Over the last three years, I have often said that, to my mind, and sooner rather than later, it is TCS that will outrun Infy as the premier Indian IT company at the bourses, notwithstanding the media fixation with the former. The addition of the words ‘at the bourses’ in the opening paragraph is particularly significant as there is no dearth of IT professionals I know, who rate TCS ahead of Infosys.
Agreed, these are mere opinions, but with the latest results (Q1) that the two Indian IT majors announced, the seemingly wide gap is now surely closing in. The gap in the net sales figure of Infosys and TCS has widened in favour of the latter over the last four quarters.
The more interesting number set revolves around the growth in net sales percentage. Whereas Infy grew by 42.6 per cent as compared to TCS’ 32.6 per cent during Q4 of FY07, in this, the first quarter of FY08 the respective percentages have dipped to 23.9 and 24.4. Is this an early indication of which company carries more firepower, when the chips are down ?
TABULAR COMPARISON OF THE STANDALONE FINANCIALS OF INFOSYS AND TCS
Now, cast a glance at the operating profit , shorn of the other income boost. Here too, the gap widens in favour of TCS. For the record, Infy’s Operating Profit, net of other income stood at Rs.1010 crore whereas that of TCS stood at Rs.1105.9 crore.
Yet again, it is the growth in operating profit percentage that clearly displays how TCS is now coming into its own. Whereas Infy grew by 44.8 per cent as compared to TCS’ 41.9 per cent during Q4 of FY07, in this, the first quarter of FY08 the respective percentages have dipped to 16 and, note this carefully, 27.
On the operating margin front though, Infosys scores over TCS, but just about, and that too, it must be noted that the gap has widened from 3 per cent just three quarters ago, to less than 2 per cent now.
And so, the gap has narrowed. While Infy, undoubtedly remains the markets’ sentimental favourite, TCS now enjoys a marginally higher discounting at the bourses. So, will TCS outrun Infy ?
I think so, and my money is where my mouth is …….
-Ashok Kumar
