Tata Communications vs Tata Consultancy Services Which Is More Profitable?

Tata Communications and Tata Consultancy Services are two separate entities under the Tata Group conglomerate, each belonging to different sectors of the industry. Tata Communications primarily focuses on providing communication services, while Tata Consultancy Services specializes in IT services and consulting. Both stocks have their own unique appeal to investors, with Tata Communications offering growth potential in the rapidly evolving telecommunications sector, and Tata Consultancy Services boasting a strong track record of consistent performance and dividends. Investors should carefully consider their investment goals and risk tolerance when evaluating these two stocks.

Tata Communications or Tata Consultancy Services?

When comparing Tata Communications and Tata Consultancy Services, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Tata Communications and Tata Consultancy Services.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Tata Communications has a dividend yield of 0.94%, while Tata Consultancy Services has a dividend yield of 1.81%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Tata Communications reports a 5-year dividend growth of 36.08% year and a payout ratio of 0.00%. On the other hand, Tata Consultancy Services reports a 5-year dividend growth of 19.89% year and a payout ratio of 56.51%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Tata Communications P/E ratio at 54.43 and Tata Consultancy Services's P/E ratio at 32.02. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Tata Communications P/B ratio is 28.35 while Tata Consultancy Services's P/B ratio is 14.97.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Tata Communications has seen a 5-year revenue growth of 0.27%, while Tata Consultancy Services's is 0.71%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Tata Communications's ROE at 54.39% and Tata Consultancy Services's ROE at 50.69%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are ₹1750.70 for Tata Communications and ₹4117.65 for Tata Consultancy Services. Over the past year, Tata Communications's prices ranged from ₹1585.55 to ₹2175.00, with a yearly change of 37.18%. Tata Consultancy Services's prices fluctuated between ₹3327.00 and ₹4592.25, with a yearly change of 38.03%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.