Rs.10 K to Rs.15 Cr: Investing Lessons From Infosys

Infosys celebrated its 40th anniversary this week. A company sustaining for more than four decades is a commendable achievement. This is a rare milestone in the business world. Very few companies have the caliber to reach this echelon. It is also worth noting that Infosys not only sustained this long but also grew exponentially year after year.

From a small capital of US$ 250, it has achieved a market cap of US$ 71 billion. This is an unbelievable success story worth telling again and again. Infosys has led the foundation of the IT industry in India. In due course of time, it became synonymous with the IT industry. Mr. Narayan Murthy, the founder of Infosys, is now recognized as the father of the IT industry. With the democratization of wealth, Infosys has changed the socio-economic canvas of India.

Today, Infosys has become an institution. The brand Infosys is now interchangeable with the words integrity, trust, honesty, and transparency. Infosys has touched the lives of every Indian in some way or another. Start-up entrepreneurs look forward to Infosys as an aspirational dream. The success story of Infosys has completely transformed the entire generation and moved them upwards in the financial strata. Today, the world looks at Infosys with awe and respect.

There are many reasons behind the success of Infosys. However, I think the value system by which all founders have worked to date is the most vital contributor. The charismatic leadership of Mr. Murthy also acted as a force multiplier. There is a lot to learn for everyone from this story. Be it an investor, a leader, an IT professional, a start-up entrepreneur, or an ordinary man on the street. Every lesson is worth emulating.

When a company's business does so exceedingly well, it eventually rewards its investors handsomely. This became true with Infosys as well. Infosys turned out to be one of the biggest multi-baggers in the history of the Indian stock market.

Infosys announced its IPO in June 1993 at Rs.95 per share. If one had invested in 100 shares of Infosys for Rs. 9,500/- today, the market value of these shares would have been worth Rs. 15 Crores!

An investment of Rs. 10 K in Infosys stock could have become Rs. 15 Crores. Unbelievable but true!!!

Some investors may say that in hindsight, everything looks nice and rosy. True. Some may feel that they have missed the bus. However, the intelligent investor will always try to learn a few valuable lessons from the past. That’s why we study history, not just for exciting stories. Isn’t it?

Who knows, there may be a few Infosys-like companies available in the market, and we are not aware of them. However, identifying a good company is one thing, and converting that opportunity into enormous wealth is another.

Even if we are lucky enough to invest in such a company, do we have enough behavioral traits to grow our wealth from Rs. 10 K to Rs. 15 Crores? The answer is a big no. It requires real mental strength, conviction, and courage to hold on to your winners this long.

So on this 40th anniversary of Infosys, let me reiterate again a few important investing lessons for the benefit of retail investors:-

• Only long-term investment has the true potential to create wealth

• Compounding is your best friend. Time here is literally money

• Invest only in great franchises like Infosys having best management practices

• Once you invest in a great company, hold it for lifelong. Never ever think of exiting

• Do not get tempted to buy those cheap penny stocks based on neighborhood tips

• Patience is the key. Hang on there

• Avoid instant gratification

• Stay away from crypto, future & options, day trading, and other speculative activities

• Your investing behavior will decide your financial destiny

It is worth noting that very few companies have impeccable reputations, integrity, and management quality like Infosys. Many companies in India are yet to earn the respect and trust of retail investors. The market is not a place where you go shopping blindly. One has to be extremely careful in selecting a company to invest in. However, if you learn from the above lessons, I am sure you will definitely be richly rewarded.

The wise old man, Charlie Munger puts it very succinctly when he says:-

“Remember that reputation and integrity are your most valuable assets—and can be lost in a heartbeat.”

(Disclaimer:- I and my wife own Infosys in our personal portfolios. This article is not investment advice. Its purpose is to educate investors on behavioral traits.)