Amid the pandemic, the IT sector has seen good pick-up in demand for digital solutions
Shares of information technology (IT) companies were on a roll on Thursday with the S&P BSE IT index surging over 1,000 points on the BSE after the sector giant, Tata Consultancy Services (TCS), reported a healthy set of July-September quarter (Q2FY21) numbers that were above analysts' estimates.
board has also approved a buyback of Rs 16,000 crore to buy 53.3 million shares at Rs 3,000 per share. This was at 9.5 per cent premium from Wednesday's close of Rs 2,737.4 per share. Besides, the company also declared an interim dividend of Rs 12 per share. The record date for interim dividend is October 15, 2020 while payment date is November 3, 2020.
Apart from TCS, peer firm Wipro also announced on Wednesday that its board will consider a buyback proposal on October 13. Wipro is the third IT firm along with Majesco to consider share buyback.
At 11:32 am, the S&P BSE IT index, the top gainer among sectoral indices, was up 1,003 points or 4.7 per cent at 22,233 points, as compared to 1.4 per cent rise in the S&P BSE Sensex. The IT index hit a fresh record high of 22,285 on the BSE in the intra-day trade. Thus far in the financial year 2020-21 (FY21), the BSE IT index has zoomed 74 per cent, as against 37 per cent surge recorded by the S&P BSE Sensex, BSE data show.
Among individual stocks, Mindtree
and Larsen & Toubro Infotech
rallied 11 per cent in the intra-day trade on the BSE today. Meanwhile, TCS, HCL Technologies, Infosys, Mphasis, Sasken Technologies, Wipro, Aptech, KPIT Technologies, Sonata Software, Coforge, Ramco Systems and Persistent Systems were up 5 per cent to 8 per cent.
Amid the pandemic, the IT sector has seen good pick-up in demand for digital solutions resulting in improvement in growth outlook for most of the companies within the sector, say analysts at IDBI Capital. The optimism over the months also stemmed from the encouraging management commentary by Accenture as well as HCL Technologies' mid-quarter upward revision in revenue and earnings before interest, and tax (EBIT) margin guidance. Cost rationalisation, lower travel cost, and cross-currency benefits, according to analysts, are also expected to drive operating margins of the companies in Q2FY21.
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