Why TCS Is Worth $100 Billion, And Infosys Isn’t

Tata Consultancy Services (TCS), India’s largest IT services company, is now one of the world’s 100 most valuable firms by market valuation. The market capitalisation of Mumbai-based TCS today (April 23) crossed $100 billion (Rs6,65,275 crore), making it the first Indian company in a decade to reach this milestone. In 2008, Mukesh Ambani-owned Reliance Industries had breached the threshold, according to Bloomberg. Now, TCS’s market cap is almost 2.5 times more than its nearest Indian competitor, Infosys.

There is a perception that TCS has outperformed Infosys because of its greater focus on new technologies like digital, but analysts believe there’s more to it. “It would be wrong to say that TCS has done something vis-a-vis technology that Infosys has not,” said Sanchit Gogia, chief analyst and CEO of Greyhound Research. “It’s just that TCS has a much bigger scale at which it is implementing these things.”

“Leadership turmoil is a significant mind play for investors. While they look at hard metrics like revenue and profits, they do include soft metrics like leadership while making their bets,” Gogia of Greyhound Research said. “While TCS is out and out a professionally run company, Infosys is still having teething trouble as it comes out of the arms of its founders. Infosys has a great example in TCS to learn how to build a strong second-rung leadership that can hold the fort if things go wrong at the top-level.”

[Quartz]

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Analyst:

Sanchit Vir Gogia: Sanchit is the Chief Analyst, Founder & CEO of Greyhound Research, an award-winning global research & advisory firm. To read more about him, click here.


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