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The market capitalisation of Infosys at ₹2.12 lakh crore has slipped sharply and now stands below the combined market capitalisation (₹2.62 lakh crore) of next two frontline companies, Wipro and HCL Technologies, thanks to Vishal Sikka’s exit as MD & CEO. Earlier Infosys’ market cap was close to or a little higher than the two together.
The exit of Sikka comes at a time when the industry is facing a number of challenges, such as global headwinds and new technologies. Some analysts have cut their estimates on revenue and earnings. They have also downgraded ratings on the stock.
IDBI Capital has cut FY18 and FY19 revenue forecast by 1.1 per cent and 3.6 per cent respectively. It has downgraded the stock to ‘Hold’ while lowering the target price to earnings multiple of 13 times for FY19, compared to 16 times.
“While Infosys did better than the industry during Sikka’s tenure, it was nowhere near achieving Sikka’s own $20-billion target by 2020. Sikka’s allegation that he was continuously being distracted does not wash as he had a long enough honeymoon period to make his mark,” said VK Sharma, Head — PCG, HDFC Securities.
However, Angel Broking maintains its ‘Buy’ rating on the stock as it is confident that the company will overcome the setback over time. Even G Chokkalingam, Founder, Equinomics Research & Advisory is unperturbed by the Sikka’s exit.
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