Dollar revenues of TCS and HCL Technologies have consistently grown faster than the guidance provided by industry body National Association of Software and Services Companies (NASSCOM) over the last eight financial years. The two companies have also outperformed industry peers in five out of the last eight years. Among the other IT majors, Infosys' dollar revenue beat NASSCOM guidance only twice while Wipro has underperformed in each of the last eight fiscal years.
But the market seems to have largely disregarded the dollar revenue growth clocked by these companies relative to the NASSCOM guidance. Despite its outperformance, HCL Technologies traded at almost the same valuations in this 8-year period – average one-year forward price to earnings ratio of 15 times – as Wipro, which has been a consistent underperformer.
Similarly, Infosys which has been a relative underperformer, traded at one-year forward PE of 19 times during this period, nearly at par with the valuations of TCS.
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