Cognizant’s share price has been surging in recent months, leading to a widening in the difference between its market capitalization and those of its peers Infosys and Wipro.
The company now has a $6 billion lead over Infosys in market capitalisation. Infosys had caught up with Cognizant and overtaken it in 2016, but it has not lost significant ground. Infosys’ share price has fallen in the past one year.
“My belief is that Cognizant is benefiting from the promise it has made to Elliot Management that it will raise margins and return cash to shareholders. The market may not have fully baked in that to do this Cognizant must reduce its sales expense and that this will slow down its growth,” said Peter Bendor-Samuel, CEO of Everest Group.