TCS has found itself in the limelight following a recent legal setback in the United States. A United States District Court has imposed a hefty penalty of approximately $194.2 million (around Rs 1,600 crore) on TCS, stemming from multiple charges of misappropriating trade secrets. This adverse judgment has stirred the market, leading to notable movements in TCS’s stock performance.
On Friday, TCS shares closed 1.17% lower at Rs 3831.95 on the BSE. Despite opening higher at Rs 3,885, the stock couldn’t sustain its initial gains and ended the session on a downward note. This dip led to a reduction in the company’s market capitalization, which fell to Rs 13.86 lakh crore. The trading volume was considerable, with a total of 0.67 lakh shares changing hands, amounting to a turnover of Rs 25.68 crore on the BSE.
From a technical standpoint, TCS shares present a mixed picture. They are trading above the 10-day, 20-day, and 200-day moving averages but are below the 30-day, 50-day, 100-day, and 150-day moving averages. This indicates some short-term strength but potential medium-term weakness, reflecting cautious market sentiment. The RSI of TCS stood at 49.4, suggesting that the stock is neither overbought nor oversold, a neutral zone that signifies a balanced trading atmosphere. Additionally, TCS has a one-year beta of 0.4, pointing to low volatility compared to the broader market.
Over the past year, TCS shares have rallied by 18%, and over the past two years, they have risen by 19.33%, highlighting the company’s resilience and steady growth. However, this recent legal blow could test investor confidence in the short term.
The legal case, initiated by Computer Sciences Corporation (CSC), now known as DXC Technology Company (DXC), accused TCS of misappropriating trade secrets. The court’s decision included a breakdown of the penalty: $56,151,583 in compensatory damages, $112,303,166 in exemplary damages, and $25,773,576.60 in prejudgment interest through June 13, 2024.
In response to the judgment, TCS has communicated its intention to challenge the ruling. The company believes it has strong arguments to counter the court’s decision and plans to defend its position through a review petition or an appeal to the appropriate court. TCS received the court order on June 14, 2024, and swiftly moved to reassure stakeholders that the judgment will not have a major adverse impact on its financials and operations.
TCS’s proactive stance underscores its commitment to protecting its interests and addressing the legal challenges presented by this ruling. The company has emphasized that it is taking all necessary steps to safeguard its position and mitigate any potential negative impacts on its business operations.
As the situation unfolds, market participants will be closely monitoring TCS’s legal maneuvers and their potential implications for the company’s future. Despite the immediate negative impact on the stock, TCS’s robust historical performance and strategic approach to legal challenges may help it navigate this turbulent period.
The unfolding developments around this case will be crucial for investors and analysts alike, as they gauge the long-term effects on TCS’s market position and financial health. For now, TCS remains focused on defending its stance and continuing its journey as a leading player in the global IT landscape.
