InvestorQ : After the latest results what do you think are the two factors that IT stocks like TCS, Infosys and Wipro are still preferred stocks?
Rutuja Nigam made post

After the latest results what do you think are the two factors that IT stocks like TCS, Infosys and Wipro are still preferred stocks?

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8 months ago
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You can sum up the interest in IT stocks into two basic categories. The one is consistently good result and the other is rewarding shareholders through corporate actions. Let us look at look at results first and then at the corporate action rewards by IT companies.

TCS, Infosys and Wipro announced Q4 and full year results while HCL Tech is expected in the coming week. In all 3 cases, revenue growth was 3-7% while profits were up on the back of cost controls and belt tightening. Hence OPMs were well above 20% for Wipro and around 25% for TCS and Infy. Fall in tech spending was more of a mirage.

Secondly, IT companies consistently rewarded owners of companies. They typically give away a chunk of their cash flows to shareholders as dividends or buybacks. Major IT companies have done 3 buybacks in the last 5 years ensuring long term investors are rewarded handsomely. All this worked in their favour.

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