TCS announced its results on 09th July and the growth in revenues and profits were slower than anticipated by the markets. Also, the operating margins of TCS fell quite sharply due to a sharp rise in costs. Large IT companies are now compelled to recruit local talent abroad and pay them more as per the existing pay scales in those countries. This has added to their costs and put pressure on margins. However, TCS does not give any future guidance as a matter of policy so you will have to only look at what TCS has reported till date.

Infosys announced its quarterly results for the June quarter on 12th July. Here is a quick take on the key numbers announced by Infosys for the June quarter.

· Infosys June quarter profit fell 6.8 percent sequentially but the good news is that the company has raised its full-year revenue guidance to 8.5-10 percent. This is nearly 70 bps more than the guidance given in the previous quarter.

· Profit for the quarter ended June 2019 stood at Rs 3,802 crore, down from Rs 4,078 crore in March quarter. That was more due to the impact of higher manpower costs as the company relied more on global recruitments at a higher manpower cost.

· Even though the operating margin guidance for June quarter fell to 20.50%, Infosys maintained its FY20 operating margin guidance in the range of 21-23%.

· There is traction on the fast growing digital segment. Digital revenue for the quarter stood at 35.7% of total income and even registered year-on-year growth of 41.9%.

· Large deal total contract value (TCV) was highest ever at $2.7 billion for Q1. This is a sign of large retention clients and is good for sustaining margins.

At the current stock price of Rs.720, the stock is quoting at 20X past earnings and with robust guidance it looks cheaper. Relatively, TCS is looking more expensive. As an investor, you can certainly prefer Infosys over TCS for the time being.