60% profits or 400%...Which is big?

Infosys results – what is in store?

INFY beats forecast, but, analysts wary…….. What is the reality?

The numbers….

Earnings grow above 21% as against 1% last year.

Sales grow above 22% against the 8% growth last year.

Net Profit Margin at above 23% is lower than what was earlier.

Trailing Twelve Month earnings grow at 3% and Sales at 23%.

What we infer….

On a broader scale, profits are not growing to the level of growth in sales. This means the company is compromising on margins.

On the quarterly basis, shrink in NPM is not a good sign, and above all a growth of less than 25% will not make a company a strong performer or a leader.

There are peers in the same group like HCL Tech, Tech Mahindra and TCS, even Wipro is showing signs of growth which is above INFY. It doesn’t require rocket science to tell that this company has lost its shine. Every other day news papers throw out news about INFY leadership, when the leaders get out of the company, what does it mean?

1.       They have lost significance.

2.       They don’t find the company giving opportunities for the level of growth that they are used to.

3.       Maybe the hierarchy in the company is against the top managers.

Is this good sign for a company which led the integrity wave about 2 decades back? 

It is high time that loyalists of this stock take a look at the performance of their holdings. Sentiments and emotions apart, end of the day you want your investments to grow, not at a snail’s pace, but at rocket speed isn't it. If there are any thought about growth, move your investments from INFY to companies that have superior growth.

HCL Technologies is a stalwart here at present. This stock has been growing at fast pace since June 2011 and the stock has gained 400% since then. Think!!! How would it be investing in a stock that grows your investment 4 fold than 0.60% growth in INFY from the same period.

Invest wisely, prune your investments when the stocks in your portfolio is not doing what you want it to do. Be ruthless, only then you can be at the top 1% in your standard of living.

Happy investing.