Any company stays profitable due to a combination of reasons. In the case of TCS, RIL and HDFC Bank, there are two important reasons for their solid financial performance quarter after quarter.

Firstly, these 3 companies have been disruptive and have managed to stay ahead of competition. Let us look at each of these stocks individually. HDFC Bank shifted out of corporate lending and into consumer financing much before the NPA crisis started. They were first off the block. TCS made a shift to digital business and out of BFSI focus well before the rest of the IT companies did. This allowed them to widen the valuation gap over Infosys since 2014 and the results are there for all to see. Finally, RIL has invented opportunities like petchem, plastics, value refining etc in the past. Even in its latest digital foray, RIL has captured the ecosystem best. That could be one reason for their financial performance.

The second reason is a lot more practical and it has to do with their consistent focus on margins and growth. You know that each of these companies is a leader in their respective industry by a margin and this leadership position has given them some unique advantages. HDFC Bank maintained 20% plus growth and sub-1% NPAs for over 40 quarters now. RIL has the highest gross refining margins (GRMs) in the world; nearly twice the Singapore benchmark. In telecom, Jio is still growing at the expense of other telecom players. TCS operating margins have consistently held a lead gap of 300-400 bps over Infosys. TCS also boasts the lowest levels of attrition in the IT industry.

It is a combination of solid performance and the ability to stay ahead of competition that has separated the big value creators from the rest of the pack. For now you don’t really need to worry about valuations. Their performance will do the talking.