Street prefers large-cap information technology firms over mid-tier peers

Better cost management, execution have led to higher multiples for tech majors

Ram Prasad Sahu  |  Mumbai 

A year ago, select mid-cap information technology (IT) companies were trading at a premium to their larger or tier-I peers. Tier-II players such as L&T Infotech, Hexaware, Mphasis and Mindtree were trading in the range of 22-27 times their one-year forward earnings estimates in July. In comparison, tier-I players, barring TCS, were trading at their one-year forward price to earnings multiple of 13-18 times.

TCS has been the only outlier among the larger IT majors. It was trading at 24 times its one-year forward estimates. Since then, tier-I players (TCS, Infosys, Wipro, TechM and HCL ...

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First Published: Tue, June 25 2019. 00:19 IST