IT Industry in India (Quantitative Analysis) of the Top 8 IT sector stocks listed on Indian stock exchange

This analysis is done with the only purpose of screening out good companies. Analysis done is completely on quantitative basis. No suggestions are being made to directly go and invest in the top scoring companies of this analysis.

Let’s study some IT companies, we have selected the following companies for study and analysis (the companies are selected on the basis of market cap, the top 8 companies of that sector according to market cap): –

  1. TCS
  2. Infosys
  3. Wipro
  4. HCL Technologies
  5. Tech Mahindra
  6. Oracle Financial Services
  7. L & T Infotech
  8. Mphasis
Sr. No.Company NameMarket Cap (Rs. Crore)
1TCS₹703,181.0
2Infosys₹288,657.9
3Wipro₹146,412.8
4HCL Technologies₹129,971.4
5Tech Mahindra₹66,847.0
6Oracle Financial Services₹30,826.0
7L & T Infotech₹29,422.5
8Mphasis₹17,990.0

The top 100 companies according to the market capitalization are called as the large cap companies. Companies from 101 to 250 (based on market capitalization) are the mid-cap companies and the rest, that is above 250 are the small cap companies.

TCS, Infosys, Wipro, HCL Technologies and Tech Mahindra are the large cap companies. Oracle Financial Services, L&T Infotech and Mphasis are the mid-cap companies.

The analysis of these companies is going to be based on the following parameters. They are as follows: –

  1. Price-to-Earnings (PE) Ratio
  2. Return On Capital Employed (ROCE)
  3. Return On Equity (ROE)
  4. Debt to Equity Ratio (DE Ratio)
  5. 5 Years Sales Growth
  6. 5 Years Net Profit Growth

These parameters play an important role in the analysis of any company. This does not mean that one should be dependent only on these, but these parameters are crucial for initial screening.

First, we have given the companies their ranks and then accordingly we have assigned scores to those companies from 1 to 8, where 1 being the least and 8 being highest score. (total number of companies taken here are 8, that’s why the mentioned scoring card)

PE Ratio

Sr. No.Company NamePE RatioRankScore
1TCS24.5681
2Infosys17.5145
3Wipro18.9654
4HCL Technologies14.0118
5Tech Mahindra16.2327
6Oracle Financial Services24.1272
7L & T Infotech22.0163
8Mphasis17.4836

PE ratio is nothing but what price an investor is paying for 1 rupee of earning.

The company which has the highest PE ratio has been given number 8 rank and the company which has the lowest PE ratio has been given number 1 rank.

But the company which has the highest PE ratio has been given the lowest score.

TCS has the highest PE ratio and thus got number 8 rank and scored point 1. HCL Technologies has the lowest PE ratio and thus scored number 8 rank and a score of 8.

ROCE

Sr. No.Company NameROCERankScore
1TCS39.57%27
2Infosys29.52%54
3Wipro16.95%81
4HCL Technologies31.02%45
5Tech Mahindra24.77%63
6Oracle Financial Services46.14%18
7L & T Infotech39.50%36
8Mphasis18.78%72

The company which has the highest ROCE has the highest rank and has also been given the highest points. And the company which has the lowest ROCE has the lowest rank and has also been given the lowest score.

Oracle Financial Services has the number 1 rank and scored 8 points. And Wipro has the lowest rank (8th) and scored 1 point.

ROE

Sr. No.Company NameROERankScore
1TCS30.03%36
2Infosys23.36%54
3Wipro16.07%72
4HCL Technologies24.79%45
5Tech Mahindra20.66%63
6Oracle Financial Services31.01%18
7L & T Infotech30.19%27
8Mphasis14.55%81

ROE has been analyzed on the same basis as ROCE.

The company which has the highest ROE has the highest rank and has also been given the highest points. And the company which has the lowest ROE has the lowest rank and has also been given the lowest score.

Here too, Oracle Financial Services ranked 1st as it had the highest ROE and thus scored 8. But here, Mphasis ranked 8th as it had the lowest ROE and thus scored 1.

DE Ratio

Sr. No.Company NameDE RatioRankScore
1TCS018
2Infosys018
3Wipro0.2981
4HCL Technologies0.0254
5Tech Mahindra0.1372
6Oracle Financial Services018
7L & T Infotech018
8Mphasis0.0763

The company which has the highest DE ratio has the least score and the company with lowest DE ratio has the highest score.

TCS, Infosys, Oracle Financial Services and L&T Infotech being 0-debt companies have scored 8. Wipro has the highest DE ratio and has thus scored 1.

 5 Years Growths

Sr. No.Company Name5 Years Sales GrowthRankScore
1TCS14.34%36
2Infosys11.81%54
3Wipro7.80%63
4HCL Technologies14.60%27
5Tech Mahindra34.96%18
6Oracle Financial Services5.44%72
7L & T Infotech13.66%45
8Mphasis2.46%81
Sr. No.Company Name5 Years Net Profit GrowthRankScore
1TCS13.06%45
2Infosys10.65%54
3Wipro6.03%63
4HCL Technologies16.40%27
5Tech Mahindra21.88%18
6Oracle Financial Services2.83%72
7L & T Infotech13.5%36
8Mphasis2.64%81

The company with the highest 5 Year CAGR in Sales and Net Profit get the highest rank and thus gets the highest score. And Vice-Versa.

Tech Mahindra has the scored 8 in both, as it has the highest 5 years sales & net profit growth. And Mphasis has scored 1 in both, as it has the lowest 5 years sales & net profit growth.

Final Standings

RankCompany NameFinal Score
1HCL Technologies36
2L & T Infotech35
3TCS33
4Tech Mahindra31
5Infosys30
6Oracle Financial Services29
7Wipro14
8Mphasis14

HCL Technologies is on the 1st position with 36 points, L&T Infotech on 2nd with 35 points, TCS on 3rd with 33 points and Mphasis is on the last position, that is 8th with just 12 points.

The point here is to focus on the fundamentals of the company. Here, we have analyzed the company based on their current fundamentals. Also, the qualitative analysis of these companies will provide with a better outlook towards them

And quantitative analysis along with qualitative analysis will give a better understanding of which company is worth investing from here on.

Top 8 IT Companies Listed in India (By Market Cap)

Note:

  • We are not, in any case, suggesting buying stocks of any of the companies mentioned above. We have just provided a study on these companies.
  • All the data used is of Trailing Twelve Month (TTM)

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