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How Infosys Became An Investors’ Favourite Company

| Published on June 14, 2018

Infosys got listed On 14 June 1993, with over $5 million in annual revenue and 250 employees. The company now values over Rs 2.7 trillion and reported a revenue of Rs 18,083 crore in March quarter this year. In the last 25 years, Infosys has not helped the founders but also helped shareholders, employees to make big money. An idea about Infosys success can be taken from knowing the fact that Rs 10,000 investment in 1993 is now worth Rs 2.55 crore.

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“The biggest takeaway from Infosys’s listing was that it showed to Indians that a few ordinary people, with no powerful background and rather simple middle-class upbringing, can set up a great company and on a global scale,” said T.V. Mohandas Pai, a former human resources head and chief financial officer of the company. Pai had joined Infosys as a consultant in January 1994.

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The listing of Infosys, which was set up by N.R. Narayana Murthy and his friends came at a time when India had just begun to allow foreign investors enter in the market. Earlier, foreign investors were not allowed to hold shares in Indian companies and the stock markets were still facing problems due to $1 billion banking and securities fraud by stockbroker Harshad Mehta.

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Infosys’s IPO was undersubscribed but Morgan Stanley supported by picking up 13% of equity at the price of Rs 95 per share. Infosys shares opened at the price of Rs 145 per share with nearly 60% premium on the day of listing. With its continuous growth year after year, Infosys even became the 2nd-most valuable company in the IT index after Wipro.

Also, Infosys became the very first listed company to make a financial policy with investors, aiming to generate a return on capital (RoC) that was twice the cost of capital and three times the cost of capital deployed.

Infosys is an example for other companies which proves that employees and shareholders are the heart of any business by sharing profits with them. Many employees have become millionaires due to employee stock scheme employed by Infosys.

In short, we can say that the vision of Infosys to share success changed the way companies used to do business in India.

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