No further upside in Infy; sell to book profits: Harit Shah

Harit Shah of Nirmal Bang Institutional Equities explains to CNBC-TV18 that there isn't any further scope for an upside in Infosys. He has advised clients to sell if they can book profits.

Below is an edited transcript of the analysis on CNBC-TV18.  Q: What’s your advice to clients on Infosys after the 8.5% cut? Is it 'sell' or 'buy'?
A: At this point, there isn't too much scope for any major upside. There is really no major positive trigger that is likely to occur over the next few quarters given that the economic environment is worsening quite significantly.
The announcement of halting all quarterly guidance is another indication. So, from that perspective we really don't see too many major positive upside triggers that would justify entering into the stock even at current levels. Q: So what's your target price? Have you scaled down your EPS? What's your current EPS now?
A: We are actually reworking our data which should probably be released by the end of the day. Q: What are the industrywide implications of  this price-cut by Infosys? Do you see the entire sector under a shroud and margins getting hit or do you think its just company-specific?
A: I think the impact is more company-specific. It is important to note that discretionary spending does seem to be coming off quite a bit. This quarter, Infosys’ consulting revenue fell by 5% sequentially. So from that perspective, it is an indication that the pricing cut is partially also a portfolio issue. Q: Do you expect further downside in Infosys? What’s your advice to those who already hold Infosys shares? If it's likely to fall further, does it make sense to book profits and sell now?
A: If they are actually booking profits, yes. Q: What about TCS? What's the expectation regarding its results this time?
A: We are expecting about 2.5% growth in dollar revenue for the company in the first quarter. I think TCS will do better than Infosys as it has been for the last several quarters. The bar seems to have been set so low by Infosys, that it’s pretty easy for TCS to post better results.