Infosys must empty its over-filled wallet and invest  

Infosys is sitting over a cash pile of USD 4. 5 billion. About time, India’s IT bellwether invested at least part of it and led investment revival in the country, aspiring high. 

Unlike most of the industries, particularly in manufacturing, well –performing IT service firms have enough cash on their balance sheets but have remained somewhat doubtful about expanding their operations and investment horizon. Infosys is among very few which are enjoying the warmth of cash while bulk of the Indian industry reels under debt.

If there are any sectors still considered somewhat safe for investors in the market, IT firms make the grade there as well. Top five of the Indian IT firms , be it TCS, Infosys or  Wipro …..have all survived market crash, 2008-09 global financial crisis included.

They cater to the best known Fortune 500 corporations, the likes of Apple Inc, Wal-Mart and Volkswagen. The Indian service firms have not only survived worst of economic crises, but also political onslaught in the US against outsourcing . Infosys gets about 63 per cent of its revenue from the US, followed by Europe.

While each time there is an earning season, TCS and Infosys surprise the investors with pleasant results, too much of cash on their balance sheets is not something that presents a forward looking outlook. It is good to be conservative but holding on to liquid assets beyond a point becomes counter-productive and may lead to missed opportunities.

In fact, with this kind of cash, Infosys can scout for some of the best assets in different class of high end technology applications at relatively cheap valuations. And with a tech-savvy CEO in Vishal Sikka , timing should be opportune for Nagavara Ramarao Narayana Murthy- promoted Infosys to go for the kill.  It need not spend the entire corpus at its command , but keeping it in safe wallet may not be a smart strategy.    

India's second-largest software services exporter has  reported a better-than-expected 9.8 percent increase for the quarter ended  September,2015. The company’s emphasis on moving up the value chain did help it .

Infosys posted a net profit of USD 525.07 million) in the September quarter.  

Pic: Infosys Facebook page