Some action needs to be taken at Infosys over next few weeks: Mayuresh Joshi, Angel Broking

Talking to ET Now, Mayuresh Joshi, Fund Manager, Angel Broking, says at this point at least 15-20% of incremental money can go in qualitative stocks on any significant decline.

Edited excerpts:

How would you classify yesterday’s dip in the markets? It looks like we have aligned ourselves with the rest of the globe. Could there be more such days because of the geopolitical tensions?

That remains a high possibility at this point of time and if you work on the probability of the geopolitical tensions escalating in the days to come, there might be some nervousness in the equity markets round the globe including India. The opportunity that long-term investors can get on every significant decline in my opinion is pretty large. If qualitative stocks do correct, the valuations contract, making them ripe for investment.

The caveat obviously stays that if the geopolitical tensions escalate beyond what the market expects at this point, there might be a further selloff. At this point, at least 15-20% of incremental money can go in qualitative stocks on any significant decline into the markets.

Do you think that with all that is being said but not done as yet, the Infosys promoters have once again cast a shadow of doubt and uncertainty because one needs to move on from the saga. When will we do that once and for all?

As I said before, though we remain positive on the long-term outlook for the company, the general consensus at this point is wait-and-watch mode. Largely again, the statements given out by Mr Murthy yesterday are more in line with what the large expectations were but again it has to be substantiated by a lot of action over the next few weeks and months.

The numbers will do the talking overall for the financial performance of the company. As I said, there is nothing wrong in terms of the business model. The kind of orderbook that they have record, the cash on books, the kind of cash flows that they generate at this point of time and even the margins that they are doing on the EBIT front, the guidance that they have given both in terms of constant currency and dollar, the products and service lines that they are getting into the digital transformation mode, all of this should work positively for the company again with the caveat that Q2 will be seasonally weak because the wage hike has got deferred. So, the EBIT margin will take a hit in that front. But some substantiative action has to be initiated and unless that happens over the next few weeks, this stock in my opinion is still stuck in a range.