SERVICE MARKETING

ASSIGNMENT

NAME:- ANIKET PAUL CHOUDHURY

ROLL NO. 16BSP3012
Infosys closing valuation gap on TCS after weak Q3

Shares of Infosys were near closing valuation gap on TCS after weak Q3.

Tata Consultancy Services fell as much as 1.85 per cent, while rival Infosys gained 1.8 per cent.

TCS trades at 17.3x of 1-yr forward earnings vs 16.4x of Infosys, according to Eikon data.

TCS Q3 dollar revenue fell 0.3 per cent to $4.15 bln q/q mainly due to US holidays and heavy
flooding in the southern Indian city of Chennai.

Q3 represents sixth consecutive quarter of disappointing revenue growth versus consensus

expectations, according to Nomura.

TCS is likely to underperform on revenue growth vs Infosys in FY16/17 after 5 years of

outperformance, it says.

Constant currency revenue growth for TCS was 12.5 per cent y/y in 9MF16 compared with 13 per
cent at Infosys in H1F16, according to Morgan Stanley.

Growth rates seem to be converging which can alter multiples, it says.

TCS is trading at 17.5 times FY17 P/E, a 10 per cent premium to Infosys, We see this gap bridging
over the next twelve months as it suffers from deceleration, says ICICI Securities.