Buy Infosys; target of Rs 2988: Firstcall Research

Firstcall Research is bullish on Infosys and has recommended buy rating on the stock with a target of Rs 2988 in its January 11, 2013 research report.

“Infosys Limited, formerly known as Infosys Technologies Limited is a global technology Services Company headquartered in Bangalore, India. The company has changed its name to Infosys Ltd. on June 16, 2011. It is the second largest IT exporter in India. Infosys Limited was started in 1981 by seven people with US$ 250. Today, it is a global leader in the "next generation" of IT and consulting with revenues of US$ 6.994 billion (FY12). Infosys takes pride in building strategic long-term client relationships. 97.8% of revenues come from existing customers (FY12). Infosys defines designs and delivers technology-enabled business solutions for Global 2000 companies. Infosys provides a complete range of services by leveraging its domain and business expertise and strategic alliances with leading technology providers. Infosys pioneered the Global Delivery Model (GDM), which emerged as a disruptive force in the industry leading to the rise of offshore outsourcing. The GDM is based on the principle of taking work to the location where the best talent is available, where it makes the best economic sense, with the least amount of acceptable risk.”
 
“Infosys Ltd. is a global leader company in the "next generation" of IT and Consulting Services & is recognized for its world-class management practices and work ethics, reported its consolidated financial results for the quarter ended 31st December, 2012. The company’s net profit falls to Rs.23690.00 million against Rs.23720.00 million in the corresponding quarter ending of previous year, a decrease of 0.13%. Revenue for the quarter rose 12.11% to Rs.104240.00 million from Rs.92980.00 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.41.42 a share during the quarter, registering 0.13% decrease over previous year period. EBITDA is Rs.109270.00 millions as against Rs.97200.00 millions in the corresponding period of the previous year.”
 
“At the current market price of Rs.2668.20, the stock P/E ratio is at 16.37 x FY13E and 14.67 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.163.01 and Rs.181.91 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 19% and 15% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 11.58 x for FY13E and 10.21 x for FY14E. Price to Book Value of the stock is expected to be at 3.75 x and 2.99 x respectively for FY13E and FY14E. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 2988 for medium to long term investment,” says Firstcall Research report.

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