Infosys Technologies : Buy recommendation

by khalid on 24/12/2009 · 0 comments

Research analyst Angel Broking recommends to BUY shares of Infosys Technologies at present price level of Rs 2526 on the basis of company’s new strategy, for good return on 15 months horizon.

Recommend Price : Rs 2545
CMP on 23/12/09 : Rs 2583
Target Price : Rs 3020
Recommend by : Angel Broking

The company is exploring new areas to work under New Engagement Models (NEMs). NEMs are expected to be the key growth drivers of the company’s overall business going forward. Infosys currently has 84 clients in NEM model with deal size of US $165mn. The company is currently looking at newer NEM opportunities which would be greater than US $500mn to be executed going forward.

Stock Info :
Sector : IT
Market Cap : Rs 145898 crore
Beta : 0.7
52 Week High / Low : 2550 / 1065
Avg Daily Volume : 217622
Face Value : Rs 5.00

The company’s strong efforts on the non-linear front are expected to pay off in the next five years and the same are expected to contribute 33% to the company’s overallrevenues,
up from the current 5%. The Consulting and Pacakge Implementaion services is also expected to register robust growth, contributing 30% to the company’s revenues, with the balance expected to be contributed by the core ADM services in the next five years time frame.

As per the company, interactions with its clientele indicates that IT budgets for CY10 are expected to be flat or marginally lower as there still exists some uncertainty with respect to
economic revival as consumer spending is still down and savings have increased in the US, the dominant IT spend contributor.

Thus, Infosys’ increasing focus on non-linear initiatives along with its strategy to focus on newer geographies and services are positive and will be fruitful in coming time. At CMP Infosys trades at 21.7 times its estimated FY11E EPS, leaving room for further upside. On the basis of above analysis Angel Broking maintains ” Buy ” rating for the stock.

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