This article has been written in response to a request from Nanayam Vikatan, as they wanted to publish an article about the two bell weather IT companies when TCS is at the cusp of being the first Indian IT company to have a $100 billion valuation. download
TCS and Infosys have been among the pioneering companies that have been responsible to put India on the Information technology map of the world. The have created an industry, lakhs of jobs, and significant wealth.
This article takes a perspective of investor’s experience in investing in these companies over the last 12 years. This article is not a critique of the either of the company strategies, it is only intended to reflect the experience of investors in these stocks.
This article examines the investor experience from 3 different perspectives
- An investor who invests in January of a year and sells in December of that year
- An investor who invested once and is holding the investment to date
- An investor who has systematically invested monthly and is holding to date.
The data here is from 2006, this is to allow 16 months from the time TCS was listed, this is to factor in the early listing gains that can also be attributed to Infosys when it was listed. We have used the data till 31st March 2018 for this article.
Both TCS and Infosys have generated market beating returns for their early investors. Returns from these stocks since 2011 have been less than exciting. This is especially true for systematic investors as well as investors with long holding periods.
Based on the analysis of data so far, we at IndusWealth believe that both Infosys and TCS may not generate market beating returns for systematic investors or for investors with long holding periods.
Disclosure: Author and the clients of IndusWealth may own some or all the stocks discussed in this article and may transact in them for their own portfolios.
Disclaimer: The information provided here is based on our opinions plus our statistical and financial data and independent research. The article does not constitute individual investment advice and is not intended to be a solicitation for investment advisory services. Authors do not guarantee any results that may be obtained from investing in the securities discussed above. Readers should note that investing involves risk and they should not make any investment decision without first consulting his or her own personal financial advisor and conducting his or her own research and due diligence.
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