Built-up social capital helped in working in remote areas during the crisis: InfosysAbhishek Salunke
Update on the Indian Equity Market:
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Edited excerpts of an interview with Mr Salil Parekh, CEO, Infosys Ltd; dated 4th June 2020 from Economic Times:
- Over the past few years, Infosys has invested in technology infrastructure, remote access and telecommunications. As a result, the Company was able to scale up work from home with ease and security. They currently employ 240,000 people of which 90% have migrated and are working from home.
- The infrastructure for working from remote places was already in place for Infosys. The Company simply had to scale it up and make it effective.
- About the future of the work environment, he mentioned that people are underestimating the value of building social capital by working together. He explained that remote working has worked for the Company because of the social capital that they built over the years of working together. His sense is that working from home shall continue till we achieve medical milestones in therapeutics and vaccines post which we should look at rebuilding and expanding social capital because that is the glue which has helped to put all of this together.
- The Company has not yet finalized on the target model for working culture. There are tremendous benefits to work from home or remote working. It creates a lot of flexibility for many employees. The way is to build a model once we are out of this crisis.
- The IT industry will look at the most effective ways of cutting costs like travel expenses, and onsite expenses. There will be some efficiencies in adopting this model but it is too early to quantify how much per cent will be saved on a permanent basis.
- He emphasized on the fact that hiring is still an important part of the IT industry. The industry is witnessing technology demand in the digital cloud areas.
Consensus Estimate: (Source: market screener website)
- The closing price of Infosys Ltd was ₹ 707/- as of 05-June-2020. It traded at 18.9x/ 16.7x/ 15.2x the consensus EPS estimate of ₹3/ 42.3/ 46.3 for FY21E/ FY22E/ FY23E respectively.
- The consensus target price of ₹ 725/- implies a PE multiple of 17x on FY22E EPS of ₹3/-.
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