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BUY Infosys

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  1. #1
    insight95in
    insight95in is offline eTI Member

    BUY Infosys

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    Infosys
    BUY
    Price: Rs2,788 Target: Rs3,200 (Mar’11)


    CEO meeting notes – Geared for growth

    * Client outlook positive, offshoring to increase: We recently met Infosys
    CEO Kris Gopalakrishnan and came back positive on the medium term growth
    outlook of the industry. Infosys clients believe the worst is behind them and
    banking clients in particular are looking to invest for future growth which
    could herald revival of discretionary spending. CY10 IT budgets have been
    finalized for most clients – flat to marginally up, with higher offshore
    allocation. Importantly, decisions are being made at a faster pace and deal
    sizes are increasing for Infosys (US$200mn deal signed recently). To cater to
    the increased demand, Infosys is hiring in full swing – 19k fresher offers
    already made for FY11 (10k in the current qtr). With only ~120 clients from
    the Fortune 500 list, Infosys sees tremendous scope to widen its client reach
    and drive revenue growth in the medium-term.

    * Vendor consolidation working in favor of tier-1 companies: Infosys CEO
    indicated that most large clients are looking to work with 3-5 strategic
    partners to drive efficiency. Almost all such deals have 1-3 offshore vendors,
    which we believe is a favorable trend, manifested in two recent publicly
    announced vendor consolidation exercises at Telstra and British Petroleum.
    Infosys believes its ability to compete with global vendors has increased and
    this is manifested in higher win rates.

    * Demand is not fully back, upside still there: The deal pipeline has not fully
    revived for transformational deals; however, strategic sourcing deals have
    revived. Revival in transformational deals in CY10 can accelerate revenue
    growth trajectory for FY11/12, in our view. Slowdown has accelerated
    demand for new business/pricing models, platform/IP driven solutions and
    we believe investments made in CY09 keep Infosys well positioned.

    * Infosys is our top pick; earnings upgrade to support valuations: We
    believe QoQ revenue growth will further accelerate from the current 5-6%
    trajectory and significantly surprise consensus. In our view, stocks are likely
    to trade above historical average multiples in an earnings upgrade cycle. We
    reiterate positive stance on the sector and prefer large caps (Infosys, TCS and
    Wipro all rated BUY). Our price target of Rs3,200 is based on 21x FY12 EPS.


    Contact : +91 9822226867

  2. #2
    priya0710
    priya0710 is offline eTI Iron
    Infosys is a good performing stock of information technology sector.On BSE its stocks are available at 919.40Rs.Its share prices are down by 4.55 points. Traders should analyze stock both fundamentally and technically before beginning to trade in it.

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