Infosys overtakes TCS in winning over big investors.

Infosys overtakes TCS in winning over 

big investors.

Every big money manager who invests in Infosys and TCS shares in their portfolio.

Infosys and TCS hold shares in the portfolio of every big money manager investing in India. Till some time ago, money managers who are more interested in TCS have started moving towards Infosys. The bulk of their additional investment in both companies is going to a Bangalore-headquartered company. According to analysts, this is due to aspects related to the valuation of both companies. Infosys shares have risen 11% in the last eight trading sessions while TCS shares have fallen by half a percent. During this period, Infosys delivered an average of Rs 620 crore, while in TCS, the figure was Rs 480 crore.

Kavaljit Saluja, analyst at Kotak Securities, said, "Infosys shares have come down to attractive valuations in the recent correction. It has become a mandatory stock in the portfolio. Measures taken for the company's turnaround have been successful. The company's digital revenue growth has accelerated. The company's recognition in the ecosystem has grown and large deals have also been achieved. Infosys shares are trading at 17 times the FY2021 estimated EPS and have a dividend yield of 3.2%. As per market capitalization, shares of TCS, the country's second largest company, are trading at 23 times FY2021 estimated EPS and dividend yield is just 1.4%.

Shares of the company fell 16% on October 22 after a whistleblower group of employees accused Infosys CEO Salil Parekh and CFO Neelanjan Roy of misconduct of business. On this, most brokerage houses started advising to withdraw their money from Infosys to TCS as the allegations against the company could create many doubts about its future and put pressure on the shares.

Sandeep Aggarwal, analyst at Edelweiss, says, "Infosys fell to an attractive level of 16.5 times FY20E EPS due to the fall in share prices in response to the allegations. This increased its discount from 19% to 35% as compared to TCS with a growth profile like Infosys. We have increased the weightage of Infosys from 15% to 27% in our model portfolio. In the September quarter, Infosys' profit margin rose 120 basis points on a quarterly basis, while TCS's margin fell to a nine-quarter low. TCS missed the estimate due to weak performance in the retail space, while sluggishness in the financial services and manufacturing space remained as expected.

Sanjeev Hota, Head of Research, Sharekhan, says, "At first glance, the allegations of whistleblowers seem to have no merit and the management has paid full attention to them. The trust built on the company's results and corporate governance is also reassuring to investors.

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