“A Study on Financial Performance of IT Sector in India:

With Special reference to TCS, INFOSYS AND WIPRO”

A Project Submitted to

University of Mumbai for partial completion of the Degree of

Bachelor of Management Studies under the Faculty of Commerce

By

Ansari Uzair Haider

Roll No. 4 Seat no.
Under the Guidance of
Prof. Aiman Peerzade

Studying at

Rizvi Education Society’s

Rizvi College of Arts, Science and Commerce

Rizvi Educational Complex, Bandra (West), Mumbai – 400050

Academic Year 2022-2023

1
 DECLARATION

I, Mr. Ansari Uzair Haider, student of TYBMS [Finance], Roll No. 4, Seat No. of the
academic year 2022-2023 studying at RIZVI COLLEGE OF ARTS, SCIENCE AND
COMMERCE, hereby declare that the work done on the project entitled A Study on
Financial Performance of IT Sector in India: With Special reference to TCS, INFOSYS
AND WIPRO is true and original to the best of my knowledge and any reference is duly
acknowledged.

Date: ______________ Signature of Student: _________________

2
 CERTIFICATE

This is to certify that Ansari Uzair Haider, student of TYBMS (Finance), Roll No. 4 Seat No. of the
academic year 2022-23 studying at RIZVI COLLEGE OF ARTS, SCIENCE AND COMMERCE, has
successfully completed the project entitled -A Study on Financial Performance of IT Sector in India:
With Special reference to TCS, INFOSYS AND WIPRO.

_________________________ _________________________

PROF. AIMAN PEERZADE DR. SUHANA KHAN

(Project Guide) (BMS Coordinator)

___________________________ _________________________

External Examiner Dr. MASOOMA SAYED

(Chief Coordinator)

___________________________

DR. ASHFAQ AHMED KHAN

(Principal I/c)

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 ACKNOWLEDGEMENT

“Acknowledgement is an art, one can write glib stanzas without meaning a word, and on the other hand one
can make a simple expression of gratitude”

The satisfaction that accompanies the completion of any task would be incomplete without mentioning the
people who made it possible, whose consistent guidance and encouragement crowded my efforts with
success.

I consider as privilege to express my gratitude and respect to all those who guided me in completion of the
project.

I express my sincere gratitude to the principal for providing the facilities and the guidance. I extend my
profound thanks to my project guide PROF.AIMAN PEERZADE for giving me opportunity to undertake
this project. I convey my regards to untiring support and encouragement. I am very thankful to for guidance
and support during my project work.

Finally I give immeasurable thanks to my parents and to all those who extended their support and
cooperation in bringing out this project work successfully.

_________________________________

Ansari Uzair Haider

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 INDEX

CHAPTER. PARTICULARS Pg. NO

NO

INTRODUCTION 6 - 27
1

2 RESEARCH METHODOLOGY 28 - 36

3 REVIEW LITERATURE 36 - 38

4 DATA ANALYSIS AND INTERRESENTATION 39 - 57

5 CONCLUSION 58

BIBLIOGRAPHY 59 - 61
6

5
 CHAPTER:-1

INTRODUCTION

[1.1] ABSTRACT

In this study, ‘A Study on Financial Performance of IT Sector in India: With Special

reference to TCS, INFOSYS AND WIPRO’, the focus is on the financial performance of the
three leading IT companies in India. These selected IT companies have emerged drastically in
the contemporary world.
The exponential growth of the IT industry in India in the last two decades has changed the
perception of the whole world about India’s storehouse of knowledge and skills and powered
economic growth. The present paper analyses and examines the financial performance of
selected Indian I.T companies such as TCS, INFOSYS AND WIPRO and establishes a linear
relationship between liquidity, leverage, efficiency and profitability. In this, an attempt is made
to do Financial Analysis with the help of various accounting ratios and statistical tools like
CAGR which shows differences in profitability of selected IT companies.

Key Words – Financial Performance, IT Companies, Profitability Analysis, Liquid Analysis,

Solvency Analysis, CAGR.

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1.2 – Introduction to Financial Performance

What is meant by Financial Performance of a Company?

Financial performance is a critical aspect of a company's success and is closely watched by a variety of
stakeholders, including investors, lenders, customers, and employees. Financial performance metrics provide
insights into the company's financial strengths and weaknesses, its ability to generate revenue, and its ability
to generate positive cash flow. Some of the key indicators of financial performance include:

 Revenue growth: This measures the increase in a company's revenue over time, indicating the
company's ability to increase sales and generate income.

 Gross profit margin: This is a measure of a company's profitability, indicating the percentage of
revenue that remains after deducting the cost of goods sold.

 Return on equity (ROE): This measures a company's efficiency in using shareholder's equity to
generate profit.

 Debt-to-equity ratio: This measure the level of debt a company has compared to its equity, indicating
the company's financial leverage.

 Liquidity: This measures a company's ability to meet its short-term obligations, such as paying bills
and debts, using its current assets.

Financial performance analysis is an important tool for investors and stakeholders to assess the financial
health of a company and make informed decisions about their investments. However, it's important to
remember that financial performance is just one aspect of a company's success and that other factors, such as
management quality and market conditions, can also have a significant impact on a company's overall
performance.
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Additionally, financial performance can be evaluated in comparison to industry benchmarks and competitor
companies to get a more complete picture of a company's financial position and potential.

 Benchmarking: This involves comparing a company's financial performance metrics to industry

averages or to other companies in the same sector. This helps to identify areas where the company
may be underperforming compared to its peers and provides insight into the company's relative
strengths and weaknesses.

 Trend Analysis: This involves evaluating a company's financial performance over time, looking for
patterns and trends that may indicate future success or challenges. This can help identify areas for
improvement and provide insight into the company's financial trajectory.

 Ratio Analysis: This involves using various financial ratios to evaluate a company's financial
performance, such as its debt-to-equity ratio, return on investment, and return on equity. Ratio
analysis provides a quick snapshot of a company's financial position and can be used to identify areas
of concern or potential improvement.

Financial performance is a critical aspect of a company's success and is closely watched by a variety of
stakeholders. It provides insight into a company's financial position, its ability to generate revenue, and its
efficiency in managing its financial resources. Financial performance analysis can help identify areas for
improvement and provide a more complete picture of a company's financial position and potential.

It is also important to note that financial performance should be viewed in the context of a company's overall
business strategy and goals. For example, a company may prioritize investing in research and development
over maximizing short-term profits, which may result in lower profitability in the short term but stronger
financial performance in the long term.

Another aspect of financial performance is sustainability, which refers to a company's ability to continue
generating positive financial results in the long-term. This can be influenced by various factors, such as a
company's business model, its ability to adapt to changing market conditions, and its ability to manage risk.

Investors and stakeholders also increasingly consider the social and environmental impact of a company
when evaluating its financial performance. This includes considering factors such as the company's carbon
footprint, labour practices, and social responsibility initiatives. Companies that prioritize sustainability and

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Corporate social responsibilities are often seen as having a more favourable long-term financial outlook and
are more attractive to investors and stakeholders.

Additionally, financial performance is closely related to a company's management and governance. The
quality of a company's management can greatly impact its financial performance, as strong leadership and
effective decision-making can drive growth and success. On the other hand, poor management can result in
financial difficulties and reduced financial performance.

It's important to remember that financial performance is not the only factor that determines a company's
success. Other factors, such as brand recognition, customer satisfaction, and product quality, can also play a
significant role in a company's overall success and should not be overlooked when evaluating a company's
financial performance.

Financial performance is a complex and multifaceted aspect of a company's success that should be evaluated
in the context of the company's overall business strategy, goals, external factors, management, and
sustainability. A comprehensive evaluation of financial performance provides a more complete picture of a
company's financial position and potential and is crucial for making informed investment and business
decisions.

Furthermore, financial performance can be influenced by various external factors, such as economic
conditions, competition, and government regulations, among others. These factors can have a significant
impact on a company's financial performance and should be taken into consideration when evaluating a
company's financial position.

It's also worth mentioning that financial performance can be presented in different ways and can sometimes
be misleading if not analyzed carefully. For example, companies may use accounting tricks or engage in
financial manipulation to present a more favourable financial picture, which can be misleading to
stakeholders. Therefore, it is important to carefully review financial statements and perform thorough
financial analysis to get an accurate picture of a company's financial performance.

Financial performance is a complex and multifaceted aspect of a company's success that should be viewed in
the context of a company's overall business strategy, goals, and external factors. Careful analysis and
interpretation of financial performance metrics is crucial for making informed decisions about a company's
financial position and potential.

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1.3 – Introduction to IT Sector in India

The IT sector in India is a rapidly growing industry that plays a significant role in the country's economy.
India is one of the world's largest hubs for software development, IT services, and business process
outsourcing. Major companies such as Tata Consultancy Services, Infosys, Wipro, and many others have
established a strong presence in India. The Indian government has also been supportive of the growth of the
IT sector through various initiatives and policies. In recent years, the rise of new technologies like artificial
intelligence, machine learning, and cloud computing has further boosted the growth of the IT industry in
India.

In addition to traditional IT services, the Indian IT sector is also making a mark in emerging technologies
such as blockchain, internet of things (IoT), and digital transformation. The sector employs millions of
people and generates significant foreign exchange for the country through exports. India's vast pool of
technical talent and its favourable business environment have made it a popular destination for multinational
companies looking to set up IT operations in a cost-effective manner.

However, the sector is not without challenges. The shortage of skilled talent in certain areas, limited
infrastructure in certain regions, and issues related to data privacy and security are some of the challenges
faced by the IT industry in India. Despite these challenges, the sector continues to grow and is expected to
remain a major contributor to the country's economy in the coming years.

The Indian IT sector has also played a key role in the development of the country's startup ecosystem. Many
successful Indian startups such as Flipkart, Paytm, and Ola have emerged from the IT sector and have
disrupted traditional business models across various industries. The government has also launched initiatives
to promote entrepreneurship and innovation in the IT sector, such as the Startup India initiative and the
Digital India campaign.

Another important aspect of the IT sector in India is the BPO (business process outsourcing) industry. India
is one of the largest destinations for outsourcing in the world, with a large number of multinational
companies setting up call centers and back-office operations in the country. The BPO industry provides
employment opportunities for a large number of people, particularly in tier-2 and tier-3 cities.

10
The IT sector in India is a crucial part of the country's economy, providing employment, driving innovation,
and boosting exports. Despite challenges, the sector continues to grow and evolve, positioning India as a
major player in the global IT landscape.

The Indian IT sector has come a long way since its inception and continues to evolve and grow. The industry
is poised to play an even more significant role in the future of India's economy, shaping the country's
development and contributing to its progress in the years to come.

1.4 IT in India before Economic Reforms :

The first electronic computer was introduced in 1955. The concept of IT industry was virtually unknown
during the 1950-60s and this picture continues up to 1970s. At that point of time IBM was only the Multi
National Company who was working in India as one of the largest hardware service provider along with
some development of basic software packages with the help of COBOL, FORTRAN etc. However, it is a
very shocking fact that prior to 1984 there was no IT industry in India. In 1968 Tata Consultancy Services
(TCS) the first Indian software company established with the unregistered head office in Mumbai.

Formally at the beginning years of its existence it had only some local contracts but the picture was like
almost changed after getting one export order from Iran to develop ‘Inventory Management System’ in the
mid of1970 and afterwards the picture began to change. In 1975, 26th December CMC (Computer
Maintenance Corporation) was established. The registered office of CMC situated in Hyderabad. CMC
became a Public limited company in August 19, 1977primarily the 100% shares of this company were held
by the Government. But then it started to face a certain type of challenges came into its way.

First and foremost challenge was shortfall of skilled and trained manpower to develop new technologies,
Secondly lack of availability of required hardware, thirdly rigid and hostile government policies stating that
the MNCs has to reduce their share in Indian subsidiaries less than 50%. At that time IBM, the only foreign
company was working in India not agreed with this regulation, subsequently decided to leave India. As a
result shortage of foreign exchanges arises. But consequently it seems to be a great chance towards Indian
software companies to occupy the Indian market with foreign exposure.

The actual fact is that first IT companies are concentrated in Mumbai Nariman point; later on it shifted to
Santacruz. Though the first IT industry started over there in 1970 but the real turning point turned around
when an US company Texus Instrument (TI) came to India in 1986 and established its designing 11 centers
in Bangalore. After that many large and small companies clustering in and around the city. Primarily Indian

11
economy was agricultural based. In one word it can be said that agriculture was the backbone of economy.
But now a day the total picture is likely to be changed. Agricultural sector contributes only 21% towards
Indian economy whereas from industrial sector it is getting 28%.

Above all IT sector plays a vital role for such contribution. It is like a sunrise to Indian economy. India’s
economic condition was not very impressive after post independence period. Industrial sector as a whole was
totally neglected. Therefore there was no question for separate IT industry.

Above all the India was the worst sufferer due to scarcity of foreign currency; inadequate international
business, harsh and hostile policy as framed by Indian government, closed economy etc. This picture was
continued up to the mid of 1990s but began to change afterwards. Meanwhile Government understood the
necessity of open economy started to liberalized its policy towards the outside of the country and adopt the
policy of globalization with a view to increase its global trade. That became possible only for the former
Finance Minister Dr. Manmohan Singh and Prime Minister Rajiv Gandhi. But it was very unfortunate that
nobody has concentrate over IT sector and it was being neglected till 1990.

1.5 IT in India after Economic Reforms :

A changed scenario came out in 1990, the actual boom period started somewhere in the late 1990s. At
present Bangalore is regarded as absolutely IT destination. Bangalore. The top Indian software companies
like Infosys, Wipro Limited opened their head quarters in Bangalore. But latter on this development spread
over the ‘Silicon’ metros like Pune, Mumbai, Hyderabad, Chennai etc. and to give the support the small
cities like Bhubaneshwar in east Pondicherry, Thiruvanantapuram, Mysore in south, Chandigarh and
Gurgaon in north are in a strong position on the map of Indian software today. But soon after arising of Y2K
problem recessed Indian IT market. Indian It export market was largely affected by the slowdown of US
economy due to terrorist attack on 11th September 2001.

NASSCOM has projected an overall software service market that will grow by 25-28% to USD $ 36-38
billion in the financial year 2006-07 and the export is likely to grow 27-30% in the same fiscal. It is also
indicated through highlight that Indian IT industry has grown its revenue 10 fold in the past decade from US
$100 million in1985-86 to USD $ 47.8 billion by 2007-08. From the last decade India has became one of
the most important offshore destinations amongst the Asia-Pacific region. During 4 to 5 years it increases up
to 3fold and captured the leadership position in the world market. Indian IT sector acquires 3% of the total
global market and it is expected to increase its volume in the next few years. IT and ITES has recorded $

12
39.6 billion revenue in the year of 2006-07 which register a growth of 30.7% beating the projected growth of
27% as per NASSCOM estimation.

This is one of the fastest growing sectors in the last decade with CAGR(Compound Annual growth Rate)
exceeding 50%. The estimated CAGR in IT service20-22% and in ITES about 55% that together with shows
a total growth of 25% p.a. ITES (Information Technology Enabled Services) includes BPO, Call Centers,
administrative support etc. According to Kiran Karnik (President of NASSCOM) “Indian IT sector
consistently growth in both export and domestic segment and its ongoing expansion into new potentially
high growth opportunities reaffirms the continued confidence and global competitiveness of the Indian IT
sector. We are confident that the industry will achieve the ambitious target of US $ 60 billion in 2010 for
export.”As it is a well known fact that IT, a knowledge based industry provide a great opportunity to become
a vital sector which help in robust Indian economic growth. It provides a tremendous employment prospect
and acts as a link between government and people of rural and urban sector.

Indian IT software and service industry has emerged as one of the fastest growing sectors in Indian
economy, with a growth rate exceeding 50% in export and 40% in total IT industry over the last five years.
The higher growth in exports between 2003 and 2008 will be contributed primarily by the BPO on ITES,
which is expected to grow at a high CAGR of 36%. It is expected that the IT service export grow up to 19%
during the same period. The growth in 2003 makes India the fastest growing and forth-largest domestic
market in Asia-Pacific region. Domestic market also rapidly increasing and its growth trend reached to peek
in 2005 at 21% and it is expected to grow to a decent place. Total size of domestic market is expected to
cross USD $ 15.9 billion in current fiscal 2006-07 showing a growth of 21% over 2005-06, traditionally
which is led by MNCs. The revenue earned by domestic market grew by 24%, which shows a strong growth
rate.

It becomes only possible due development of proper infrastructure and flexible government policies.
Government understood the importance of the infrastructure for this industrial set-up and create conductive
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environment for its development and expansion. The domestic market segment continues the same growth
rate during last5 years. This is not an easy task to maintain a same growth rate during last 5continuous years.
Moreover, the domestic market is small in size and primarily influenced by Multinational Companies.

According to NASSCOM domestic market has register a growth of 18% in 2001-02 but fails in 2002-03 to
13% as slowdown in spending of manufacturing and banking concern by 17%. But in the year of 2004 IT
service market recorded a growth of USD $ 2.3 billion at a CAGR of 19%. The domestic market is expected
to grow by 22.4% in the current fiscal and will become fastest growing market amongst Asia-Pacific region.
Domestic segment grew by 23%to register revenue of USD 8.2 billion in financial year 2006-07 up from
USD 6.7billion in 2005-06. As per annual survey domestic IT industry has recorded a growth rate of 32% to
cross the US $10 billion mark in 2007-08. Therefore it can be said that Indian domestic IT market is no
longer a dream or myth.

But if we see the other side then it will be revealed that IT development confined in some metro cities and
urbanized areas. Rural areas are not taken into account properly. That is why it makes a huge discrimination
among the people of urbanized and rural areas in respect of per capita income, status, standard of living etc.
Indian IT industry is predominantly export oriented but the export graph did not grow uniformly between
1980 and 2000. Major part of Indian IT products and services export to U.S.A and U.K. As a result,
instability of economical and political conditions of these two countries affect adversely to Indian economy
at large proportion. If any discrepancy happens with these countries it will directly affect the Indian
economy immediately.

IT, being a knowledge based industry requires an enormous number of technologically equipped, English
speaking man pools with specialized knowledge. Therefore this sector itself can create a huge number of
employment opportunities with a growth rate exceeding 50% in export 40% in total IT industry over last five
years. After economic reform in 1991 leading to increase in GDP, per capita income, purchasing power of
the consumers and standard of living of people specially belonging to middle class.

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The above Table shows that the revenues of IT services, ITes BPO and software products &engineering
services increase gradually during the study period. IT-Services earns a revenue of USD $ 17.8 billion in
2006-07 compared to USD $ 5.8 billion in 2001-02 from export. The domestic revenues from IT services
also increasing steadily and shows a sharp increase of USD $ 2.1 billion in 2001-02to USD $ 5.5 billion in
2006-07. The compound annual growth rate (CAGR, hereafter) of IT-Services is 19.76 for the study period.
The export revenues from ITes-BPO shows increasing trend during the study period. Revenues from export
in2001-02 was USD $ 1.5 billion and increased to USD $ 8.4 billion in 2006-07. Domestic revenues from
this segment is also impressive and shows an increase from USD $ 0.1 billion to USD $ 1.1 billion in 2006-
07. The CAGR of ITes -BPO revenue is 34.57 percent.

The other segment of Indian IT sector is software product and engineering services demonstrated an
increasing trend in case of revenues earned from domestic as well as from export. The export revenue of this
segment in 2001-02was USD $ 0.3 billion in 2001-02, USD $ 2.5 billion in 2003-04 and USD $ 4.9 billion

15
in 2006-07. Domestic revenue is USD $ 1.6 billion in 2007-07 compared to USD $ 0.4 billion in 2001-02.
The CAGR of the revenue earned by this segment is 44.98 percent for the study period. The Figure shows
the pictorial presentation of the revenues earned from the above mentioned segment of Indian IT industry.

1.6 Impact Of Covid Pandemic On It Sector On India :

The COVID-19 pandemic has had a significant impact on the IT sector in India. The pandemic has
accelerated the shift towards remote work and digitization, leading to increased demand for IT services and
solutions. This has benefited the IT sector as companies are investing in technology to support remote work
and ensure business continuity.

However, the pandemic has also had some negative effects on the IT sector. The sudden shift to remote work
has put a strain on IT infrastructure, leading to a shortage of hardware and devices such as laptops and
webcams. Additionally, many IT services companies have been negatively impacted by the slowdown in
economic activity and reduced demand from businesses.

The COVID-19 pandemic has had both positive and negative impacts on the IT sector in India. While the
pandemic has accelerated the adoption of technology and increased demand for IT services, it has also
caused some challenges such as strain on IT infrastructure and reduced demand from businesses.

On the positive side, the IT sector in India has seen growth in areas such as cloud computing, cyber security,
and digital transformation. The increased demand for remote work and online services has led to a surge in
the use of cloud computing services, as companies seek to store and access data and applications securely.

This has also led to an increase in demand for cyber security solutions, as businesses look to protect their
online assets from cyber threats.

The pandemic has also accelerated the pace of digital transformation across industries, leading to increased
demand for IT services and solutions that support digital transformation. This includes areas such as e-
commerce, online payments, and digital marketing.

In terms of the impact on the workforce, many IT companies in India have adapted to remote work, allowing
employees to work from home. This has resulted in cost savings for companies and greater flexibility for
employees, but it has also brought new challenges such as difficulties in maintaining team collaboration and
productivity.

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The IT sector in India has demonstrated resilience during the pandemic and has continued to play a vital role
in supporting businesses and individuals as they navigate the challenges of the pandemic. Despite the
challenges, the IT sector is expected to continue to grow and play an important role in the recovery and
growth of the Indian economy.

One of the challenges faced by the IT sector in India during the pandemic has been supply chain disruptions,
which have resulted in shortages of hardware and other essential components. This has led to increased costs
for IT companies and has impacted their ability to deliver on projects in a timely manner.

Another challenge has been the reduction in demand from businesses in certain industries, such as travel and
hospitality, which have been hit hard by the pandemic. This has led to a slowdown in revenue growth for IT
companies that serve these industries.

However, the IT sector in India has also seen new opportunities arise during the pandemic. For example,
there has been increased demand for health tech solutions, such as telemedicine and remote patient
monitoring, as healthcare systems adapt to the challenges posed by the pandemic.

Additionally, the government of India has launched several initiatives aimed at boosting the IT sector and
promoting digital transformation, such as the "Digital India" program. These initiatives are expected to
provide a boost to the IT sector and create new opportunities for growth.

The COVID-19 pandemic has presented both challenges and opportunities for the IT sector in India. While
the pandemic has brought about supply chain disruptions and reduced demand from certain industries, it has
also accelerated the shift towards remote work and digitization and created new opportunities in areas such
as health tech and digital transformation. The IT sector is expected to continue to play a key role in
supporting the Indian economy as it recovers from the pandemic.

One of the ways in which the IT sector in India has responded to the pandemic is by developing and
providing solutions to support remote work. This includes development of software and applications to
support collaboration and communication, as well as solutions for secure remote access to data and
applications.

The IT sector has also played a critical role in supporting essential services and businesses during the
pandemic. For example, IT companies have provided technology solutions to support remote delivery of
education, healthcare, and financial services.

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The pandemic has also led to a greater focus on up skilling and deskilling within the IT sector in India. Many
IT professionals have sought to improve their skills and knowledge in areas such as cloud computing, data
analytics, and cyber security, in order to stay relevant and meet the changing demands of the market.
Finally, it's worth mentioning that the IT sector in India has been recognized for its strong resilience and
ability to adapt to the challenges posed by the pandemic. The sector has continued to attract investment and
talent, and is expected to play a critical role in supporting the Indian economy as it recovers from the
pandemic.

The COVID-19 pandemic has had a profound impact on the IT sector in India, but the sector has
demonstrated resilience and adaptability. The IT sector has provided critical support to businesses and
individuals during the pandemic, and is expected to play a key role in the recovery and growth of the Indian
economy in the years to come.

It's worth noting that the IT sector in India has also faced new regulatory challenges as a result of the
pandemic. For example, many countries have introduced new data privacy and security regulations to
address the increased risks posed by remote work and the widespread use of digital services. IT companies
operating in India have had to navigate these new regulations, as well as ensure compliance with existing
laws and regulations.

The pandemic has also had a significant impact on the global economy, and the IT sector has been affected
by the resulting economic slowdown. IT companies have faced reduced demand from businesses and
individuals, as well as supply chain disruptions and other challenges. Despite these challenges, the IT sector
has continued to grow and attract investment, and is expected to play a key role in the recovery of the global
economy.

It's worth mentioning that the IT sector in India has a strong reputation for innovation and creativity, and has
been a leader in developing cutting-edge technology solutions. The sector has continued to invest in research
and development, and is expected to drive innovation in areas such as artificial intelligence, machine
learning, and the Internet of Things.

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Indian IT sector’s – Past , Present, Future

The Information Technology (IT) sector in India has gone through a significant transformation over the past
few decades. Let's take a look at the past, present, and future of the IT sector in India:

Past:

 The Indian IT industry started to gain traction in the 1980s and 1990s, with a focus on providing
software development and back-office support services to global companies.

 In the late 1990s and early 2000s, the Indian IT industry began to expand, driven by a rapidly
growing pool of highly educated and English-speaking technical talent, and the Indian government's
proactive policies to encourage foreign investment in the sector.

Present:

 Today, the Indian IT sector is a major contributor to the country's economy, employing millions of
people and generating billions of dollars in revenue.

 The industry has diversified beyond traditional software development and BPO services, with a
growing focus on areas such as digital transformation, cloud computing, data analytics, artificial
intelligence, and the Internet of Things (IoT).

 The Indian IT sector has a strong global presence, with Indian companies providing services to
clients in countries around the world, and global IT companies establishing significant operations in
India.

Future:

 The future of the Indian IT sector looks bright, with continued growth expected in areas such as
digital transformation, cloud computing, and artificial intelligence.

 The Indian government's continued support for the IT sector, including initiatives like the Digital
India program, is expected to provide a further boost to the industry in the years to come.

 The growing importance of technology in the global economy, and the increasing demand for highly
skilled technical talent, bodes well for the continued growth of the Indian IT sector in the future.

19
  The demand for digital solutions is expected to grow rapidly in India in the coming years, as
businesses of all sizes adopt technology to improve their operations and reach new customers. This
will create new opportunities for Indian IT companies to provide digital transformation services to
clients both in India and around the world.

 The growing adoption of cloud computing is another area that is expected to drive growth in the
Indian IT sector. As businesses move their operations to the cloud, they will need support from IT
companies to manage and optimize their cloud infrastructure. This will create new demand for cloud
computing services in India.

 Artificial intelligence (AI) is another area where the Indian IT sector is expected to see significant
growth in the coming years. Indian companies are already working on cutting-edge AI solutions, and
the demand for AI-based services is only going to grow as more businesses look to automate their
operations and gain a competitive edge.

 The Indian government's push towards a digital economy is also expected to create new opportunities
for the IT sector. The government is investing in digital infrastructure, such as high-speed broadband
networks, and promoting the use of digital technologies in areas such as education, healthcare, and
financial services. This will create new demand for IT services in these sectors, and provide a boost
to the Indian IT sector as a whole.

 The Indian IT sector will also need to focus on developing talent in niche areas such as cybersecurity,
blockchain, and quantum computing. These are emerging technologies that are likely to play a
significant role in shaping the future of the global economy, and Indian IT companies will need to
invest in developing the necessary expertise to take advantage of the opportunities that these
technologies present.

 The Indian IT sector is expected to play a key role in promoting entrepreneurship and innovation in
the country. IT companies are expected to support start-ups and young entrepreneurs by providing
them with the tools and resources they need to bring their ideas to market. This will help to foster a
culture of innovation and create new opportunities for young people in India.

Overall, the future of the Indian IT sector looks very promising, with continued growth expected in areas
such as digital transformation, cloud computing, AI, and the Internet of Things (IoT). The growing demand
for technology-based solutions, combined with the strong pool of highly skilled technical talent in India,
bodes well for the continued success of the Indian IT sector in the years to come.

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1.7 – Industry Profile Of The Selected Indian IT Company

Tata Consultancy Limited (TCS Limited): TCS is one of the multinational Indian IT services, IT
consulting and business Solutions Company. Its head office is in Mumbai, Maharashtra, India. It is one of
the subsidiary company of the Tata Group. It operates approximately in 46 countries. It offers a consulting
led integrated portfolio of IT and IT enabled services delivered through its unique Global Network Delivery
Model (GNDM). TCS was established in 1968 by a division of Tata Sons limited. Its early contracts
included punched card services to sister company TISCO (now become Tata Steel). In 1981, TCS
established India’s first dedicated software research and development centre that was the Tata Research
Development and Design Centre (TRDDC). In 1985, TCS established India’s first client dedicated off shore
development centre, setup for clients Tandem .On 25th August, 2004, TCS became a publicly listed
company. In 2005, TCS Became the first India-based IT services company and entered the bioinformatics
market. In 2006, TCS designed an ERP system for the Indian Railway Catering and Tourism Corporation. In
2011, TCS entered the small and medium enterprises market. TCS has become the first Indian IT company
to cross 3 lakhs-crores market cap.

Some important aspects of the SDC are mentioned below.

 TCS is one of the largest employers for women with 35.3% of employees.
 TCS became the first Indian alcohol technology services company to achieve a $100 billion market
value of $102.6 billion on the Bombay Stock Exchange and another Indian company after Reliance’s
industries achieved the same target in 2007.
 TCS is ranked 10th on the Fortune India 500 list in 2018.
 It is the 9th largest provider of IT in the world by turnover.
 TCS ranks 64th in the world’s most innovative companies, making it the highest-ranked
environmental TECHNOLOGIES services company of all time.
 More recently, TCS, the largest software services company, added 12,000 jobs in the first quarter of
2019 and sent letters of offer to 30,000 graduates who have built employment levels in the country.

Products and services provided:

TCS offers a wide range of information TECHNOLOGY products and services, including application
development, business process outsourcing, capacity planning, consulting, enterprise software, hardware

21
size, payment processing, software management and technology training services. The software products
established by the company are TCS BANCS and TCS Master Craft.

Geographic presence:
TCS is a global leader in technology and consulting services. It enables customers in 46 countries to create
and execute strategies for their digital transformation.

TCS is part of the Tata Group and has 3,95,000 subsidiaries (including subsidiaries) representing 131
nationalities in 46 countries as of March 31, 2018. The Company generated consolidated revenue of $19.09
billion (up 8.6% from the previous year) for the year ended March 31, 2018, and is listed on the National
Stock Exchange and the Bombay Stock Exchange in India.

TCS branches in India

 Jaipur
 Chennai
 Ahmedabad
 Baroda
 Mysore
 Hyderabad
 Pune
 New Delhi
 Gurgaon
 Mumbai
 Lucknow
 Nagpur

Infosys Limited:

Infosys Ltd. is one of the well-known Indian multinational companies. It provides various software products
and services like information technology, business consulting and outsourcing services. On the basis on
2014 revenues, Infosys Ltd. is the second largest India-based IT services company. On 15th February, 2015,
its market capitalization was Rs. 2,63,735 cores (US$ 42.51 billion). It is 6th largest publicly traded
company in India. An idea of Infosys was born on a morning in January, 1981 in Pune. Six months later, on

22
July, 1981, Infosys was registered as a private limited company. Infosys Limited was founded by Narayan
Murthy. Infosys was cofounded by six people namely Nandad Nilekani, N. S. Raghavan, S. Gopalakrishnan,

S. D. Shilbulal, K. Dinesh, Ashok Arora. The company was incorporated as „Infosys Consultants Pvt. Ltd.‟
with an initial capital of Rs. 10,000 (US$ 250) in Model Colony, Pune. The first client of the company was
Data Basics Corporation, New York in 1983. Change in the name of the company: In April, 1992, the
company changed its name to “Infosys Technologies Private Ltd.” In June, 1992, It became a public limited
company and it changed its name to “Infosys Technologies Limited”. It was late renamed to “Infosys
Limited” in June, 2011.

Infosys History

Infosys Limited, formerly known as Infosys Technologies Limited, was founded in 1981 by N.R. Narayana
Murthy and a team of six other engineers in Pune, India, with an initial investment of only 250 $US.

 In 1993, Infosys went public and introduced the employee stock option program.
 In 1994, Infosys moved its headquarters from Pune to Bangalore, India.
 In 1999, Infosys became the first Indian IT company to be listed on the NASDAQ, making it the
most expensive market share in India at the time. In 1999, Infosys was one of the 20 largest market
value companies on the NASDAQ.
 In 1999, Infosy's annual turnover reached US$100 million, US$1 billion in 2004 and US$10 billion
in 2017.

In recent years, Infosys has undergone significant changes, including the appointment of a new CEO and the
implementation of a new strategic plan. The company has shifted its focus from traditional outsourcing
services to more advanced digital services, such as artificial intelligence and cloud computing. Infosys has
also made a number of acquisitions and partnerships to enhance its offerings and expand its global footprint.

Today, Infosys is a global leader in technology and consulting, serving clients in a range of industries,
including financial services, manufacturing, and healthcare. The company has over 250,000 employees and a
presence in over 50 countries.

Overall, Infosys has a rich and diverse history, marked by innovation, growth, and a commitment to
corporate responsibility. The company has grown from its roots as a small software development firm to
become a global leader in technology and consulting, and it continues to play a major role in shaping the
future of the IT industry.

23
Infosys products and services offered

Infosys provides software development and maintenance services to a wide range of companies in different
fields such as insurance, finance, production, etc. Some of the important work-related platforms used at
Infosys are

 Mana, now called the NIA "next generation iA platform"

 Edge verve systems, which include finacle, banking solution with various modules related to
investment and retail banking.
 Infosy’s analytics platform called Infosy’s information platform.
 Infosys Consulting is a global management consulting service.

Geographic Presence

In 2017, Infosys had 116 development centers around the world, as well as 84 sales and marketing offices.
Its largest presence is in India, the United States, China, Australia, Japan and Europe.

Infosys branches in India are in

 Bangalore
 Bhubaneswar
 Chandigarh
 Chennai
 Gurgaon
 Hyderabad
 Mysore
 Mumbai
 Jaipur
 Mangalore
 Pune
 Thiruvananthapuram

24
Infosys Claiming Business

1. Rivalry Amongst Competitors

 IT Industry is a very competitive one with every leading company providing almost similar solutions.
Moreover, the competition is not only limited to the nation itself but beyond the boundaries, too as
many countries like China are working briskly to provide technologically advanced services at a
cheaper cost.

2. A Threat by Substitutes

 With the world getting greatly dependent on technology, there is almost no substitute for it. In the
case of ITeS and BPO segments, the companies can still develop their IT department. However, this
trend has witnessed a continuous fall as companies feel that it is better to outsource and focus on
their core business rather than investing in the IT department.

3. Barriers to Entry

 As the IT industry is hugely capital intensive and with rich talent in the digital space, the barriers to
entry in the IT Industry are not very high. With the government also extending its help to new tech
startups, the competition in this industry is increasing.

 As technology is changing every second, new companies have to focus on innovation because
outdated technology gets no importance, which requires a regular flow of skill and cash. However,
some focused niche-based startups can eat up a huge market share of the existing companies. For
example, AI, IoT, etc.

4. Bargaining Power of Suppliers

 India is rich in skilled IT labour, having more than 75% of the global digital talent, that too at a very
cheap cost. Moreover, the business is not concentrated on a limited group and the work is distributed
over many divisions, which decreases the bargaining power of suppliers.

5. Bargaining Power of Customers

 Bargaining power in the case of customers is a two-way variable. At first, customers enjoy a very
high bargaining power as there are various companies providing quality solutions but when they get
installed with the products, the increasing switching costs result in a fall in bargaining power for
them. As the company gets dependent on the IT partner for all future updates and technological
developments, the bargaining power of customers decreases.

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Wipro Limited:

Wipro Limited (formerly Western India Products Limited) is an Indian Multinational provider of
Information Technology (IT) services, consulting and Outsourcing services. Its head quarter is in Bangalore,
Karnataka, India. The company Operates in four segments: IT products and services, Consumer care and
lighting, Healthcare and Infrastructure engineering. Its founder was Mohamed Hashim Premji. Azim Hashim
Premji is the Chairman of Wipro. Wipro has 40+ „Centers of Excellence‟ That create solutions around
specific needs of industries. Wipro delivers unmatched Business value to customers through a combination
of process excellence, quality Frameworks and service delivery innovation. Wipro is the World’s first
CMMi Level 5 Certified software services company and the first outside USA to receive the IEEE Software
Process Award.

Humble beginnings: from the mid-1940s to the early 1970s

Western India Vegetable Products Ltd. (Wipro Limited) was founded in 1945 by M.H. Premji. The company
sold Vanaspati solidified sunflower oil to retailers who sold it in bulk, marking 50 and 100 grams to
customers who brought their own containers. In 1947, the same year that India gained independence from
British rule, Premji, 32, laid the foundations for a vegetable oil plant in Amalner, Maharashtra. When the
Pakistani Prime Minister offered him a position as Finance Minister, Premji rejected him, citing his loyalty
to India and its young cooking oil company. None of them knew that, later in the new millennium, the value
of Wipro would eclipse Pakistan's gross domestic product. Wipro went public in 1947 for about $30,000.

Premji continued his political career with his company in India. He became the first Indian Chairman of the
Bombay Electricity Board and a member of the Board of Directors of the Reserve Bank of India, the State
Bank of India and the Life Insurance Corporation of India. But Premji's untimely death occurred in 1966,
due to a heart attack. Soon after, his son Azim, 21, left his unfinished engineering studies at Stanford
University in the United States and returned to India to take over the company. What was a dormant business

run by various family members has now become very professional, leaving Azim Premji as the only one in
the family working on the Wipro-a property that would still hold real decades later.

Premji intended to professionalize, diversify and expand his father's business, which was already valued at
about $3 million. He immediately recruited senior executives from the famous Indian Institute of
Management (IIM), where the best candidates are also courted by top-notch companies in the West. "We
pioneered packaging for the mass market," says Premji. "We've gone from Vanaspati bulk packaging to
single-use consumer packages." Innovation in packaging has accelerated and the marketing and distribution
network has been extended to rural areas. At present, the company had no intention of going global. In 1971,
activity almost doubled since the takeover of Azim Premji.

26
Globalizing in the 21st century

Wipro appears to have survived the effects of the U.S. economic slowdown in 2000, with mass layoffs and
profit warnings, and increased in 2001 amid its own rising growth rates and a huge expansion of operating
margins. Given that 60 per cent of India's computer services and software exports were tied to the United
States, Wipro's emergence was remarkable. At the end of March 2001, the company's net income reached a
record $138 million (up 106 percent from the previous year), and operating margins increased from 18
percent to 24 percent that year. While U.S. customer sales fell from 70 percent to 64 percent, revenue from
Europe rose 24 percent to 29 percent, and Japan's revenues did the same from 5 percent to 6 percent. With a
fleet of 150 Japanese-language engineers and about 800 engineers dedicated to Japanese clients including
Fujitsu, NEC, Daiwa, Sony, Toshiba and NTT DoCoMo, Wipro's Japanese business has promised to grow
with further ongoing investments in a diverse customer base. Wipro decided to establish a regional base in
the Asia-Pacific region of Singapore in 2001. At that time, Wipro had a total of 209 active customers, the
first five of which were: Nortel Networks Major Fibre Optic Network Equipment; British gas transport
company Transco; US conglomerate GE; telecommunications equipment manufacturer Lucent
Technologies; and French telecommunications equipment manufacturer Alcatel.

Wipro branches in India are in

 Bengaluru
 Hyderabad
 Pune
 Kolkata and
 Delhi, among others.

27
 CHAPTER:-2

RESEARCH METHODOLOGY

2.1 Introduction:

This chapter aims to provide an in-depth description of how the research was carried out, the nature of the
research being undertaken, the need and importance of the research, the sample size and the sampling
techniques used.

Additionally, the chapter describes the research tool used and how the information collected was described.
Moreover, it also covers the scope and limitations of the research.

Research Methodology

2.2 Title of the study:

“A Study on Financial Performance of IT Sector in India: With Special reference to TCS, INFOSYS AND
WIPRO”

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2.3 Need and Significance of the Study:

This study focuses on the financial performance of the IT sector in India as to how it is crucial for several
reasons:

 Economic Significance: IT sector contributes significantly to the Indian economy, making up a large
portion of its GDP and providing employment to millions of people. Hence, monitoring its financial
performance provides valuable insights into the overall health of the Indian economy.
 Industry growth: The financial performance of IT companies reflects the growth of the sector as a
whole, providing information on trends, market opportunities, and areas for improvement.
 Investment decisions: The financial performance of IT companies influences investment decisions,
both for domestic and foreign investors. Knowing the financial performance of the sector helps
investors make informed decisions on where to invest their money.
 Company performance: Financial performance is a key indicator of the overall health of individual
IT companies. It provides information on their revenue, profitability, and ability to generate cash
flows, which is critical for their long-term success and sustainability.

To be precise, the financial performance of the IT sector in India is crucial for understanding its impact on
the economy, assessing industry trends, and making informed investment decisions.

2.4 Objectives of the study:

 To study and analyze the financial performance of selected Indian IT companies such as TCS,
INFOSYS AND WIPRO
 To compare the financial performance position based on financial ratios of selected IT companies in
India.
 To examine the liquidity trend and profitability trend.
 To compare the leverage position of selected IT Companies.
 To analyse the solvency position.

2.5 Scope of the Study:

The IT industry can serve as a middle of e-governance, as it assures easy convenience to information. The
use of information technology in the service sector improves operational efficiency and adds to transparency.
It also serves as a middle of skill structure. Growth of IT industries gets awareness from every corner.
Example: job-seekers, Investors, government, competitors etc, and all requirements financial analysis of the

29
companies for different purposes. Hence this research paper presents “A Study on Financial Performance of
IT Sector in India: With Special reference to TCS, INFOSYS AND WIPRO”

2.6 Types of research

Fundamental and applied researches are the two main research categories. Most research types can be traced
back to being fundamental or applied, depending on the study’s goals.

1. Fundamental research

Fundamental, also known as basic or theoretical, research is designed to help researchers better understand
certain phenomena in the world. It looks at how things work but does not seek to find how to make them
work better. This research attempts to broaden your understanding and expand scientific theories and
explanations.

Example: A company studies how different product placements affect product sales. This study provides
information and is knowledge-based.

2. Applied research

Applied research is designed to identify solutions to specific problems or find answers to particular
questions. It offers knowledge that is applicable and implementable.

Types of applied research include:

• Technological: This research looks for ways to improve efficiency in products, processes and production.

• Scientific: This research measures certain variables to predict behaviours, outcomes and impact.

Example: A student working on a doctorate in education studies ways to increase student involvement in the
classroom. This research focuses on a defined problem and is solution-based.

3. Qualitative research

Qualitative research involves non-numerical data, such as opinions and literature. It uses descriptions to
obtain the meanings and feelings involved in a situation. Businesses often use qualitative research to
determine consumer opinions and reactions.

Examples of qualitative research may include:

• Focus groups

• Surveys

30
• Participant comments

• Observations

• Interviews

Example: A marketing organization presents a new commercial to a focus group before airing it publicly to
receive feedback. The company collects non- numerical data-the opinions of the focus group participants to
make decisions.

4. Quantitative research

Quantitative research depends on numerical data, such as statistics and measurements, to investigate specific
questions, like whom, what, where or when. The results are usually presented in tables or graphs.

Types of quantitative methods include:

• Survey research

• Descriptive research

• Co relational research

Example: A car manufacturer compares the number of sales of red sedans compared to white sedans. The
research uses objective data- the sales figures for red and white sedans-to draw conclusions.

5. Action research

Action research & refers to examining actions, assessing their effectiveness in bringing about the
desired outcome and choosing a course of action based on those results. It is typically used in educational
settings for teachers and principals to perform a type of self-assessment and course correction.

Example: A teacher collects data about their methods of teaching fifth- grade math. At the end of the first
school quarter, they discovered only 33% of students demonstrated proficiency in the concepts. As a result,
the teacher implements new methods for the second quarter.

Related: How to Write a Research Plan (With Definitions and Examples)

6. Causal research

Causal research, also called explanatory research, seeks to determine cause and effect relationships between
variables. It identifies how much one variable may cause a change in the other. Causal research is important
for evaluating current processes and procedures and determining if and how changes should take place.

31
Example: A business studies employee retention rates before and after instituting a work-from-home policy
after six months of employment to see if the approach increases employee retention.

7. Classification research

Classification research seeks to identify and classify individual elements of a group into larger groups or
subgroups.

Example: Researchers study an animal species, placing them in defined categories based on shared
characteristics.

8. Comparative research

Comparative research identifies similarities and differences between two individuals, subjects or groups.

Example: A business owner reviews new hire training documentation and discovers that new employees
receive much of the same information at orientation and in their initial departmental training. The owner
incorporates materials into one session to allow more time for department-specific training.

9. Cross-sectional research

Cross-sectional, or synchronous, research studies a group or subgroup at one point in time. Participants are
generally chosen based on specific shared characteristics, such as age, gender or income, and researchers
examine the similarities and differences within and between groups. The group is often used as a
representation of a larger population.

Example: A company researches the sales techniques of its top 10% of salespeople and compares them to
those of its bottom 10%. This gives the company insights into the most successful and least successful sales
methods.

10. Deductive research

Deductive, or theory-testing, research is the opposite of inductive research and moves from the broad to the
specific. Researchers choose a hypothesis and test its accuracy through experimentation or observation.

Example: Researchers observed that 12 international corporations enacted in- house carbon emissions
standards in the same year. They use deductive research to compare global emissions levels before and after
the measures were enacted.

11. Exploratory research

32
Exploratory research examines what is already known about a topic and what additional information may be
relevant. It rarely answers a specific question but instead presents the foundational knowledge of a subject as
a precursor to further research. Often, exploratory research is applied to lesser-known issues and phenomena.

Example: You may consider what is currently known about the success of yearlong maternity and paternity
leave programs. Your research includes gathering all relevant information and compiling it in an accessible
format that wasn’t available previously. Your findings may reveal gaps in knowledge, leading to additional
studies in the future.

12. Field research

Field research occurs wherever the participants or subjects are or “on location.”

This type of research requires onsite observation and data collection.

Example: A manufacturing plant hires an environmental engineering firm to test the air quality at the plant to
ensure it complies with federal health and safety requirements. The researchers travel to the plant to collect
samples.

13. Fixed research

Fixed research involves procedures determined ahead of time, such as how often testing will take place,
where it will take place, the number of subjects and their types. The research depends on precise conditions
and compliance with predetermined protocols to reduce variables. Experimentation is often fixed research.

Example: A researcher wants to test how different labels affect consumers' ratings of a sports drink.
Participants are given the same drink with various labels at the same time and take a survey about taste and
overall impressions.

The timing of providing each drink and the subsequent surveys are critical to the Study’s validity.

14. Flexible research

Flexible research allows procedures to change throughout the course of the experiment. The different types
of flexible research include:

• Case studies: Case studies are in-depth analyses and observations about a specific individual or subject.

• Ethnographic studies: Ethnographic studies are in-depth analyses and observations of a group of people.

• Grounded theory studies: Grounded theory studies are designed to develop theories based on carefully
collected and analyzed data.

33
Example: A physician uses a case study methodology to follow a patient through symptoms, treatment and
recovery.

15. Inductive research

Inductive research, also known as theory-building research, collects data that may help develop a new theory
about a process or phenomenon. It examines observations and patterns and offers several hypotheses to
explain these patterns. Inductive research is often the first step in theory generation and may lead to
additional research, such as deductive research, to further test possible hypotheses.

Example: Researchers observed that worldwide emissions declined when 12 international corporations
enacted in-house carbon emissions standards in the same year. The researchers theorize that worldwide
emissions can be reduced significantly if international corporations impose in-house emissions standards.

16. Laboratory research

Laboratory research occurs in a controlled laboratory rather than in the field.

Often, the study demands strict adherence to certain conditions, such as eliminating variables or timing
conditions. Laboratory research includes chemical experimentation and pharmacological research.

Example: A pharmaceutical company researches a new drug formula to determine if it would benefit
diabetes patients.

• Grounded theory studies: Grounded theory studies are designed to develop theories based on carefully
collected and analyzed data.

17. Inductive research

Inductive research, also known as theory-building research, collects data that may help develop a new theory
about a process or phenomenon. It examines observations and patterns and offers several hypotheses to
explain these patterns. Inductive research is often the first step in theory generation and may lead to
additional research, such as deductive research, to further test possible hypotheses.

Example: Researchers observed that worldwide emissions declined when 12 international corporations
enacted in-house carbon emissions standards in the same year. The researchers theorize that worldwide
emissions can be reduced significantly if international corporations impose in-house emissions standards.

18. Laboratory research

Laboratory research occurs in a controlled laboratory rather than in the field. Often, the study demands strict
adherence to certain conditions, such as eliminating variables or timing conditions. Laboratory research
includes chemical experimentation and pharmacological research.

34
Example: A pharmaceutical company researches a new drug formula to determine if it would benefit
diabetes patients. Researchers closely monitor chemical interactions in laboratory settings before moving to
the next step.

19. Longitudinal research

Longitudinal research focuses on how certain measurements change over time without manipulating any
determining variables. Types of longitudinal research include:

• Trend study: Research examines population characteristics over time.

• Cohort study: Research traces a subpopulation over time.

• Panel study: Research traces the same sample over time.

Example: A researcher examines if and how employee satisfaction changes in the same employees after one
year, three years and five years with the same company.

20. Mixed research

Mixed research includes both qualitative and quantitative data. The results are often presented as a mix of
graphs, words and images.

Example: A car manufacturer asks car buyers to complete a survey after buying a red or white sedan.
Questions focus on how much the colour impacted their decision and other opinion-based questions.

21. Policy research

Policy research examines the effects of current government or social policies or predicts the potential effects
of proposed policies related to the distribution of resources.

Example: An agency may research how a policy for vaccine distribution will affect residents in rural areas.
The outcome may change where the government sets up free shot clinics.

2.7 Type of research opted:

Exploratory Research

2.8 Research design:

The research design used for this study is descriptive research design.

35
2.9 Data Collection method:
Secondary data has been used to collect the data for this research like annual reports of companies, previous
research papers, magazines, journals and internet.

2.10 Sampling Design:

A] Sample Unit - IT companies are selected on the basis of higher market capitalization rate.
B] Sample Size - 3 IT companies i.e.
 TCS
 INFOSYS
 WIPRO

2.11 Tool and techniques:

Ratio Analysis technique which include Gross profit, Operating profit and
Return on equity, Return on investment, Current Ratio, capital structure ratio is used to find out profitability
and liquidity position of selected IT companies.

CHAPTER:-3

REVIEW OF LITERATURE

A few studies in this field of IT industry were found in the course of review of literature. Contents of the
important one are briefly discussed below:

Somesh Kumar (2007) examined in his study the growth performance and past and present trend of
Indian IT industry. He also discussed about the government Policies and its effect, with adverse or
favourable. He described how IT sector acts as a Catalyst of growth and development.

T.S.Srinivasan (2005) examined in this study the growth rate of revenues as Earned by IT/ITES
sector and its growing contribution towards GDP. He made the Comparison of spending on this sector
between India and China and also presented the consequences of trouble as arise with Y2K problems with its
effect on this sector that made great differences in revenues. But still the consistent growth rate can be
observed from this study.

36
 Rafiq Dossani (2005) discussed in his study the evolution of India’s software industry and the effect
of rigid and hostile government policies concerned this sector internal as well as international market. He
also shows that technologically sophisticated industry can develop even when many conditions typically
present elsewhere are missing. He also examined the conditions in which transnational entry was made.

Balaji Parthasarathy (2004) discussed in his study about the details of different phases of IT
industry starting prior to 1984. He presented the revenues earned by this industry from international as well
as from domestic market, percentage of export revenues and share of Software Technology Park’s in such
revenues from pre liberalized period. He also examined the government policies and its effect with briefly
discussing the contribution towards GDP by this sector.

Suma S. Athreye (2003) discussed about the growth of Indian Software companies during different
periods and showing the growth of software exports for different times with a detailed study on slowdown
period. This study also presented the picture of financial liberalization along with the evolution in Indian
Software Industry where the evolving strategies of firm lie at the heart of an unfolding dynamic of sector’s
growth. In addition to above some literature in form of articles in different academic, business journals and
websites etc has been found. The essence of them are enumerated as below –

Information Technology scenario can be viewed from different perspective that Indian IT industry as
an industry caters to the IT requirements and its deployment within Indian industry. To make the
improvement in business efficiency new solutions and ideologies are being accepted by helping in
automating business process and converting them into extremely cost effective moneymaking machine.
(http://www.cxotoday.com/-Article by Aarti Shah 4th January 2008)

It discussed about the problems of linear growth with its overcome measures in Indian Software
industry. Opening up the Indian market to the foreign players and the economic reforms of 1990 acted as a
catalyst for Indian Software industry Continues increase in export in export as well as domestic revenues
accompanied with growing number of employees indicates a total spectacular growth. It also specifies two
different models of revenue recognition. (www.expresscomputeronline.com – article by Neeraj Verma 16th
July 2007)

37
 The impact of IT is not restricted to its passive contribution to GDP alone. IT acts as a
transformational agent in Indian economic development helps to promote infrastructure like power, road,
electricity etc. Growth of domestic market shows a CAGR of 23% over 05-06. The infrastructures cost tends
to going down with this prosperous growth. But several problems like absence of active demand, scarcity in
proper infrastructure also exists.

It also recognizes that a vibrant and innovative domestic IT market is sine qua non for sustaining the
countries IT industry’s competitive advantage. (www.nasscom.in published on 27th September 2007) IT, a
fastest growing industry in India makes a significant contribution to GDP in way of exportation of IT
services and ITES product and becomes a preferred global sourcing base in this sector. But some problems
are there in relation to risk management, human capital attraction and retention and cost management. A key
demand driver for Indian IT services and ITES industry has been the changing global business landscape,
which has exerted performance pressure on MNC enterprises.(www.ibef.com, published on 21st February
2006)

The value proposition of offshore development being well established, corporate in west are
increasingly outsourcing to India and it promises a bright future for Indian Software industry as a whole. In
spite of having all favourable factors the Indian IT sector acquires only 3% of global market. As per Budget
parameters of 2004 like SEZ, Service Tax, Surcharge etc creates a great impact on this growing industry.
(www.rediff.com, 8th July, 2004)

Former Prime Minister created a National Task Force on IT to formulate the policies in relation to
National Information Technology with the aim to abolish impediments and to help India emerging IT super
power. During 1999-2000 with the increasing software export revenue the overall economic development
increased about 53%. The software industry is not only growing exponentially it is moving up the value
chain. (Asia Times, 7th December 2000)

India is emerging as a highly technical manpower at a cheap rate in comparison to China who is
giving a cutthroat competition to Indian IT sector. A good quality of exported software develops the thrust
among Americans at a large which helps in increasing the export revenues (Forbes Magazine, 1997).

38
 CHAPTER:-4

DATA ANALYSIS AND INTERPRETATION

4.0 Introduction:

Data analysis and interpretation plays a critical role in evaluating financial performance. It allows
businesses and financial analysts to analyze and make sense of large amounts of financial data, and to extract
insights that can inform strategic decision-making and investment decisions.
The purpose of data analysis and interpretation is to uncover patterns, relationships, and trends in the data
that can be used to support decision-making and problem-solving. In order to effectively analyze and
interpret data, it is important to have a clear understanding of the problem being addressed, the data sources
and limitations, and the methods and tools used to analyze the data.

Data Analysis and Interpretation

A business concern, being a commercial and profit seeking organization have the prime and primary
objective to earn and maximize the profit. A commercial organization always tries to continue its better
performance to achieve the ultimate goal of profit earning. It is quite true that analysis of financial statement
helps them in this respect. In real practice stakeholders like investors, government, financial institutions,
employees, consumers, suppliers and researchers are directly or indirectly interested to know the actual
financial position of the concern and for such purpose analysis and interpretation of financial statements are
required. To evaluate the financial position of selected IT companies the following aspects have been
attempted to be analyzed.

39
4.1 Profitability Analysis
The word ‘profit ‘comes from a Latin word “to make progress”. Profit is generally is making of gain in
business activity for the benefit of owners of the business. Profit can be defined in two ways. One is
economic point of view and another is accounting point of view. Pure economic profit is the increase in the
wealth that an investor posse by making investment, taking into consideration all the costs associated with
that investment including opportunity cost of capital. Profit from the accounting point of view is the reward
of entrepreneur of taking risk. It is the difference between the revenues and costs. A purely commercial
organization always aims to maximize profit. Profitability Analysis helps to show the operating efficiency of
the business. Different stakeholders (management, investors, suppliers, employees etc) want to know the
financial efficiency of the business. Financial Institutions like bank etc wish to know the profitability of the
firm or business to access the credit worthiness of such business. Owners always want to know the rate of
return on capital employed in the business. Suppliers have the interest in the analysis for his credit payments.

With this object I have attempted to calculate the following ratios of the selected IT companies [such as
TCS, INFOSYS AND WIPRO]

(i) Return on Equity

(ii) Return on Invested Capital
(iii) Gross Profit Ratio
(iv) Net Profit Ratio.

Table - Return on Equity (ROE) = Net Profit Available for Equity Shareholders/ Equity
Shareholders Fund*100

COMPANIES INFOSYS WIPRO TCS

YEARS Return on Return Return
Equity % on on
Equity Equity
% %
2008 37.33 32.38 56.74
2009 34.86 27.9 47.75
2010 33.3 24.62 37.82
2011 28.72 26.63 40.98
2012 26.11 24.31 42.15
2013 27.03 21.23 38.41
2014 24.81 23.32 40.73
2015 22.94 24.86 43.63
2016 24.12 23.03 39.77
2017 22.69 20.35 38.43
CAGR -4.86 -4.54 -3.82
40
Interpretation: The study observed that CAGR for Return on Equity of Infosys is -4.86%, WIPRO is -
4.54%, and TCS is -3.82%. It reveals that Infosys, Wipro & TCS growth rate is showing negative trend from
2008 to 2017.

Table - Return on Invested Capital (ROIC) = Net Operating Profit / Invested Capital*100

Invested Capital is equivalent to Capital Employed less Non Operating Assets and Outside
Investment.

COMPANIES INFOSYS WIPRO TCS

Return on Return on
Capital Return on Capital Capital Invested
YEARS Invested % Invested % %

2008 30.41 22.78 45.67

2009 29.08 18.24 36.42
2010 25.89 19.32 40.28
2011 22.92 17.78 42.07
2012 22.83 16.14 38.34
2013 21.32 17.47 40.64
2014 22.94 18.57 43.38
2015 20.44 16.98 39.71
2016 19.63 13.72 41.73
2017 18.7 11.65 34.66
CAGR -4.75 -6.49 -2.72

Interpretation: The study observed that CAGR for Return on Invested Capital of Infosys is -4.75%,
WIPRO is -6.49%, and TCS is -2.72%. It reveals that Infosys, Wipro & TCS growth rate is showing
negative trend from 2008 to 2017. TCS is showing negative trend but it has lower percentage as compare to
others. So the position of TCS is stronger as compare to other selected IT Companies as per return on
invested capital.

41
Table: Gross Profit Ratio (GP) = Gross Profit/Sales*100

COMPANIES INFOSYS WIPRO TCS

YEARS Gross Gross Gross

Profit % Profit % Profit %

2008 41.3 29.5 36

2009 42.1 29.8 37

2010 42.8 31.5 39.5

2011 42.1 31.2 39.1

2012 41.1 29.2 38.7

2013 37.3 30.4 37.8

2014 35.8 32 39.5

2015 38.3 31.6 34.4

2016 37.4 30.4 46.7

2017 36.9 28.9 45.4

CAGR -1.12% -0.21% 2.35%

Interpretation:
The study observed that CAGR for Gross Profit of Infosys is -1.12%, Wipro is -0.21% and TCS is 2.35%. It
reveals that Infosys and Wipro growth rate is showing negative trend from 2008 to 2017. Whereas TCS is
showing positive trend rate i.e. 2.35%. So the position of TCS is stronger as compare to other selected IT
Companies as per gross profitability.

42
Table: Net Profit Ratio (NP) = Net Profit/Sales*100

COMPANIES INFOSYS WIPRO TCS

YEARS Net Net Net

Profit % Profit % Profit %

2008 27.66 16.34 21.98

2009 27.47 13.52 18.87

2010 27.33 16.96 23.25

2011 24.81 17.06 24.26

2012 24.54 14.98 21.25

2013 23.35 17.73 22.06

2014 21.23 17.95 23.38

2015 23.11 18.43 20.97

2016 21.6 17.35 22.36

2017 20.96 15.42 22.29

CAGR -2.47% -0.58% 0.14%

Interpretation:
The study observed that CAGR for Net Profit of Infosys is -2.47%, WIPRO is -0.58% and TCS is 0.14%. It
reveals that Infosys & Wipro growth rate is showing negative trend from 2008 to 2017. Whereas TCS are
showing positive trend rate i.e. .14%. So the position of TCS is stronger as compare to other selected IT
Companies as per net profitability.

43
4.2 Liquidity Analysis
The concept of ‘liquidity’ is important in financial statement analysis. By liquidity we mean the amount of
cash or cash equivalents the company has in hand and the amount of cash it can raise in a short period of
time. The term ‘liquidity’ refers the ability of the firm to meet the current obligations as they become due. A
firm should ensure that it does not suffer from lack of liquidity which may dangerous for the company as
well as too much liquidity also can affect the company negatively Lack of liquidity leads to loss of creditors
and investors’ confidence, poor credit worthiness and bankruptcy of the company. Liquidity provides
flexibility to take advantages of changing market conditions and to react towards the strategic actions by
competitors. Liquidity also relates to the ability of a company to meet its obligation as they mature. A class
of financial metrics that is used to determine a company‘s ability to pay off its short-term debt obligation.

It is used to denote company’s ability to pay its day to day expenses or to meet its short term obligations
usually up to one year. In order to study liquidity position important ratios used are (i) Current ratio and (ii)
Quick Ratio which is computed on the basis of current assets, liquid assets and current liabilities.

Table - Current Ratio (CR) = Current Assets/ Current Liabilities

COMPANIES INFOSYS WIPRO TCS

YEARS Current Ratio Current Ratio Current Ratio

2008 5.48 1.72 2.24

2009 5.81 1.46 2.26

2010 6.56 1.9 1.88

2011 6.51 2.31 2.88

2012 6.34 2.32 2.22

2013 5.62 2.12 2.67

2014 4.71 2.6 2.74

2015 4.15 2.66 2.4

2016 3.9 2.31 2.87

2017 3.83 2.35 5.08

CAGR -3.52% 3.17% 8.53%

44
Interpretation:
The study observed that CAGR for Current Ratio of Infosys is -3.52%, WIPRO is 3.17% and TCS is 8.53%.
It reveals that Infosys growth rate is showing negative trend from 2008 to 2017. Whereas Wipro & TCS is
showing positive trend rate TCS has shown greater growth rate of 8.53%. So the position of TCS is stronger
as compare to other selected IT Companies.

4.3 Solvency Analysis

Solvency analysis is the process of assessing a company's ability to meet its long-term financial obligations
and debts. It involves evaluating the company's financial position, including its assets, liabilities, and cash
flow, to determine its capacity to pay off debts, meet ongoing expenses, and withstand financial shocks or
disruptions. The purpose of solvency analysis is to provide stakeholders with information about the
company's financial stability and the risks associated with its long-term financial commitments. It is also
known as financial structure or Capital Structure Ratio. It is used to denote company’s ability to meet its
long term obligations. It indicates company’s ability to repay fixed interest charges and principal on long
term debts on regular basis. It is mainly studied by employing (i) Debt Equity Ratio, (ii) Interest Coverage
Ratio & (iii) Proprietary Ratio.

Table - Financial Leverage (FL) = Total Debt/Shareholders Equity or Operating Profit/Profit

before Tax after deducting interest.

COMPANIES INFOSYS WIPRO TCS

YEARS Financial Leverage Financial Leverage Financial Leverage
2008 1.15 1.73 1.44
2009 1.16 1.93 1.45
2010 1.15 1.68 1.48
2011 1.15 1.55 1.34
2012 1.15 1.53 1.4
2013 1.16 1.55 1.35
2014 1.2 1.46 1.36
2015 1.21 1.47 1.45
2016 1.22 1.56 1.37
2017 1.21 1.53 1.2
CAGR 0.51% -1.22% -1.81%

45
Interpretation:
The study observed that CAGR for Financial Leverage of Infosys is 0.51%, WIPRO is -1.22% and TCS is -
1.81%. It reveals that Wipro & TCS growth rate is showing negative trend from 2008 to 2017.Whereas
Infosys is showing positive trend rate. So the position of Infosys is more strong as compare to other selected
IT Companies.

4.4 ECONOMIC ANALYSIS

Its main objective is to determine whether the economic climate is a leader and capable of promoting
business growth, particularly the capital market. As the economy grows, most industries and businesses are
expected to grow. When the economy falls, most industries and businesses face survival problems.
Therefore, to predict the share price, an analysis is required even if the overall selection of the country's
economy for investment must focus on a study of the national economic scenario.

In this study, the variables used for economic analysis are:

• Gross domestic product

• Inflation

• Exports to India (foreign direct investment in the IT industry)

• Interest

• Foreign direct investment in India (foreign direct investment in the IT industry)

46
4.4.1 India's GDP table (growth rate) from 2011-12 to 2018-2019:

Years 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

GDP (%) 7.41 8.00 8.17 7.17 6.81
Source: calculated from secondary data

Graphic representation of India's P GDP growth rate from 2014-15 to 2018- 2019

8.5

7.5

GDP
7

6.5

6
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Source: calculated from secondary data

Interpretation:
The growth rate was high in 2016-17 with a value of 8.17 and low in 2018-2019 with a value of 6.81.

47
4.4.2 Table of inflation in India from 2011-12 to 2018-2019:

Years 2014- 2015- 2016- 2017- 2018-

2015 2016 2017 2018 2019

PERCENTA 5.61 3.41 5.21 2.11 7.35

GEOF
INERT
Source: calculated from secondary data

Graphic representation of inflation rates in India from 2014-15 to 2018-2019

14

12

Series 3
10
Series 2

Series 1
48

2
6
2015 2016 2017 2018

Source: calculated from secondary data

Interpretation:
Inflation was low in 2017-18 with a value of 2.11 and high in 2018-2019 with a value of 7.35

48
4.4.3 Table of Indian Exports from 2011-12 to 2018-2019:

Years %
2015-2016 55.5
2016-2017 61
2017-2018 66
2018-2019 70
Source: calculated from secondary data

Graphic representation of India's export rate from 2014-15to2018-2019

Source: calculated from secondary data

Interpretation of the data:

According to the table above, GDP in 2015-16 was 55.5% in 2016-17, and GDP improved again to
61% in 2017-18, rising to 66%. And in 2018-2019, it was at its peak with 70%.

49
4.5 Business Analysis:

4.5.1 Table of Operating Income for three companies from 2015-16 to 2018-2019:

Years Tcs Infosys Wipro

2015-2016 26.5 32 19
2016-2017 25.7 30 32
2017-2018 24.8 29 15
2018-2019 25.6 29 17

Source: calculated from secondary data

Graphic representation of Operating Margin in India from 2015-16 to 2018-

2019:

35

30

25

20

15

10

0
2015-2016 2016-2017 2017-2018 2018-2019

Tcs Infosys Wipro

Interpretation of the data:

TCS: TCS' operating income decreased from 2015-16 to 2017-18, from 26.5 to 24.8, andin 2018-19,
it increased to 25.6
INFOSYS: Infosys' operating profit increased from 2015-16 to 2018-2019, compared to avalue of 32
to 29
WIPRO: Wipro’s operating profit rose from 2015-16 to 2016-17 from 19 to 32, and 2018-2019 fell to
17
50
4.5.2 Table of CPE for three companies from 2015-2016 to 2018-2019:

Years Tcs Infosys Wipro

2015-2016 123.18 54.13 13.57

2016-2017 133.41 59.85 13.07

2017-2018 134.19 35.53 12.62

2018-2019 83.05 35.44 14.95

Source: calculated from secondary data

Graphic representation of EPS in India from 2015-16 to 2018-2019:

160

140

120

100

80

60

40

20

0
2015-2016 2016-2017 2017-2018 2018-2019

Tcs Infosys Wipro

Interpretation of the data:

TCS: TCS EPS was low in 2018-2019 with a value of 83.05 and a high in 2017-18 with a value of
134.41
INFOSYS: Infosys EPS was low in 2017-18 with a value of 35.53 and a high in 2016-17 with a
value of 59.85
WIPRO: WIPRO's EPS was low in 2017-18 with a value of 12.62 and a high in 2018-2019 with a
value of 14.95
51
4.5.3 Table of Dividend purchases by three companies from 2015-16 to 2018-
2019:

Years Tcs Infosys Wipro

2015-2016 79 22.25 23

2016-2017 43.5 24.52 25.4

2017-2018 47 25.75 24

2018-2019 50 43.5 26

Source: calculated from secondary data

Graphic representation of Dividend purchases in India from 2015-16 to 2018-

2019:

90
80
70
60
50
40
30
20
10
0
2015-2016 2016-2017 2017-2018 2018-2019

Tcs Infosys Wipro

Interpretation of the data:

TCS: TCS purchases were low in 2016-17, with a value of 43.5 and a high in2015-16 witha value of
79
INFOSYS: Infosys' dividend purchases were low in 2015-16 with a value of 22.25 and ahigh in
2018-2019 with a value of 43.5

52
WIPRO: Wipro dividend purchases were low in 2015-16 with a value of 23 and a highin 2018-2019
with a value of 26

4.5.4 Table showing the Price-To-Earnings ratio of three companies from 2015-
16 to 2018- 2019

Years Tcs Infosys Wipro

2015-2016 21.67 20.82 17.18

2016-2017 24.24 22.1 18.92

2017-2018 23.4 17.29 19.2

2018-2019 26.9 19.73 20.21

Source: calculated from secondary data

Graphic representation of the Price-To-Earnings ratio in India from 2015-16 to

2018-2019:

30

25

20

15

10

0
2015-2016 2016-2017 2017-2018 2018-2019

Tcs Infosys Wipro

Interpretation of the data:

TCS: TCS purchases were low in 2016-17, with a valueof43.5 and a high in2015-16 with
A value of79
INFOSYS: price-to-earnings ratio was low in 2017-18 with a value of 17.23 and a high in

53
2016-17 with a value of 22.1

WIPRO: Wipro's price-to-earnings ratio was low in 2015-16 with a value of 17.18 and ahigh in 2018-2019
with a value of 20.21

4.5.5 Table of return on equity in three companies from 2015-16 to 2018-2019:

Years Tcs Infosys Wipro

2015-2016 43.89 27.61 19.79

2016-2017 36.82 29.61 21.04

2017-2018 29.4 29.4 18.6

2018-2019 34.6 30.1 22.45

Source: calculated from secondary data

Graphic representation of Return on Equity in India from 2015-16 to 2018-2019:

50
45
40
35
30
25
20
15
10
5
0
2015-2016 2016-2017 2017-2018 2018-2019

Tcs Infosys Wipro

Interpretation of the data:

TCS: The price-to-earnings ratio of the TCS was low in 2015-16, with a value of 21.67 and a peak in
2018-2019, at a value of 26.9
INFOSYS: price-to-earnings ratio was low in 2017-18 with a value of 17.23 and a high in 2016-17
54
with a value of 22.1
WIPRO: Wipro's price-to-earnings ratio was low in 2015-16 with a value of 17.18 and a high in
2018-2019 with a value of 20.21

4.5.6 Table showing the ratio of dividend payments to four companies from 2015-16 to
2018-2019:
Years Tcs Infosys Wipro

2015-2016 21.8 35.28 18.3

2016-2017 29.6 42.04 36.7

2017-2018 34.34 43.01 26.71

2018-2019 31.61 26.45 30.52

Source: calculated from secondary data

Graphic representation of Dividend Payment ratios in India from 2015-16 to 2018-2019

50
45
40
35
30
25
20
15
10
5
0
2015-2016 2016-2017 2017-2018 2018-2019

Tcs Infosys Wipro

Interpretation of the data:

TCS: The dividend pay-out ratio for Tcs was low in 2015-16, with a value of 21.8 and a high in 2017-18
with a value of 34.34

55
INFOSYS: The Infosys dividend payment ratio was low in 2018-2019 with a value of 26.45 and a high in
2017-18 with a value of 43.01

WIPRO: The Wipro dividend payment ratio was low in 2015-16 at 18.3 and high in 2016-17 at 36.7

4.5.7 Table showing the Book Value of three companies from 2015-16 to 2018-2019:

Years Tcs Infosys Wipro

2015-2016 331.71 248.94 165.57

2016-2017 329.09 290.24 140.25

2017-2018 378.45 320.01 178.01

2018-2019 379.01 310.19 180.19

Source: calculated from secondary data

Graphic representation of Book Value in India from 2015-16 to 2018-2019:

400

350

300

250

200

150

100

50

0
2015-2016 2016-2017 2017-2018 2018-2019

Tcs Infosys Wipro

Interpretation of the data:

TCS: The book value of the TCS was low in 2016-17 with a value of 329.09 and high in 2018-2019 with a
value of 379.01

56
INFOSYS: Infosys book value was low in 2015-16 with a value of 248.94 and a high in 2017-18 with a
value of 320.01

WIPRO’S book value was low in 2016-17 with a value of 140.25 and a high in 2018-2019 with18

Table showing the Valuation of the share of three companies from 2015-2016 to
2018- 2019:
Ratios Tcs Infosys Wipro

Average DPR 0.421 0.342 0.286

Average storage 0.579 0.658 0.714

Ration

Medium 0.459 0.284 0.237

Beetroot

Equity growth 0.265 0.186 0.169

Standard 23.03 19.2 19.26

average P/E

EXPECTED 41.67 81.59 38.34

EPS

Intrinsic value 710.89 1566.52 738.42

Market 816.15 921.00 495.50

Source: calculated from secondary data

Interpretation of the data:

TCS: Shares – Market value, it is undervalued, so it is recommended to buy the stock as the value of
the stock may increase in the future.

INFOSYS: Shares market value, it is undervalued, so it is recommended to buy thestock as the value
of the stock may increase in the future.

WIPRO: Shares market value, it is undervalued, so it is recommended to buy thestock as the value
of the stock may increase in the future.

57
 CHAPTER:-5

CONCLUSIONS

I.T sector has played a key role in the development of India, and has contributed significantly to its GDP.
Even during the hit of the Covid’19 pandemic in 2020, it amounts to a growth of 7.7% and recorded increase
in the exports by almost 15% last year. We see that major companies which have the highest market
capitalisation like Infosys, Wipro, Tcs have a seen significant growth and development over the years.

The financial performance of these companies is measured using financial ratios divided into three broad
categories Profitability, Liquidity and Solvency. In terms of profitability ratios i.e., Gross profit ratio,
Infosys was the best performer followed by other companies, for Net profit ratio Infosys was the best
performer. In case of return on invested capital Wipro performed very well, followed by TCS and Infosys.
For Return on Equity, again Wipro performed the best which was followed by TCS and Infosys. In terms of
Liquidity ratio i.e., Current ratio, Infosys outperformed, followed by other companies. In terms of solvency
ratio, i.e., financial leverage ratio, Wipro performed the best which is followed by other companies.

India is the topmost off shoring destination for IT companies across the world. Having proven its capabilities
in delivering both on-shore and off-shore services to global clients, emerging technologies now offer an
entire new gamut of opportunities for top IT firms in India.

The Indian IT & business services industry is expected to grow to US$ 19.93 billion by 2025. Spending on
information technology in India is expected to reach US$ 144 billion in 2023. By 2026, widespread cloud
utilisation can provide employment opportunities to 14 million people and add US$ 380 billion to India's
GDP.

58
 CHAPTER:-6

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62