Is Infosys slowly narrowing valuation gap with TCS?

Riken Mehta
Moneycontrol Bureau 

Follow me on Twitter @mehtariken 

Most IT analysts recommend TCS over Infosys to clients looking to bet on the IT services sector. The bias is evident from the valuation (measured in terms of the trailing 12 month price earning multiple) that investors are willing to pay for TCS as opposed to Infosys. A string of depressing quarterly earnings from Infosys caused the valuation gap to widen by as much as 60 percent at one stage. That gap has been narrowing of late, despite TCS reporting a superior set of quarterly numbers. One of the explanations for this trend could be that the TCS stock is already discounting most of the positives. The earnings upgrades for Infosys post second quarter earnings could be another factor. But it could still be a long road ahead for Infosys before it manages to close the gap altogether.