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Tata Consultancy shares increase on trading debut

Shares of Tata Consultancy Services Ltd, India's biggest software developer, rose as much as 27 percent on their first trading day, as investors increased holdings in one of the country's fastest-growing industries.

The stock rose as high as 1,080 rupees, from a sale price of 850 rupees. The initial sale by the Mumbai-based company this month drew bids for 7.7 times the 63.8 million shares offered.

The public share float by the Bombay-based company was Asia's second largest technology sector IPO this year, raising US$1.2 billion.

A public offering by Chinese chip maker Semiconductor Manufacturing International Corp (中芯國際集成電路) in March was the biggest, raising US$1.8 billion.

Tata Consultancy and rivals Infosys Technologies Ltd and Wipro Ltd are taking advantage of wages a third of those US competitors pay to win global business. India's software exports will rise by a third this year to more than US$16 billion, the National Association of Software & Service Companies forecast.

"People want to own some of it because it's going to be the biggest market cap information technology stock in India," said Jon Thorn, who manages about US$115 million in Indian stocks at India Capital Fund Ltd and bought the shares in the initial offering.

"Any mainstream fund that follows the index has to own this one," he said.

Tata Consultancy displaced Infosys as the third-largest Indian company by market value, after oil explorer Oil & Natural Gas Corp and refiner Reliance Industries Ltd. At US$10.2 billion, Tata Consultancy's market value compares with Infosys' US$8.8 billion and US$8.5 billion at Wipro.

The software maker will probably be included in benchmarks including Morgan Stanley Capital International indexes and the Mumbai Stock Exchange 30-member Sensitive Index.

"Infosys and Wipro have been around as listed companies for some time but its difficult to predict with any degree of accuracy how Tata Consultancy will perform on a quarterly basis," said Vinay Kulkarni, who manages the equivalent of US$454 million of stocks at UTI Asset Management Co in Mumbai. "At 1,000 rupees it is quite expensive, because that values it at 22 times the earnings per share estimates."

Even so, that is less than the estimated 24 times earnings per share at which Infosys trades and 27 times for Wipro.

The initial sale of Tata Consultancy, which is owned by the 135-year-old Tata Group and counts General Electric Co, General Motors Corp and Citigroup Inc as customers, valued the software company at about 407 billion rupees.

"We underestimated the enthusiastic response from the retail investors," Ratan Tata, 66, chairman of Tata Sons Ltd, said at the share-listing ceremony. Tata Sons owns an 81 percent stake in the software maker.
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