Infosys is available cheaper then Nifty
Updated on 25 Aug 2016
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Infosys valuations are at their lowest ever discounted to the stock benchmark Nifty. Once a favorite on Dalal Street, the stock has always enjoyed premium valuations but increasing concerns over the impact of Brexit on its business and slowing growth have moderated investor interest in the company.
The stock's estimated price to earnings (P/E) ratio is currently trading at 15 while Nifty is currently trading at 17.8 times estimated earnings.
Analysts said this discount in P/E ratio - a measure for valuations -has never happened before as investors have rarely doubted Infosys' prospects. Tata Consultancy Services (TCS), Infosys' rival and the biggest software exporter, is trading at 19.17 times estimated earnings.
Infosys shares have underperformed both Nifty and TCS so far this year. Infosys declined 4.4% so far this year, as against a 6% gain in TCS. Nifty has surged over 8% since January 1.
Bad news this year does not bode well for the company which just keeps adding to the uncertainty around the stock, Last week, shares of Infosys hit their lowest level in eight months after Royal Bank of Scotland decided to junk its plan to separate and list a new UK standalone bank, for which the company was a technology partner.
Analysts said the main reason for this discount is because of investors' preference for TCS, HCL and Tech Mahindra over Infosys.