INFOSYS VS WIPRO: WHICH IT STOCK IS BETTER?

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Today, this industry has emerged as the most preferred destination for global IT companies. This is due to the availability of highly skilled manpower.Indian IT companies are giving tough competition to global firms. They have risen to top positions in the global IT landscape over the last two decades.The IT industry is now considered to be the backbone of the Indian economy.And indeed it is.The industry contributes nearly 8% to India’s GDP and is one of the largest employers in the country.Most IT firms, big or small, are able to operate with ease and grow efficiently. These firms have also made governance and access to government services easy and inexpensive. In such an important industry, Infosys and Wipro are among the top 4 players in the country.
In this article, we compare these two companies to understand which is better.
BUSINESS OVERVIEW:- With over four decades of experience in the IT services industry, Infosys is one of the leading IT companies in India.It offers traditional and digital IT services to its clients across financial services, retail, communication, energy and utilities, and manufacturing.The company also has a significant presence in emerging segments such as artificial intelligence, cloud computing, blockchain, and the metaverse.Wipro is a global information technology, consulting, and business process services company.Its operations are broadly classified into three segments, namely IT Services, IT products, and India State-Run Enterprise , through which it offers a diverse range of services to its clients. The company has a diversified client base across several industries, including banking, financial services, healthcare, energy, natural resources, and manufacturing.
REVENUE GROWTH : - Revenue growth is the percentage increase in revenue over a period of time. A high growth rate indicates faster growth of the business.The revenue for Infosys grew at a compound annual growth rate of 7.5% in the last five years, against a 2.1% CAGR of Wipro.Rapid digitisation has helped Infosys increase its revenue, especially in the technology, energy, and utility sectors.For Wipro, the revenue growth was led by growth in the IT services segment, especially in the finance, consumer business, and healthcare sectors.After revenue growth, the next important parameter is profitability.Investors can determine the profitability of a company using two margins, namely operating profit margin, and net profit margin.Operating profit margin determines a company's profit from purely selling a product or service as a percentage of its revenue.The net profit margin determines the final profit of a company after considering all operating and non-operating expenses as a percentage of its revenue.The five-year average operating profit margin of Infosys stands at 25.8% against 20.6% of Wipro. Infosys is leading in terms of operating profit margin mainly because its large scale of operations helps the company keep its costs lower than its competitors.With respect to net profit margin, Infosys is again leading with a five-year average of 20% against a five-year average of 15.8% of Wipro.
RETURN ON EQUITY
Return on Equity measures the rate of return the equity shareholders earn on their investment.Higher the number, the better. Infosys is leading with 24.1% in terms of five-year average return on equity against 17.4% of Wipro.

Moreover, Wipro’s shares are under-priced when compared to Infosys. But there is hardly any gap in their valuations.Before considering investing in any company, check for its fundamentals and valuations. This will help in deciding the suitable investment for your portfolio.Also, consider investing for the long term to reap greater benefits from your investments. Remember, the time spent in the market is more important than timing the market.