TCS & RIL at Life High - Who Will Be Winner?

TCS made life high of Rs. 3,878 on 6th Sep. 21, so did RIL at Rs. 2,480 on the same day. TCS closed yesterday at Rs. 3,845, about less than 1% lower from its life high, while RIL closed at Rs.2,372,about 4.5% lower from its life high. on yesterday closing, M cap of TCS was at Rs. 14.22 lakh cr, while RIL had of Rs.15.30 lakh cr, excluding unpaid money of Rs.24k cr, to be paid at Rs. 628.50 per share, on 15th Nov. 21.

Based on Q1FY22 numbers, TCS posted an EPS of Rs. 24.35, with PAT of Rs. 9,008 cr, is likely to post an EPS of Rs. 110 for FY 22, against Rs. 87 seen for FY21, expected to give a growth of over 26%. As against this, for Q1FY22, RIL posted an EPS of Rs.18.75, with PAT of Rs. 12,273 cr is likely to post an EPS of Rs. 79 for FY 22, against Rs. 68 seen for FY21, thus expected to give a growth of around 18%. TCS is now ruling at a PE of 35x, while RIL is ruling at a PE of 30x.

FIIs are seen relentless buyers in TCS from 1st Aug, which made stock to rise by Rs. 650 or above 20%. RIL rose by Rs. 320 or by 16% in this period, largely due to buying seen by the informed circles, maybe, to catch up with TCS. M cap of RIL is higher by Rs. 75k cr, due to Rights issue, while TCS is on a buy back spree at periodic intervals.

RIL is losing is valuations on its new generation business of Jio and Jio Mart, to Bharti and other Retailers, while 14% of its PBT is contributed by Interest income, which deserves a lower multiple. Its O2C business, having contributed 55% of EBIT in this Q1, is largely Commodity Business, which also deserves lower multiple. Hence, PE of 30x for RIL is surely not seen sustainable.

On the other hand, TCS having Promoter stake of  72.19% and Instutions and FIIs, holding 23.40%, leaves float of just 4.40%, which itself is a bullish factor.

Hence maybe, on year end and FY end, TCS will emerge as the Top M Cap stock on Indian Bourses.

This is not a Buy or Sell recommendation, while stock recommendations are provided exclusively to our paid members in the Member Zone.