The shares of India’s largest IT company declined almost one percent to Rs 3,481.10 per share after the company announced a $125 million provision as an exceptional item in its third-quarter results in connection with a trade secret litigation filed by US-based Epic Systems.
At 3:27 p.m., The shares of Tata Consultancy Services Ltd were quoted at Rs 3,528.90 per share, up 0.54 percent from the previous close price. The company has a market capitalization of Rs 12,92,340 crore.
As per reports, Epic Systems Corporation had alleged that Tata Consultancy Services misused documents downloaded from Epic System’s user-web portal.
In 2014, Epic Systems filed a lawsuit against TCS alleging that the Indian IT services company stole its intellectual property (IP) while it was contracted to implement Epic’s healthcare software.
In the EPIC Systems Corporation matter, the United States Supreme Court on November 20, 2023, rejected the Company’s petition to file an appeal against the orders passed by the US Court of Appeals, 7th Circuit, which confirmed the punitive damages award of $ 140 million passed by the District Court of Wisconsin, As per TCS regulatory filing.
Tata Consultancy Services to take a $125 million hit in third-quarter results about a 2016 trade secret lawsuit filed against the company by US-based EPIC Systems.
The matter relates to a US grand jury order that slapped two Tata Group companies TCS and Tata America International Corp with a $ 940 million fine in a trade secret lawsuit filed against them by EPIC in April 2016.
The punitive damages award was first lowered to $280 million, but in August 2021, a US Court of Appeals ruled that this amount was “constitutionally excessive,” resulting in a reduction to $140 million in 2022.
The Company intends to make the balance provision of approximately USD 125 million in its financial statements as an exceptional item, for the third quarter and nine months ending December 31, 2023.
Tata Consultancy Services Ltd shares have delivered a return of 7 percent in the last six months and 6 percent in a year.
The company’s revenue has increased by 8 percent yearly, from Rs 55,309 crore in Q2FY23 to Rs 59,692 crore in Q2FY24. In the same time frame, net profit has jumped by 9 percent from Rs 10,465 crore to Rs 11,380 crore.
The Company’s return on equity increased from 42.99% in FY22 to 46.61% in FY23, while the return on capital employed rose from 52.91% to 57.63% during the same period.
Tata Consultancy Services is engaged in the business of IT services, consulting, and business solutions. The company offers a consulting-led, cognitive-powered, integrated portfolio of business, technology, and engineering services and solutions.
Written by Omkar Chitnis
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