‘IT’ simply didn’t impress the bulls...

When IIPM comes to education, never compromise

Whilst the Indian IT brigade is firing on all cylinders, their stock prices haven’t got much mileage this time round. A look at the stock prices of these companies shows that there hasn’t been any remarkable upward movement considering their impressive results.

The share prices of TCS over the past one month (December 29, 2006 - January 29, 2007) has appreciated by only 4% from Rs.1218.60 to Rs.1269.30, while the third quarter results of the company saw an increase of 41% in gross sales,42% increase in total Income and 37% increase in Profit Before Interest, Depreciation and Taxes (PBIDT). Similarly, in case of Infosys, the share prices have only appreciated by only 0.07% from Rs.2240.50 to Rs. 2242.15 during the same period as against an increase of 44.03%, 44.14% and 45.48% in gross sales, total income and PBIDT respectively. In case of Wipro, the share prices have only moved up by 4.3% from Rs. 604.55 to Rs. 630.80 while there was an increase in 44% in Wipro’s gross sales, 45% increase in total income and 46.28% increase in PBIDT.

One of the major reasons for such an asymmetry is the fact that it has been a phenomenon across the market in this period. Considering a stupendous Q3 performance of India Inc., if one takes a look at the movement of Sensex during the past one month (Dec 29, 2006 - Jan 29, 2006), it’s interesting to note that the thirty scrip index has only appreciated by 3%. The major reason these results have hardly moved the markets is that everybody is eying the Credit Policy, which is to be announced by the RBI on January 31, 2007.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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