From a lukewarm debut to becoming a tech titan: This is the Infosys IPO story

IPO Recap

The year is 1993. India’s nascent IT scene is bubbling with possibilities, but access to global markets remains a hurdle. Amidst this backdrop, a young company called Infosys takes a gamble on its future – an Initial Public Offering (IPO).

The initial reception was, well, underwhelming. The public subscription barely scraped by, falling short of expectations. Enter Morgan Stanley, the seasoned Wall Street behemoth. Recognising Infosys’ potential, they did something unusual – they stepped in and subscribed to the undersubscribed portion of the IPO.

This bold move not only injected much-needed confidence into the market but also signalled Morgan Stanley’s belief in Infosys’ long-term vision. And what a vision it was! Fast forward to the present day, Infosys stands as a global IT powerhouse, with a market capitalisation exceeding $77 billion. Its journey, however, is a testament to resilience and the power of believing in an idea before its time.

So, how did a lukewarm IPO pave the way for such a stellar rise?

Early Mover Advantage: Infosys entered the IT services market at a crucial juncture, capitalizing on the burgeoning global demand for outsourcing.

Focus on Quality and Talent: Infosys established itself as a reliable partner, known for its high-quality services and focus on employee development.

Adaptability and Innovation: The company constantly evolved, embracing new technologies and adapting to changing market dynamics.

Global Expansion: Infosys actively expanded its footprint, establishing a strong presence across key markets like the US and Europe.

Of course, Morgan Stanley’s role should not be understated. Their faith in Infosys during its IPO days not only bolstered investor confidence but also forged a long-standing partnership that proved mutually beneficial.

1998: Infosys made history as the pioneering Indian company to introduce its American Depositary Receipts (ADRs) to the market.

Returns

If one had allocated Rs 10,000 to Infosys shares in 1993, the investment would have burgeoned to Rs 84.03 lakh by the conclusion of 2023. This remarkable growth translates to an astounding positive return of 83,926.8% over the 30 years, accompanied by an impressive compound annual growth rate (CAGR) of 25.1% from 1993 to 2023.

The Infosys story is an inspiring one, a reminder that even the most promising ventures can face initial scepticism. It’s a story of perseverance, strategic decision-making, and a solid belief in the power of innovation. And while the IPO might not have been a roaring success on day one, it ultimately served as the springboard for a journey that continues to inspire generations of entrepreneurs and investors alike.

So, the next time you hear about a lukewarm IPO, remember Infosys. Remember that sometimes, the greatest stories begin with a little doubt and a whole lot of conviction.

Disclaimer:This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.