TCS vs Infosys (2026): Valuation, Margins, AI Deals, Growth & Which Is Better?
India IT leaders · Q1 FY2027 · Market snapshot 25 August 2026
TCS is still the stronger operating machine. Infosys is currently the cheaper stock. TCS earns higher margins, produces substantially higher returns on capital, generates far more free cash flow and signed a much larger Q1 deal book. Infosys, however, is trading on a lower earnings multiple, offers a higher dividend yield and delivered stronger year-on-year rupee revenue and profit growth in the latest quarter.
That makes the comparison more balanced than the usual "TCS is bigger, therefore TCS wins" argument. Investors are deciding whether to pay a modest valuation premium for better operating economics or accept slightly lower profitability in exchange for a cheaper multiple and a stronger current income yield.
The TCS premium is much smaller than its operating advantage
TCS currently trades at about 15.9 times earnings versus Infosys at roughly 14.4 times, yet the profitability gap between them is considerably wider.
TCS has ROE of roughly 48.7% and ROCE of about 58.5% in Bull Run's latest fundamental snapshot.
Infosys is hardly weak on these metrics. Its ROE is approximately 31.2% and ROCE about 38.5%.
But TCS still produces more profit from each rupee of shareholder equity and capital employed.
That makes valuation the first important question. Infosys is cheaper, but TCS's premium is currently only around 1.5 turns of earnings, not an extreme gap.
TCS vs Infosys: current financial comparison
| Metric | TCS | Infosys | Current Edge |
|---|---|---|---|
| Market capitalisation | ₹791,946 Cr | ₹437,177 Cr | TCS |
| P/E | 15.90x | 14.43x | Infosys on valuation |
| P/B | 7.38x | 4.71x | Infosys on book valuation |
| Industry P/E | 22.33x | 22.33x | Both below current industry benchmark |
| ROE | 48.72% | 31.21% | TCS |
| ROCE | 58.50% | 38.54% | TCS |
| Net profit margin | 18.05% | 16.41% | TCS |
| 5-year sales growth | 10.22% | 12.20% | Infosys |
| 5-year profit growth | 8.70% | 8.75% | Nearly identical |
| 5-year EPS growth | 9.42% | 9.43% | Essentially tied |
| 5-year operating margin | 27.84% | 25.60% | TCS |
| 5-year free cash flow | ₹210,878 Cr | ₹32,515 Cr | TCS on absolute cash generation |
| Dividend yield | 2.92% | 4.46% | Infosys |
| Debt-to-equity | 0.00 | 0.00 | Both |
| Operating cash flow / net profit | 1.06x | 1.15x | Infosys |
| Promoter holding | 71.77% | 14.55% | Different ownership models |
| FII holding | 9.66% | 28.45% | Infosys |
| DII holding | 13.34% | 43.19% | Infosys |
| Bull Run Score | 65.4/100 | 60.4/100 | TCS |
Q1 FY2027 shows two different kinds of strength
TCS showed superior margin and order-book strength; Infosys showed faster reported rupee growth.
TCS
TCS reported Q1 FY2027 revenue of $7.624 billion, up 2.7% year on year in US-dollar terms and 3.2% in constant currency.
Operating margin was 24.0%, excluding the exceptional item disclosed by the company.
Net margin stood at 19.2%.
Net cash from operations equalled 93% of net income.
Total contract value was $9.5 billion.
Infosys
Infosys reported Q1 FY2027 revenue of ₹48,211 crore, up 14% year on year in rupee terms. In constant currency, growth was 2.4% year on year and 1% sequentially.
Operating profit was ₹10,163 crore, up 15.4% year on year, with operating margin at 21.1%.
Net profit increased 12.2% year on year to ₹7,769 crore.
Large-deal TCV was $3.6 billion, of which 61% was net new.
TCS still has the better margin structure
The gap between 24.0% and 21.1% operating margin is meaningful in a mature IT-services business.
Both companies employ hundreds of thousands of people and compete for similar enterprise transformation budgets. A few percentage points of margin therefore represent a large amount of operating profit.
TCS's FY2026 operating margin was also 25.0%, its highest in four years according to its annual report.
Infosys operates with a lower margin but still within a healthy range. Its FY2027 margin guidance remains 20% to 22%.
The strategic issue is whether Infosys can narrow the profitability gap while continuing to invest aggressively in AI, talent and platforms.
But Infosys has grown revenue faster over five years
Infosys has the stronger five-year top-line growth rate despite being the smaller company.
Bull Run records five-year sales growth of approximately 12.2% for Infosys versus 10.2% for TCS.
That advantage disappears at the profit line, where five-year profit growth is almost identical: about 8.75% for Infosys and 8.70% for TCS.
EPS growth is also effectively tied at roughly 9.4% for each company.
This suggests Infosys has expanded revenue faster but has not converted that extra top-line growth into meaningfully faster long-term per-share earnings growth.
The Q1 deal-book gap is enormous
TCS reported $9.5 billion of Q1 FY2027 TCV, compared with $3.6 billion of large-deal TCV at Infosys.
The definitions are not perfectly identical, so the numbers should not be treated as a precise apples-to-apples market-share calculation.
But the gap still reflects TCS's extraordinary scale in enterprise outsourcing and transformation programmes.
Its Q1 wins included an $800 million AI-led transformation deal with SKF alongside several strategic AI, cloud and platform-modernisation engagements.
Infosys's $3.6 billion large-deal TCV was also healthy, particularly because 61% was net new business.
For Infosys, the quality of net-new wins matters as much as absolute TCV because it indicates opportunities to expand wallet share beyond existing contracts.
TCS has started disclosing an AI revenue number that changes the comparison
TCS reported annualised AI revenue of $2.6 billion in Q1 FY2027, up 13.6% sequentially.
That disclosure is important because investors have spent much of the past two years debating whether generative AI would create incremental revenue for IT-services firms or simply automate existing work.
TCS is now showing a measurable AI revenue run rate rather than discussing only pilots, employee certifications or deal pipelines.
Infosys is also deeply invested in enterprise AI through Infosys Topaz and reported strong AI-led deal activity, but its Q1 disclosures frame the opportunity differently rather than presenting the same annualised AI revenue metric.
That makes direct AI revenue comparison imperfect. The useful conclusion is that both are monetising AI, while TCS currently gives investors a clearer aggregate revenue figure.
Infosys guidance is cautious despite a decent Q1
Infosys narrowed its FY2027 constant-currency revenue guidance to 1.5% to 3.0%, while retaining operating-margin guidance of 20% to 22%.
The lower upper bound matters because Q1 itself was not weak.
Constant-currency revenue grew 2.4% year on year and 1% sequentially.
The guidance therefore suggests management remains cautious about discretionary enterprise spending and the pace at which large transformation deals convert into revenue.
TCS does not provide the same formal annual revenue-growth band, so investors should not manufacture a direct guidance comparison where one does not exist.
Cash generation is where TCS's scale becomes difficult to ignore
Bull Run's five-year free-cash-flow series shows ₹210,878 crore for TCS versus approximately ₹32,515 crore for Infosys.
Absolute FCF naturally reflects TCS's larger revenue and profit base.
Still, the magnitude matters because cash finances dividends, buybacks, acquisitions, investments and strategic flexibility.
Infosys actually has the slightly better current operating-cash-flow-to-net-profit ratio at about 1.15x versus TCS at 1.06x.
So Infosys converts current accounting earnings into operating cash very effectively. TCS simply produces much more cash in absolute terms.
Which has the stronger balance sheet?
Both companies are effectively debt-free in Bull Run's current dataset.
TCS has debt-to-equity near zero and a current ratio around 2.23x.
Infosys also has debt-to-equity at zero and a current ratio near 1.98x.
Interest coverage is approximately 54x for TCS and 97x for Infosys.
For practical investment purposes, neither company has a conventional balance-sheet leverage problem.
The more important capital-allocation debate is how efficiently each company uses surplus cash.
Infosys pays the better current dividend yield
Infosys currently offers a dividend yield of about 4.46%, compared with roughly 2.92% for TCS.
That is a meaningful difference for investors seeking cash income from a large-cap technology stock.
TCS remains a substantial capital-return company and declared a ₹12 per share dividend with its Q1 FY2027 results.
Infosys historically pays dividends twice annually and also completed a large ₹18,000 crore buyback during FY2026.
Total shareholder return should therefore consider dividends, buybacks and changes in valuation, not yield alone.
Why TCS has such a high ROE
TCS's approximately 48.7% ROE reflects an asset-light model, strong margins and a highly efficient equity base.
Infosys also has an excellent ROE at around 31.2%.
ROCE reinforces the difference: roughly 58.5% for TCS versus 38.5% for Infosys.
These numbers explain why TCS has historically commanded a quality premium.
The question for investors in 2026 is whether that premium is now sufficiently small to make the superior return ratios especially attractive.
One surprising feature of the current valuation
Both TCS and Infosys trade below Bull Run's current IT-industry P/E of about 22.3x.
TCS trades around 15.9x and Infosys around 14.4x.
Those multiples are far below the levels investors became accustomed to during stronger digital-spending cycles.
The discount reflects concerns about slow discretionary spending, AI-driven productivity, pricing pressure and whether traditional headcount-led growth can continue.
The key analytical mistake would be assuming a low historical P/E automatically means the old growth rate will return.
The real question is what level of revenue growth and margin is sustainable in an AI-heavy services environment.
What the share-price performance says
Both stocks have suffered large one-year declines, with Infosys slightly outperforming TCS over that period.
| Period | TCS | Infosys |
|---|---|---|
| 1 month | +3.38% | +9.90% |
| 3 months | +0.53% | -1.37% |
| 6 months | -13.28% | -11.26% |
| 1 year | -26.89% | -25.33% |
| Distance from 52-week high | -31.46% | -33.80% |
| RSI (14) | 42.70 | 47.52 |
The broader message is more important than the small relative difference: investors have materially de-rated both companies.
That means future returns are increasingly likely to depend on whether earnings growth can re-accelerate rather than on further multiple expansion alone.
The ownership profiles are very different
TCS has concentrated promoter ownership, while Infosys has a far larger institutional float.
Tata Sons and related promoter entities account for the large promoter stake reflected in Bull Run's 71.77% promoter holding for TCS.
Infosys has promoter holding of about 14.55%.
FII ownership is around 28.45% in Infosys versus 9.66% in TCS.
DII ownership is about 43.19% in Infosys compared with 13.34% in TCS.
Neither company currently shows promoter pledging.
The strongest case for TCS
Why TCS stands out
- Largest market capitalisation of the two.
- 24.0% Q1 operating margin.
- 48.7% ROE.
- 58.5% ROCE.
- 18.1% net profit margin in Bull Run's current dataset.
- $9.5 billion Q1 TCV.
- $2.6 billion annualised AI revenue.
- Massive five-year free-cash-flow base.
- Debt-free balance sheet.
What can go wrong
- Revenue growth remains modest in constant currency.
- AI productivity could pressure traditional effort-based billing.
- North America remains almost half of revenue.
- Large-company scale makes high growth harder.
- Stock remains materially below its 52-week high despite strong profitability.
The strongest case for Infosys
Why Infosys stands out
- Lower trailing P/E.
- Lower P/B multiple.
- Higher current dividend yield.
- 12.2% five-year sales growth.
- 31.2% ROE.
- 38.5% ROCE.
- $3.6 billion Q1 large-deal TCV with 61% net new.
- Strong operating cash conversion.
- Large institutional ownership base.
What can go wrong
- FY27 revenue guidance has been narrowed.
- Operating margin remains below TCS.
- Five-year revenue growth has not translated into faster profit growth than TCS.
- AI investment could raise near-term costs before producing incremental revenue.
- The stock remains more than 30% below its 52-week high.
TCS vs Infosys: which company wins each category?
Scale: TCS.
Operating margin: TCS.
ROE: TCS.
ROCE: TCS.
Five-year revenue growth: Infosys.
Five-year profit growth: Essentially tied.
Current P/E valuation: Infosys.
Current P/B valuation: Infosys.
Dividend yield: Infosys.
Absolute free cash flow: TCS.
Current operating cash conversion: Infosys.
Q1 deal-book scale: TCS.
Current Bull Run Score: TCS.
TCS vs Infosys FAQs
Which company is bigger?
TCS, with a current market capitalisation of roughly ₹7.92 lakh crore compared with Infosys at about ₹4.37 lakh crore.
Which stock is cheaper?
Infosys on current trailing P/E and P/B. Its P/E is about 14.4x compared with TCS at approximately 15.9x.
Which has higher ROE?
TCS, at roughly 48.7% versus Infosys at about 31.2%.
Which has higher ROCE?
TCS, at approximately 58.5% versus Infosys at roughly 38.5%.
Which has a higher dividend yield?
Infosys, at roughly 4.46% compared with about 2.92% for TCS.
Which company has the bigger Q1 deal book?
TCS reported $9.5 billion of Q1 FY2027 TCV. Infosys reported $3.6 billion of large-deal TCV.
Which is more profitable?
TCS currently has the higher operating margin, net profit margin, ROE and ROCE.
Research sources
Disclaimer
This article is for educational and informational purposes only. Financial and market data is based on company disclosures and Bull Run's available August 25, 2026 snapshot. Valuation ratios, share prices, ownership, margins, growth rates and technical indicators change over time. Deal TCV definitions can differ between companies and are not perfectly comparable. Nothing here recommends buying, selling or holding TCS, Infosys or any other security. Bull Run is not a SEBI-registered Research Analyst or Investment Adviser.