Infosys Stock, up 40% after Narayana Murthy rejoined in June 2013

Murthy effect on Infosys stock; Up 40% in 6 months; Solid Q3FY2014

How does a great leader like Narayana Murthy of Infosys effect the stock price and perception? Infosys announced Q3FY14 results, Profit of Rs 2,875 crore and consolidated revenue of Rs 13,026 crore. Profit rose 19.4% and was higher than what the analysts were expecting.Infosys Stock, up 40% after Narayana Murthy rejoined in June 2013

Infosys Stock, up 40% after Narayana Murthy rejoined in June 2013

Before Narayana Murthy joined Infosys in June 2013 as Additional Director and Executive Chairman, Every quarter Infosys was coming up with negative surprises and its stock price were beaten down as compared to the peers and was trading at Rs 2412. For the last 2 quarters Infosys has come up with better than expected results on all parameters except for the attrition which stood at 18% (highest in Tier-1 software companies) this quarter.Margins improved in Q3 because of focus on efficiency and in the coming year Infosys will try to gain the ground it lost to the peers. Infosys is the only company of the Nifty which at one time was famous for delivering the consistent result as per the estimates given by the management team for very long period.

After Murthy joined, Investors flocked the stock and as a result of it Infosys stock rose from Rs 2412 in June to Rs 3128 on 10th October, a day before the Q2FY2014 results were announced. This shows that investors had so much faith on Murthy that they did not even wait to see the effect on actual results before making the investment and now with Stock price trading near to all time high level of Rs 3551 are making good amount of profit.

This is not new and stock markets always have faith on great leaders and are ready to make decisions based on it. Another example of this is the appointment of Raghuram Rajan as RBI Governor in September 2013, Resulted in 10% rise in the Nifty/Sensex within a period of 1 month. Raghuram Rajan considered as a renowned Economist, admired by the top Financial leaders and economist around the world came up with a fresh thinking on how to stimulate  economic growth and control inflation.

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2 thoughts on “Murthy effect on Infosys stock; Up 40% in 6 months; Solid Q3FY2014

  1. Hemant Reply

    Isn’t it the responsibility of a great leader to have a good succession plan. He should have started preparing a successor few yrs back. It is not a good sign that a person is not replacable. As an example, see ratan tata’s effort on succession planning.

    • aslam Post authorReply

      At the time when Murthy left, there already were prominent leaders which were also the founder of the company and took the charge and were more natural choice. Its always hard to find a successor, especially for the visionary leaders. Atleast this time Infosys is planning for a successor for Shibulal in advance.

      Ratan tata’s effort on succession planning and making Cyrus as chairman is commendable although we are yet to see material results.The reason I admire Murthy more is because he started from scratch and started Infosys with an initial capital of Rs10,000 only in 1981.

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