Infosys' Shares Dip as Co-Founders Sell $1.1B Stock
Shares of Infosys Ltd. (INFY) tumbled 4.02% during the regular trading session on Dec 8 on the NYSE, following the news of one of the biggest block stock sales in the Indian market history. Four co-founders of the company – NR Narayana Murthy, Krishnaswamy Dinesh, SD Sibulal and Nandan Nilekani – along with their families, reportedly sold stocks worth $1.1 billion.
As per market reports, the co-founders of this leading business consultation, technology, engineering and outsourcing services provider firm offloaded their shares at INR 1,988 per share ($32.13, based on exchange rate on Dec 5 of 1 INR = $0.016). The selling price represented a 4% discount to the closing price of the company on Dec 5. These sold shares accounted for around 3% of Infosys’ market capitalization of $37 billion on Dec 8.
Deutsche Bank AG (DB) was the sole book runner for the transaction. Notably, this move came few months after Infosys elected Vishal Sikka as its new CEO, who is the first non-founder of the company in this post.
The co-founders of Infosys stated the stock sale event as a strategic move to aid their personal and philanthropic initiatives. They further vouched their commitment by pointing to the fact that even after this stock sale, their families remained as the one of the largest retail stakeholders of the company. However, Infosys declined to comment on this.
Although the stock sale affected the near-term pricing of Infosys, we believe that the move will not affect its long-term perspective. Encouragingly, Infosys has been performing well lately with an average surprise of 9% in the last four trailing quarters. Also, under the guidance of its new CEO, it is all set to regain its position as the IT bellwether. Encouragingly, on Dec 8, Infosys declared a stock split in 2:1 ratio.
Infosys currently carries a Zacks Rank #2 (Buy). Other better-ranked stocks include CDW Corporation (CDW) and Luxoft Holding, Inc. (LXFT). All stocks have the same rank as Infosys.
Read the Full Research Report on DB
Read the Full Research Report on INFY
Read the Full Research Report on LXFT
Read the Full Research Report on CDW
Zacks Investment Research
