Wipro-Infocrossing: What do experts think?

Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Tech cos still need a help from Rupee for long term Wipro buys Infocrossing for $ 600mn, stock up 3% Wipro acquires Nasdaq-listed Infocrossing for $18.70 p/sh Don’t bet on Wipro Wipro BSE | NSE 13/02/12 Are Mutual Funds betting on Wipro?

IT major Wipro has acquired Nasdaq-listed Infocrossing for USD 18.7 per share in an all-cash deal. Infocrossing is an outsourcing solutions firm. Its FY07 revenues stood at USD 232.4 million and its net income was USD 9.3 million. The deal size is about USD 450-500 million and the acquisition will be completed by December.

 

So, what do analysts make of this deal?

 

Sanju Verma of HDFC Securities feels that the acquisition will be good for Wipro on account of Infocrossing huge US client base. "I would like to take the management on face value and believe that it is going to be a strategic fit for them. Wipro has had a good history in terms of acquiring companies and then synergising them with their overall operations. The deal should hold them in good stead. The USD 18.74 per share, which they have paid for Infocrossing, might be slightly on the higher side if you look at the acquisition in terms of price to earnings. But if you look at the acquisition in terms of EV per sales, which is the more reasonable parameter, it is about 2.25 times. The acquisition looks reasonably cheap, it is not expensive. One should not forget that Infocrossing has a huge customer base of about 200 clients in the US. Prima facie the acquisition certainly seems to be fitting into their largest scheme of things," she added.