Let’s be blunt here. Infosys is not the respected company
it has been. It does not deserve to be called an IT bellwether anymore and
clearly the current management is absolutely no patch on the kind of leadership
it had some years back.
Just imagine this kind of performance under Nandan
Nilekani and Mohandas Pai. Even if they would have come with an occasional
shocker, they would stand up to tough questions and not stand behind the
comfort of their own corporate communication manager asking them silly and easy
questions.
Look at the guidance. 6-10%. Why not 2-14%? That also has
same median or even 0-16% for that matter? Let’s be clear here – Infosys guidance
has ZERO meaning for the market now. It does not respect the current management
and it should not do it in near future too.
And they haven’t declared EPS guidance because they have no clue on what
will be their pricing, margins or anything for that matter. And what will be
amazing? Expect TCS and HCL Tech to rub salt into their wounds over next 2
weeks by maintaining their standards (just like Infy maintained its standards).
And one word for the analysts too who keep saying this is
a great, under-owned stock. Under-ownership? What under-ownership. The FII
holding is at multi-year high, mutual funds have not sold much. The only
selling has come from LIC and insurance companies which had their own reasons
as I wrote in my previous blog.
But, my apologies to LIC – they turned out to be the
smartest investors, even if it’s by default. They sold 80 lakh shares at around
2900 Rupees (something which the stock will not hit for at least 2 years)
Nine months back, I turned positive on Infosys. I had a
strong feeling that it was coming out of a rut and a patch of outperformance
was coming. I was right for last 9 months but today’s event has changed it all.
The company has revised the clock backwards by a good 2 years and whatever
confidence it built over the last 6 months has been destroyed.
Be under no illusion of stock finding bottom at 2300 or
so. For me even if you assume an EPS of Rs 170 for Infosys, you should apply a
multiple of 10-11x because this is now just another midcap kind of volatile
companies which we have plenty of in this market. The stock doesn’t deserve to
trade above 1700-1870 given the circumstances.
Nice blog sir, I agree with your thought, just 1 year back the chairman of Infosys S. Gopalakrishnan said on the result day of the first quarter of last year when Infy result came below the expectation that Infosys is the player of long race, but when this long race will come to an end..The top leadership has no vision like previous leadership has like Nanda nilkani and Mr. Narayan Murthy had for the Infosys. Infosys will be a globally respected corporation, however as of right now this is not respected corporation in India for the time being.
ReplyDeleteBut the question is whether Infosys can make a comeback, like Tiger Woods? Undoubtedly, it can Infosys is still one of India's finest companies, generating more than Rs 12,500 crore in cash last year from operations — provided it regains the imagination and initiative that made it such a successful company in the first place