X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Are investors overcautious on Infosys? - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Aug 23, 2011

    Are investors overcautious on Infosys?

    In the last one year, Infosys stock is down 21%. In comparison, peers such as TCS (Tata Consultancy Services) and HCL Technologies and even the benchmark BSE-Sensex has performed much better. Why is this under-performance? Is it that the Infosys aura is fast fading?

    While part of the stock price decline is due to turbulences in US and Europe, key end market for Information Technology(IT) companies, the underperformance relative to sector as a whole is attributable to the issues that are largely internal and company-specific. In the last few quarters, Infosys has missed its revenue guidance. That too at a time when arch-rival TCS reported blowout earnings with positive guidance and the entire IT sector seemed to be recuperating. With the stepping down of Narayan Murthy from the Chairman position last Saturday, the biggest concern in investors' mind is whether the new management can drive the company ahead and whether there is sufficient coherence between key personnel that is required to run a large company like Infosys. In short, investors are concerned whether Infosys will take back its IT bellwether tag. Will Infosys be the same without Murthy?

    Of course it will never be the same. Apple would not be the same after Steve Jobs. Microsoft would not be the same after Bill Gates. But we should appreciate that Infosys has been grooming the next level of leaders by involving them in decision making process and taking the process one level below the Board. This way, people who were only looking at their unit earlier, now participate in planning and execution of tasks at the organization-wide level. We should realize that change is inevitable and that the succession issue is always a very difficult one.

    In addition, by being overcautious on the management change issue, investors are in a way underestimating the new Chairman KV Kamath. He is the man who has brought ICICI Bank to the position where it is today - the largest private sector bank in India with an asset base of a whopping Rs 4 trillion.

    Whether Infosys scales new heights and grows faster than peers under Kamath's able guidance is yet to be seen. But one thing is sure. Under Kamath's guidance, Infosys is all set to shed its 'conservative' image and will be much more aggressive than before. In the past, Infosys has been very reluctant to make better use of its cash pile of Rs 150 billion. Now, the company is more open to acquisitions. Kamath has already given indications that an acquisition in the near future is a distinct possibility.

     

     

    Equitymaster requests your view! Post a comment on "Are investors overcautious on Infosys?". Click here!

      
     

    More Views on News

    Tech Mahindra: Our Revised View (Quarterly Results Update - Detailed)

    Aug 2, 2017

    A better than expected turnaround in performance results in a change in view.

    Wipro: A Decent Start to the Year (Quarterly Results Update - Detailed)

    Jul 27, 2017

    Digital services drive growth for Wipro in 1QFY18.

    Infosys: A Decent Start to FY18 (Quarterly Results Update - Detailed)

    Jul 14, 2017

    Infosys starts FY18 on an encouraging note with a stable performance.

    Ankit Shah's First Five Insider Recommendations (The 5 Minute Wrapup)

    Aug 5, 2017

    How to get exclusive insider recommendations from Ankit Shah.

    TCS: Currency Volatility Plays Spoilsport (Quarterly Results Update - Detailed)

    Jul 14, 2017

    TCS starts FY18 decently despite an adverse currency impact.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working(Vivek Kaul's Diary)

    Aug 21, 2017

    Most Indians who cannot find jobs, look at becoming self-employed.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Think Twice Before You Keep Money In A Savings Bank Account(Outside View)

    Aug 22, 2017

    Post demonetisation, a cut in bank savings deposits rates was in the offing.

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE IT


    Aug 23, 2017 (Close)

    S&P BSE IT 5-YR ANALYSIS

    COMPARE COMPANY

    MARKET STATS