Accumulate Infosys; target of Rs 2435: Dolat Capital
Dolat Capital is bullish on Infosys and has recommended accumulate rating on the stock with a target of Rs 2435 in its April 22, 2013 research report.
April 23, 2013 / 13:11 IST
Dolat Capital is bullish on Infosys and has recommended accumulate rating on the stock with a target of Rs 2435 in its April 22, 2013 research report.
“Infosys has been facing major challenges to sustain growth over the last 9 quarters and hence gone through a significant de rating (30 percent lower than its 5yr average). The consensus ratings have also moved down dramatically with constant downward revisions in the sales and earnings estimates. However, the credibility which the company built over years kept the hopes alive of things turning around for the better sooner than later. In the latest earnings release and conference call as well, the management continued to stress its focus on reviving growth et al. We are not at variance with this stance. However where we have another view, and this is what we intend to take up in this note, is that it is about time for Infosys to consider a share Buy Back.” “The management stance over the years, to build up reserves for unforeseen events has been commendable, and set an example for the Indian corporate. However, Infosys’ cash levels now at 18% of market cap, nearly one of the highest we have ever seen, we believe demands a relook. And let us remember, that in spite of the muted growth over FY14-FY16 built into estimates, the cumulative free cash flow that Infosys may generate shall be around USD 3bn. This is taking into account the dividend pay outs staying at stated policy levels of up to 30 percent payout, the current rate, and sustained capex (c. USD 2bn over FY14-16) Keeping aside any requirements relating to its internal business requirements, stated dividend policy (30 percent payouts), any acquisitions and so on, we estimate Infosys can manage an equity buy back to the extent of USD 3-4bn over FY14- 16 — implying 10 percent-15 percent of its outstanding equity considering at INR 2400 (5 percent premium on CMP assumed for calculation). Accumulate Infosys,” says Dolat Capital research report. FIIs holding more than 30% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
Read More
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
