Even as TCS enters elite $100 billion m-cap club, analysts say buy Infosys

Tata Consultancy Services Ltd. maybe basking in the afterglow of joining the $100-billion club, but it is the company’s rival Infosys Ltd. that is a preferred buy for analysts.

Of the 44 analysts covering both companies, 38 have a buy or equivalent rating on Infosys, India’s original poster child for software development. This compares with 19 buys for TCS, Asia’s largest software exporter, according to data compiled by Bloomberg.

“We find the relative valuation attractive given the similar EPS growth -- 11 percent CAGR, same as TCS,” Pankaj Kapoor and Akash Verma, analysts at JM Financial Research wrote in a note on April 23, referring to Infosys that has a market value of $38 billion.

Tata Consultancy Services’ shares have jumped over 25 percent this year, more than double the gain in Infosys. Jefferies in a post-earnings note said that the improved outlook for TCS has been factored into the share price, while Kotak Securities deemed the stock to be rich, noting its price-earnings multiple of 19 for fiscal 2020 earnings.

Tata Consultancy Services Ltd. maybe basking in the afterglow of joining the $100-billion club, but it is the company’s rival Infosys Ltd. that is a preferred buy for analysts.