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Journalism of Courage
Ravindera Ingle’s association with the Tata group goes back to the time when his father was employed at Tata Power.
‘‘After his death in 1974, I kept investing in other Tata companies but this is my biggest investment,’’ said the 50-year-old retired office assistant. Ingle has no plans to part with his newly acquired 17 shares of Tata Consultancy Services (TCS) for a long time.
India’s largest IT company — it became India’s first billion-dollar software firm in revenues last year — finally became a listed company on Wednesday. The splashy Bombay Stock Exchange (BSE) debut, at a cool 23.5 per cent premium to its offer price, was for it just one of many reasons to celebrate.
TCS is now the third-largest Indian company after ONGC and Reliance Industries. Thanks to TCS, the Tata conglomerate also overtook the Reliance group to become the country’s top private business group.
‘‘It was a positive, satisfying and very, very humbling moment,’’ said managing director S Ramadorai of the dream listing. The 59-year-old was the recipient of all kinds of encouragement from his wife (‘‘All the best’’) to Tata group chairman Ratan Tata (‘‘This is only the beginning’’).
The stock made its BSE debut at Rs 1,050, up 23.5 per cent from its offer price of Rs 850. It quickly climbed to a high of 1,080, then fell back to 979 before ending a hectic day at Rs 987.50 or a 16.17 per cent premium. On the National Stock Exchange, TCS closed at Rs 987.95.
The company topped volumes on both bourses with over 65.21 lakh shares traded on the BSE and more than 1.71 crore shares traded on the NSE, indicating that many retail investors booked profits on Day One. ‘‘It opened above the issue price… but owing to selling pressure by short-term investors, the price came down,’’ said S K Mitra, MD, Birla Sun Life Mutual Fund. ‘‘In the long term. I see TCS outperforming the market for sure and it will definitely be an index heavyweight,’’ he added.
Earlier this month, TCS created history as India’s biggest IPO was oversubscribed 7.7 times. The IPO raised Rs 5,420 crore from the market. ‘‘I was overwhelmed by the interest shown by individual investors for the TCS IPO,’’ Tata said at the listing ceremony early in the day.
TCS has emerged as a Tata group giant in terms of market capitalisation. At Wednesday’s closing price of Rs 987.50, its market capitalisation stands at a solid Rs 47,229 crore. At present, ONGC is No. 1 at Rs 1,00,028 crore followed by Reliance Industries at Rs 63,933 crore. It has also overtaken Infosys Technologies (Rs 41,082 crore) to emerge as the No. 1 Indian IT company in terms of market cap.
However, the TCS closing below the Rs 1,000 level made some investors jittery. Tata group tech stocks Tata Infotech (down 7.24% to Rs 426.25), Tata Elxsi (down 5.27% to Rs 131.25) and CMC (down 1.49% to Rs 684.95) were also hit when the listing price fell below some expectations. These shares have been on an uptrend since the announcement of the TCS IPO.
‘‘We do not go by the listing price. We go by fundamentals. Fundamentally, TCS is a great company and a long-term investment for any fund manager. It also ushers in a ‘feel good’ factor for the software sector,’’ said Sandeep Dasgupta, CEO, Deutsche Asset Management.
Top competitors, the New York Stock Exchange-listed Wipro (down 2.10% to Rs 565.10) and the Nasdaq-listed Infosys (down 1.33% to Rs 1,535.35) also traded lower.
Tata was optimistic about the future of TCS. ‘‘We will go for a merger (with other infotech companies in the group) only if it makes sense to TCS and other companies. At present, the group will concentrate on growing business in the right direction,’’ he said.
Ramadorai said prospects in the software sector were looking good. ‘‘I feel markets like India will spend a lot on technology. We’re also looking at goverment as a big spender in the years to come,’’ he said. ‘‘There’s a lot more understanding that technology has to play an important role in solving business problems.
