Infosys Tech 9th in market capitalisation; scrip touches new high of Rs 5000
Sam:
Get a load of this,forget I said the stock price was Rs.4000 it is more like Rs.5,000 (US$119.00) now.
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Our Markets Bureau in Mumbai
The stock price of Infosys Technology, the Bangalore-based software major, on Friday scaled a new high of Rs 5,000 before closing marginally lower at Rs 4910 at the BSE. This makes Infosys the highest priced stock in the Indian market currently.
With this rally, the stock has moved into the list of the top ten highest companies in terms of market capitalisation on the bourses. With yesterday jump of Rs 224, Infosys' market capitalisation has climbed up to number nine.
In just over two months the market capitalisation of the India's premiere company has zoomed to touch Rs 7865.82 crore (Rs 100 crore = Rs 1 billion) on Friday. This represents a huge appreciation of 95 per cent from its market cap of Rs 4020 crore on September 30, 1998.
While there has been no let up in the bull run at this counter, equity analysts tracking this stock maintain that a technical correction is must for the long term health of the stock.
Significantly, the analysts attribute the current bull run at this counter to 1:1 bonus announced by the company recently. "The bonus announced by the company was certainly the main trigger for the current rally. It clearly demonstrated that the company has the potential to perform. It was also a vote of confidence on company's performance," commented Nirmal Jain of Probity Research.
Another reason cited for the sudden turn around of Infosys' fortune is the spectacular third quarter performance of the company. "The company did stunned most market players by announcing a 107 per cent jump in its net profit in the third quarter. This coupled with the bonus issue did trigger the rally," said Manish Gunwani, an equity analyst with SSKI Securities.
Looking forward, the demand for infosys can only increase, say analysts. "Dematerialisation has amde it possible for small investors to buy even one or two shares. Moreover, when the price goes ex-bonus, more punters are likely to enter the stock at a lower level," said an analyst.
Market players have not been always so bullish on the tech major. In early October 1998, Infosys witnessed a sell off following meltdown at Nasdaq. This also forced the company to withdraw proposed ADR issue as it was not sure of getting an attractive price. "Since then Nasdaq has gained close to 30 to 40 per cent, the fortune of Indian companies too has changed," said Jain.
The meltdown also gave ample reason for bear opeators to go short at this counter. As a result, the short positions at this counter sharply moved up after October. However, later the bears were forced to square their position and the stock also moved up on short covering. Hence it was a case of negative supply as the fresh demand emerged for the stock.
Analysts are also confident that the company will be able to maintain the 70 per cent growth rate at least for the coming two to three years. When compared to software companies listed at Nasdaq, Infosys Technology has certain advantages. For instance, Infosys Technology has given a higher return on capital as compared to companies with similar client and product profile.
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