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Good morning [%first_name |Dear Reader%],
It’s human nature to feel a bit uncertain if you are undervalued. And if you are Infosys Technologies, once the most admired IT services company in India, then you’re certainly feeling it—having gone from a $100 billion market cap three years ago to just $77 billion now.
Partly to correct that investor sentiment, Infosys announced a Rs 18,000 crore share purchaseback last week, its fourth since 2019. Data reveals the last two out of three purchasebacks have been disappointing, with the stock performing way below the Nifty50’s compound annual growth rate during those periods.
Will this time be different? Maybe, maybe not.
While the purchaseback itself is a strong signal of confidence, it doesn’t really assuage investors’ concern. After all, across geographies, investors in tech-services businesses are jittery about AI-led disruption. Infosys could have invested this money for tarobtained acquisitions or building out an AI-era services stack, but instead, it seems to have decided that the best investment is in its own shares.
Infosys is putting up a strong front becaapply, of the $3.8 billion in large deals it won in the June quarter, 55% were “net new” wins. This indicates it is gaining new business rather than just renewing existing contracts. Overall, the deals are focapplyd on enterprise AI, client consolidation, and cost-efficiency initiatives.
Since most communication about AI from IT companies lacks specifics, I viewed for proxies, one of which is the corpus of original case studies or content that these companies produce. Parsing through its blogs, articles, and whitepapers between January 2024 and early September, it became apparent that Infosys, at least, is talking about AI a lot more than other things.
Drilling down further into its AI-related content reveals the enterprise AI category isn’t really occupying all the space on its sites. It comprises nearly 32% of all its writings and publications, compared to ~37% for non-AI content, 27.5% for generic AI, and 3.6% for AI efficiency.
Within the enterprise AI space itself, the two most prolific domains—financial services and banking, which contributed nearly 28% and 16% to Infosys’ revenue in the latest quarter—aren’t surprising. But that healthcare, cybersecurity, and governance also dominate its AI positioning is interesting. Unsurprisingly, manufacturing and utilities recorded the highest growth this quarter, much more than financial services and retail.
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