Sikka quits, long awaited

Infosys CEO Vishal Sikka resigns citing ‘continuous assault’ by NRN as the reason. With the kind on interference that the Ex-CEO was doing often, this news was expected…..

The wealth creator has now become the destroyer. 20000 crores of value lost today alone, since the stock corrects 7%. As it is, the Tech sector is loomed with slow growth, losing margins and now governance issues. INFY is one of the highly owned stocks by mutual funds, which means all the investors have lost wealth. And all this due to one person’s insecurity.

Old management in actual reality wants to control the company, while for the world, they show that, they have given management to expert hands. This episode along with the events that have been happening in the TATA group, shows the world that, Indian’s are still to learn a lot when it comes to having their wealth managed by professionals.

Though the Tech sector is a poor performer and the stock is showing very less growth, why did Mutual funds load so much exposure into this stock? HDFC owns 2%, ICICI Pru owns 1.50%. Is it due to the vicious thought that, it will come up one day and they should own it or just parked funds forcefully due to high capital availability, as the company has good liquidity and old track record of performance?

Such exposures are some of the reasons that Mutual Funds under-perform and lose confidence of investors.

There is open criticism in the media about the Infy board not able to manage a man with 3.44% stake, clear signs of more trouble in future. Stay away from technology stocks and more so from INFY. Protect the profit made from the stock in the early years, move out and invest in some good performing one’s and grow wealth. Do not become emotional and lose the gains made.

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Ramesh Sigamani

Ramesh Sigamani

With over 3 decades of experience in capital market investments, Ramesh Sigamani is a trusted Financial Planner par excellence. He works personally with individuals and corporates to build a strong investment portfolio that stands firm against market volatilities and delivers time & time again.

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Comments ( 2 )

  • Ramesh Sigamani
    Ramesh Sigamani

    NIlekani steps in as interim CEO, market cheers, while this is not a good move. Old hands coming in cannot bring change to the company. In a sector where changes are the fastest, bringing in old thought is a big negative.
    This drama of the founders will help competition gain more business, eventually, bigger clients will not want to do business with Infosys, in the next 4 to 6 quarters, the number will speak well about the future of the current turmoil.

    If a 3.44% stake holder can inflict so much damage to a company, there are investors with higher stake like Mutual Funds and Insurance companies which are sitting tight, is there some thing fishy in the whole company or the minority shareholders are having so much of clout in the company. If the later is true, then the company will soon hit the other end of the bell curve.

    What Mutual Funds are doing when the issue is panning out is really bad, in the first place they should not have been invested in a company which is under performing, in spite of the mistake, they are sitting tight as their valuations took a 20K crore beating. If it is public money, can they just not bother about it.

  • Ramesh Sigamani
    Ramesh Sigamani

    Founders likely to participate in the Buy back.
    This news brings more disturbance, while the founders kicked out the existing board, now within them they have issues, else why should founders take advantage of the price preference and move out. It also gives a feeling that, some of the founders are shrewd to sense that the end is nearing.
    Maybe INFOSYS will become history in the Indian corporate world.

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