TCS and Infosys - The better friendly fundamentals

India's two biggest IT Companies - Tata Consultancy Services and Infosys Limited. TCS have over 50 years of experience and Infosys have more than 40 years in the field of Tech Industry. The Current Market Capitalization for TCS is around Rs.11.85 Lakh Crore, where Infosys stands with Rs.6.73 Lakh Crore in the Indian Stock Market Exchange.

TCS is the fourth largest employer in India after Indian Railways, Indian Army and India Post. It has more than 4 Lakh employees and it is noteworthy that 37 percent of its employees are Women. Tata Consultancy Services takes its revenue mostly from America and Europe. 52 Percent of revenue comes from America and the Europe contributed with 31 Percent.

Both Companies are considered as a Debt Free Companies. Their Financial Track record were also reasonably good and progressively improving. They are not fast on its financials, but with stabled achievement. TCS is currently trading at 14 times of its book value, where Infosys were trading nearly 10 times. 

Based on its Earnings, both market prices are trading similar times(PE). TCS have a Strong Promoter holding side with 72 Percent, where the Infosys comes with 13 Percent holding due to the extended earlier promoters. The Debt to Equity and Reserves in Balance Sheet were in a good pace and there is no big difference with these companies.

 

The Balance Sheet Reserves for the March ending 2021 comes around Rs.86,063 Crore for TCS and Rs.74,227 Crore for Infosys. Debt to Equity is less than 0.5 for both Tech Companies. The Strong Cash Flow and other ratios like ROE(Return on Equity) and ROCE(Return on Capital Employed) gives more insights for the Valuation.

On Share holding Pattern aspect, there is a well diversified investor side for Infosys - 13 Percent on Promoter Holding, 33 Percent on Foreign Institutional Investors(FII), 22 Percent on Domestic Institutional Investors(DII) and 32 Percent with Public Holding. 

 

Tata Consultancy Services have a 72 Percent Promoter holding as we said earlier, 16 Percent on FII, 8 Percent on Domestic Institutional Investors and the Public have less than 5 Percent on its Share holding pattern. 

As we look out the P&L Statement, the Consolidated Sales of TCS have grown from Rs.30,000 Crore in 2010 to Rs.1.64 Lakh Crore in 2021. The Net Profit have also raised from Rs.7,000 Crore to Rs.32,400 Crore in the said period. 

For Infosys, the Sales have increased from Rs.22,700 Crore in 2010 to Rs.1 Lakh Crore in 2021, which is a progressive way. The Net Profit have increased to Rs.19,350 Crore in 2021, from Rs.6,200 Crore which happened in the year 2010. The Earning per share(EPS) for both companies were doubled in the last 10 years - TCS(3 Times) & Infosys(2.5 Times).

 

Both Companies have the large number of Equity Shares as per the Public Listed Entity - Infosys comes with 426 Crore Equity Shares with Face value of Rs.5 per share and TCS were 370 Crore Equity Shares with a Face value of Re.1 per share.

On Dividend yield, it's not a great for the investors. However both companies are declaring regularly and the current yield provides between 1 - 2 Percent annually. As per March 2021, the Cash plus Cash Equivalents(Rs.24,714 Cr) are excessive than the Total Non-current liabilities(Rs.7,739) for Infosys.

 

For TCS, the Total Non-current liabilities(Rs.9,496 Cr) are not covered well with Cash plus Cash Equivalents(Rs.9,329 Cr). Currently, TCS trading at the price of Rs.3,200 per share, which is trading near 52 week high. Infosys were trading at Rs.1,580 per share - 52 week high.

As per DCF(Cash Flow Model) valuation, TCS is worth below Rs.1800 per share and Infosys comes around Rs.950 per share - March ending 2021 Financial report.

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