key verticals and geographies.

3) The TCS top boss was confident of growth in Europe, which is witnessing a severe debt crisis for three years now. The US and Europe account for over 75 per cent of sales for IT companies including TCS.

"From a tech perspective, Europe continues to be an excellent market primarily because customers in Eurozone are looking at technology to revive themselves. So there's a lot of opportunity to work closely with customers," Chandrasekaran said.

4) Bofa-ML also cited confidence on "strong leadership" and TCS' "promising" strategy of tapping volume in sectors such as IT infrastructure management services as well as investing in platforms that "demonstrate its domain expertise."

5) TCS expects dollar revenues to grow at over 11-14 per cent (Nasscom's projection for fiscal 2012-12) unlike its peer Infosys, which expects a modest 5 per cent growth in the fiscal. TCS shares have gained over 31 per cent over the last year as the company reported rapid growth quarter after quarter. In contrast, the BSE Sensex has gained mere 7 per cent since August 29, 2011.

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