Couple weeks ago we saw that the visionary leadership of Ratan Tata has earned investors of the major Tata Group companies handsome returns during the last 10 years of his chairmanship. We compared 6 major Tata companies (check out related chart here) with the BSE 30 (Sensex) and all except Tata Steel performed heads and shoulders above this benchmark index. But how do each of these companies do compared to their direct competitors? Does Mr. Tata's charismatic leadership manifest itself as forcefully when viewed through this lens? Last week we compared Tata Motors to its competitors (see chart here) and found that the Auto company provided a healthy annual return of 21% since 2004 but slightly lagged behind Ashok Leyland (23%) and was neck and neck with Maruti Suzuki. We now compare TCS to its peers.
We have chosen the time window of September 2006 through February 2016 in order to include data for all 4 companies. As you can see in the chart, TCS emerges as the clear frontrunner with a healthy Compounded Annual Growth Rate of 19%, 3% higher than runner up Infosys.
With a market capitalization of over $75 billion, it is India's most valuable company and holds the record for highest quarterly net profit. In 2014, TCS broke into the the top 10 of the largest IT service providers globally. Infosys on the other hand was stuck in low gear for a while; several senior executives quit from 2012 though 2014 and the overall attrition rate at the company was alarming. In 2014, 4 of the original founders offloaded almost $1 billion worth of shares causing the stock to further take a beating. Vishal Sikka's arrival in June 2014 appears to have steadied the ship- attrition is lower, employee morale is high, and company has unveiled a strategy to focus on Automation and Artificial Intelligence. The acquisitive Tech Mahindra too has been doing well and has provided a respectable 14% return. Wipro, founded by the other well-respected technocrat Azim Premji, however does not seem to have fared too well.