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<ul><li>Any lead that Tata Consultancy Services (TCS) had gained over Infosys has nearly been erased.</li><li>Infosys outperformed TCS in Q2 2020 and it looking to boost the growing revenue from its digital services.</li><li>TCS' digital business, on the other hand, is slowing down.</li></ul>Infosys performed considerably better than Tata Consultancy Services (<a href="https://www.businessinsider.in/business/news/tcs-q2-earning-report-profit-at-8042-crore/articleshow/71521639.cms">TCS</a>) during the second quarter of the current financial year. The Indian MNC has even raised its full-year guidance to 9% to 10%. Valuation premium that TCS had gained over Infosys through the early part of 2019 has been nearly been erased, according to Nirmal Bang Institutional Equities. Infosys expects bottom line growth from its digital sector where it feels it will be able to capture a higher premium from its clients. "Digital pricing is a new area we are looking at — how we price digital service and command a premium from our clients," said CFO of Infosys, Nilanjan Roy, during the earnings call. "Our digital margins are higher than our core business, that's something we already know. I think the way we repurpose our digital talent and looking at the scarcity, we think there's an opportunity of how to price this scarce talent — depending on skills, experience, what sort of clients they work with," he added. TCS' digital business, on the other hand, has slowed down from being on track to cross 40% last quarter to a mere 28% at the end of September 2019. "We downgrade TCS to neutral and strike it off our list of conviction picks following 4% EPS (earnings per share) cut and a weak growth trajectory," according to analysts at HDFC Securities Institutional Research. Here's a comparison of key metrics of the two tech giants in the three months between June and September 2019: <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Infosys </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">TCS </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Revenue growth in constant currency terms compared to last year </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">11.4% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">8.4% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Full-year guidance </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">9-10% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Single digit growth </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Deal wins </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">$2.8 billion </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">$1.16 billion </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Hiring </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7,457 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">14,097 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Digital services growth </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">38.4% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">27.9% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">EBIT Margin </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">21.7% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">24% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Forex impact </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">(-)15 bps (June-Sep) </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">(-)260 bps (Apr-Sep) </td></tr></tbody></table>

Here’s how Infosys and TCS earnings performance in Q2 2020 stack up against each other

<ul><li><keyword id="1912963" type="PERSON" weightage="20" keywordseo="Wipro-share-price">Wipro share price</keyword> has jumped by 16% on Wednesday morning after the Indian IT services giants announced its Q1 results on Tuesday. </li><li>Piggybacking on Wipro’s surge, <keyword id="620690" type="PERSON" weightage="20" keywordseo="Infosys-share-price">Infosys share price</keyword> is also up by 8%. </li><li>Analysts expect the impact of the coronavirus impact on Infosys — which is set to announce its results today evening, July 15 — to be less than its peers. </li></ul>Wipro’s share price is up by over 16% after the company announced its first-quarter results yesterday. Building on that momentum, Infosys share price — who is set to announce its Q1FY21 results after the stock market closes today — is surging by 8%. <div type="image" title="wipro share price (1)" msid="76974011" hostid="261" caption="&amp;lt;p&amp;gt;Wipro share price over the past month&amp;lt;/p&amp;gt;"></div> <div type="image" title="infosys share price (4)" msid="76974001" hostid="261" caption="&amp;lt;p&amp;gt;Infosys share price over the past month&amp;lt;/p&amp;gt;"></div> Wipro’s gross revenue was down 5.1% this quarter as compared the previous quarter, and most of it came from the drop in revenue from IT services which fell by 7.3% quarter on quarter (QoQ). <div type="image" title="Wipro revenue" msid="76973854" hostid="261" caption="&amp;lt;p&amp;gt;Wipro&amp;#39;s gross revenue and growth trajectory over the last five quarters&amp;lt;/p&amp;gt;"></div> However, it announced that it onboarded 7,000 new employees in the last three months, with plans to continue lateral hiring in the second quarter of 2020-21. Infosys to announce Q1 results on Wednesday After the results of Tata Consultancy Services (TCS) and Wipro, Infosys is set to announce its first-quarter results on Wednesday evening, July 15. Analysts expect Infosys to be less impacted than its peers. All eyes will be on new large deals that the Indian IT services giant was able to bring in over the next three months as well as the impact across different segments. The manufacturing and auto vertices are likely to see continued pressure. Piggybacking on Wipro’s jump in share price, the Infosys stock is also rising as investors expect the company’s results to be better than its counterparts. SEE ALSO: <a href="https://www.businessinsider.in/careers/news/tcs-hiring-again-with-5-employees-to-return-to-offices/articleshow/76887172.cms">TCS to kickstart lateral hiring and bring back 5% of its employees to offices</a> <a href="https://www.businessinsider.in/business/corporates/news/wipro-q1-earnings-preview-growth-revenue-margins-theirry-delaporte/articleshow/76951601.cms">A new CEO, Brexit and supply-side exposure may leave Wipro’s Q1 earnings more dented than others</a> <a href="https://www.businessinsider.in/business/corporates/news/infosys-earnings-what-to-expect-and-comparison-with-tcs/articleshow/76952717.cms">The key thing to watch out for during Infosys earnings will be the size of the new deals</a>

Wipro share price 16% increase leads to surge in Infosys share price too

<ul><li>Infosys second quarter earnings surprised market by reporting earnings closer to the upper end of the guidance.</li><li>The company has also increased its full-year guidance to 9% to 10%.</li><li>The surprise in Infosys' earnings and guidance has been more due to disappointment from TCS a day earlier.</li></ul>Infosys second quarter earnings surprised market by reporting earnings closer to the upper end of the guidance. The company has also increased its full-year guidance to 9% to 10%. The surprise in Infosys' earnings and guidance has been more due to disappointment from TCS a day earlier. Infosys' second-quarter revenue grew 3.3% in constant-currency terms compared to three months earlier. The growth was over 11% compared to the same quarter last year-- making this quarter the fourth straight quarter of double-digit growth. The following are the top comments from the management and other highlights from the earnings press conference: 1. 6 out of 7 segments have shown strong double-digit growth in the second quarter. 2. Voluntary attrition has come down by 18%. 3. Looking to optimise cost and margin has widened by 110 basis points. 4. Looking at ways to increase the price of digital services-- because the skills and the talents are scarce. 5. Reduced consumption has led to softness in IT spending by retail clients. 6. Seen some slowdown in European banks, capital markets. There is nothing new in material terms. 7. The second half of the year is expected to be slower, as it is every year. 8. Digital services now make for 38% of the total business and this segment grew over 38% in constant-currency terms compared to three months ago. 9. Bagged a new deal to improve the user experience for a global confectionery company. 10. Hired 7,457 employees during the quarter. 11. Total impact due to exchange rate was negative 15 basis points due to weaker pound, even as there was benefit from stronger dollar. 12. Most of our work today happens at the clients' premises. Some of it will be moved to our hubs. The innovation centres will be around the hubs where the clients can come. 13. Local hires in US make for 50% of the workforce and the hiring of freshers has helped the cost structure. 14. $2.8bn in large deal wins during the quarter was the highest ever taking the total for the first six months of financial year 2020 to $5.6bn. 15% The current tax rate is marginally below 25% even before the tax cuts were announced by the government. SEE ALSO: <a href="https://www.businessinsider.in/business/news/tcs-q2-earning-report-profit-at-8042-crore/articleshow/71521639.cms" data-type="tilCustomLink" target="_blank">TCS earnings growth gets squeezed by slowing economies across the world</a>

Top comments and highlights from Infosys Q2 earnings press conference

<ul><li><keyword id="620690" type="PERSON" weightage="20" keywordseo="Infosys-share-price">Infosys share price</keyword> is up by over 9% after the Indian IT services company reported its earnings on Wednesday. </li><li>While its quarterly numbers may have been in the red, Infosys’ Q1 earnings fared better than its peers like Tata Consultancy Services (TCS) and Wipro. </li><li>Infosys share price had already jumped by over 6% ahead of the earnings on Wednesday. </li></ul>Infosys share price is up by over 9% since Indian markets opened today morning. The IT services behemoth reported a 4.5% drop in profit and a 2% dip in revenue quarter-on-quarter. While the numbers may be in the red, Infosys has outperformed its peers — Tata Consultancy Services (TCS) and Wipro — who have already announced their first-quarter results. <div type="image" title="infosys share price (6)" msid="76996549" hostid="261" caption="&amp;lt;p&amp;gt;Infosys share price over the last 30 days&amp;lt;/p&amp;gt;"></div> The uptake in Infosys share price comes after the stock value was already on the rise by over 6% on Wednesday, ahead of the company’s earnings announcement. <div type="Article" hostid="261" msid="76980089" title="Infosys gives annual guidance of up to 2% growth this year as profit plummets by 4.8% and revenue dips 2% in Q1" mstype="2" mssubtype="0"></div> Last week, Tata Consultancy Services (TCS) reported that its revenue fell by 7.1% as compared to the previous quarter. For Wipro, the revenue was down by 5.3% By that comparison, Infosys 2% dip in revenue seems marginal. <div type="image" title="infosys vs tcs vs wipro revenue q1fy21" msid="76996571" hostid="261" caption="&amp;lt;p&amp;gt;TCS vs Wipro vs Infosys Q1 revenue&amp;lt;/p&amp;gt;"></div> However, when it comes to profits Wipro reported a 2.1% increase but TCS’ profit plummeted by 13.5%. <div type="image" title="infosys vs tcs vs wipro profit q1fy21" msid="76996580" hostid="261" caption="&amp;lt;p&amp;gt;TCS vs Wipro vs Infosys profit in Q1&amp;lt;/p&amp;gt;"></div> Infosys was also the only Indian IT services company so far to issue guidance for the coming of between zero to 2% annual growth. With more employees working from and the depreciation of the rupee — which helps IT companies since they operate abroad and most of the billings are in dollars — Infosys was also able to expand its operating margins by 1.6%. The margin expansion could have been larger but the company increased the variable pay of its employees, which cost it around 110 basis points of benefits. “We see a strong pipeline across our verticals, of course, financial services being the largest,” said Infosys’ chief financial offer Ninaljan Roy during the earnings call. Verticals with the most amounts of interest are cloud, workplace transformation, digital transformation, automation and cost-efficiency. “We are also seeing demand in the area of consolidation,” said CEO Salil Parekh. Chief operating officer, Pravin Roy, added that when it comes to retail, aside from groceries, all other segments — from apparel to logistics — are seeing contraction and supply chain disruptions. “One on their key focus is on variating their costs. They’re also looking at continued investment,” he said. SEE ALSO: <a href="https://www.businessinsider.in/business/corporates/news/infosys-company-profit-is-down-4-8-and-revenue-has-dipped-by-2-in-q1fy21/articleshow/76980089.cms">Infosys gives annual guidance of up to 2% growth this year as profit plummets by 4.8% and revenue dips 2% in Q1</a> <a href="https://www.businessinsider.in/careers/news/infosys-work-from-home-not-permanent-says-coo-pravin-rao/articleshow/76995155.cms">Infosys is still on the fence when it comes to making work from home a permanent change</a> <a href="https://www.businessinsider.in/business/corporates/news/tcs-infosys-wipro-and-tech-mahindra-what-to-expect-from-earnings/articleshow/76865753.cms">TCS and Infosys to face least impact — Indian IT companies likely to report sharp decline in revenue during first quarter</a>

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Here’s how Infosys and TCS earnings performance in Q2 2020 stack up against each other

Prabhjote Gill

Wipro share price 16% increase leads to surge in Infosys share price too

Prabhjote Gill

Top comments and highlights from Infosys Q2 earnings press conference

Sriram Iyer

Infosys shares are on fire because it beat TCS and Wipro⁠— and gave a soothing guidance

Prabhjote Gill

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