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Buy Infosys, target of Rs 2250: Karvy
Karvy Stocking Broking has maintained its buy rating on Infosys Technologies with a target price of Rs 2250. The resultant acquisition is not going to lead to any boost in earnings, and the company would end up report an earnings of Rs 102 for FY09 and Rs 130 for FY10.
Karvy Stocking Broking has maintained its buy rating on Infosys Technologies with a target price of Rs 2250 in its August 27, 2008 research report. "Infosys' acquisition of Axon for UKP 407 million is not only little expensive from a valuation stand point, the timing of it too is probably little wrong as we expect the Pound and Euro to depreciate (against the USD), which would mean the rupee could end up appreciating against the two in the near future. The resultant acquisition is not going to lead to any boost in earnings, and the company would end up report an earnings of Rs 102 for FY09 and Rs 130 for FY10. The conundrum the company is facing whether to forego revenues for margins or margins for revenues."
"Till yesterday the company did not buck to the pressure, but now with the acquisition there is a feeling the company wants to chase revenues and not defend margins. That is the massive change in the strategy. However I continue with my positive rating as the revenue base and client base has increased, though the jury is out on the margins. We maintain with our BUY rating with a price target of Rs 2250 as we believe there is no threat to our earnings and the cash is made to productive use," says Karvy's research report.
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