Indian information technology companies should reinvent themselves, said Ramesh Damani, Member, BSE and NSE, as Infosys on Thursday marked its 25th year of market listing.
Speaking to CNBC-TV18, Damani said Indian companies have taken a backseat when it comes to facial recognition technologies, automation of transportation, drone technology, in camera technology etc. compared to China.
Watch: Infosys is to India what Ford was to America in early 1920s, says Ramesh Damani
Damani said people like FC Kohli, Azim Premji, Narayana Murthy, Nandan Nilekani and Jack Welch of General Electric should be considered for Bharat Ratna.
Edited Excerpts: You have seen many multibaggers, Infosys is a story which is about perhaps developing equity cult in India, right?
I think that also puts it very narrowly. Infosys is what Ford Motor Company was to America in the early 1920s or what Google and Apple have been. It is the seminal moment in Indian equity markets. If you connect two events that happened in our lifetimes – the fall off Berlin Wall and for Dalal Street, the listing of Infosys, you may not find much similarities but if you connect the two, one led to the other.
I think, once Infosys got listed, it created a cult of investors but it created so much more. I think because of Infosys tech people and Indians walk proud. It's one of those extraordinary moments in corporate India and it's very hard to overstay the importance they had on the Indian economy.
Someone rightfully called the Infosys, Rahul Dravid of the stock markets, but Rahul Dravid is retired, right? Do you think Infosys has past its prime?
It would be very unfair criticism against Infosys. The company has given a compound annual growth rate (CAGR) of 36% as you yourself have pointed out. One of the great stocks in America by contrast for example is Philip Morris, which over a period of 98-100 years, has grown 2 million fold but the CAGR is only 16%. So clearly, from the base that it operates, it's hard to grow at 35% year on out but even if this company grows at 15-16% , it would have delivered stunning value for shareholders as it has done for the last 25 years.
There are of course challenges that all great companies face. They have to reinvent themselves in the light of office automation, artificial intelligence, block chain technologies and all these new things that are coming out in the world and Indian companies have been a bit slow to adopt all these technologies. But to take a day, when we are celebrating one of the great companies of India and to criticise them is not appropriate.
Infosys has been the bulwark for the shareholders wealth and probably will continue on it into the next decade. Especially, when Nandan Nilekani now back as chairman, because I know he lives, breathes Infosys and I am so very happy that he is back at the helm.
When you look at the future and you look at innovation because that is where the next round of wealth is being created, in the US the Apple and the Netflix, you in the past have spoken about these ideas perhaps like the end of oil, new kind of car engines etc, the constant criticism is that do we see Indian companies of that pedigree, that degree of innovation that can sustain this so within India in the listed space if you are talking about the next big innovator, where do you see this happening?
Clearly, I think even compared to China, the Indian companies have taken a backseat. For example, in facial recognition technologies, automation of transportation, drone technology, in camera technology, in so many areas, China is far ahead of us and we have a 25-year lead in the services market out there, but that market is maturing and there is no question about that.
For the next 25 years, unless you are a product oriented company with some intellectual property, I think the going will be tough. There is a lot of work that needs to be done in the world for software to automate and I think the Indian companies will continue to address the market. But you are right, we are hoping that a company will emerge out of India like a 10 cent or Alibaba, who captures the imagination of the high-tech intellectual property oriented market.
Have the Indian companies done that? They haven’t but they have to look at the kind of employment they have created, the wealth they have created, the honour they have bought to India. There is a band of brothers, which includes , FC Kohli under TCS, Azim Premji under Wipro and Narayana Murthy and Nandan Nilekani under Infosys and I would add Jack Welch of GE, who actually started the outsourcing boom to India, they deserve a place of honour in history.
In fact, I would even go so far as to recommend on your show that they should be considered for Bharat Ratna. I think it's just – they put corporate India, India Inc on the map. Every fortune 500 companies now has a head office in Bengaluru, thanks to the efforts of these guys and the spill over effect has been so enormous. Should they reinvent themselves? Yes, I think they should reinvent themselves but let us not detract from the enormous honours that they have bought to the capital markets and to our country by the contribution over the last 25 years.
I wanted your thoughts on this whole recent market volatility specially in the midcap - I asked this because a lot of domestic money over the last two years has gone into equities and after a long time we have seen the market where foreigners are selling and still the market has rallied, what phase of bull market do you think we are in right now and do you think this volatility is just part of the game and the bull run will resume?
I will summarise what Mark Twain said that rumours of the death of this bull market are greatly exaggerated, if you look at the new high list even yesterday 12 A group stocks made new highs, they were the highest quality companies like Elxsi, Hindustan Unilever. So, many high quality companies Nestle, Maruti are at new highs or close to new highs. Bull markets do not die, when great companies are still making the new highs.
There has been a weeding out process, a regression to mean, if you are in the midcap space and I do not think that is bad. I think it's good that Infosys is self-correcting discipline, when stocks get out of hand and then value re-emerges and investors can come back and step in there. I think the market action is fine.
I know we are headed into an election year, I know oil prices are high and globally markets are moving back to developed markets from emerging markets. But having said all of that, India continues to occupy a special place in emerging markets, because we are one of the few economies that can produce six-seven percent growth rate.
I see no reason to be pessimistic over the next two years about the Indian equity markets, notwithstanding, we are facing general elections. Elections come and go in India and if you look at Infosys' history, for 25 years since its listing, we have had so many events - defaulting on IMF loans almost, Kargil war, typhoons, tsunamis, global meltdowns, Y2K, tech meltdown and despite that, Infosys has delivered 30% plus CAGR, the Sensex has delivered 16% plus CAGR.So the pessimists are giving short shifts to the resilience that the Indian market has shown and Indian investors will come back and reinvest in the Indian market because they delivered, they have understood the value of investing in sound businesses. So consider me as the optimistic and not the pessimist even over the next two-three years.