Infosys may up revenue guidance; concerns overdone: Kotak

Moneycontrol Bureau

Brokerage house Kotak Securities expects Infosys to raise its revenue growth guidance for the full year when it reports its second quarter earnings this Friday. Also, Kotak analysts Kawaljeet Saluja, Rohit Chordia and Shyam M feel the street is too cautious about the stock, and that concerns relating to senior management exit, employee morale and business restructuring may have been overdone.

Infosys shares have lagged those of rivals like TCS and HCL Technologies over the last three months, because of these concerns.

Infosys has guided for a 6-10 percent growth in revenues for FY14.

"The Street is divided on whether Infosys will revise guidance or not; we believe it would and forecast a revised range of 9.5-11 percent," said the Kotak note.

"Recent deal wins (RBS, Toyota and Northeast Utilities) offer comfort regarding focus on protecting its turf in traditional services is yielding results. Risky as it may be to say anything about Infosys’ results ahead of the quarter, our channel checks indicate business is not as bad as feared by the Street," the note said.

Kotak is recommending its clients to buy into the stock, citing attractive valuations.

"Valuations are undemanding and make Infosys one of the few stocks that can deliver reasonable absolute returns," the note said.

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