TCS - A very strange case for investing!

Infy has been growing at a decent rate since Salil Parekh took over. TCS has been inconsistent in it’s performance.

We have to also understand that there is difference in the management style.

Infy tries to grow by acquiring companies, so it has opportunity to grow faster but as with all acquisitions, problems do crop up (Read accusations on Salil).

TCS is more organic and conservative way and believes in partnering with companies rather than acquiring (Read TCS coin). The growth will be more slower and steadier.

This is a problem in every sector eg. Is ICICI Bank better or HDFC Bank.

To be frank with you at certain points of time Infy will look better and at others TCS.

If you are chasing much more growth and volatility then HCL Tech (more M&A and agressive revenue chasing) is also to be considered for evaluation.

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TCS vs Infy - the comparative performances of stock prices are cyclic - mean to say in some years infy performs better than TCS & vice a versa.
However operationally TCS is “The TCS”; it’s like a comparison of HDFC Bank (without tech problem) vs ICICI.

Just some data points:
TCS had seen just 4 CEOs vs many more of Infy
Salary of TCS CEO is lower vs infy as it’s from within organisation vs outsider
Both have stable margins like for TCS 26-28 whereas infy 24-28
Attrition of TCS is always lower than industries average whereas it’s very high for infy

Due to all this, as far as PE is concerned, TCS is a 10%+ premium to infy historically and will remain so in forthcoming futures.

Disc: Invested in both

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