Buy Infosys; target of Rs 2716: Firstcall Research

Firstcall Research is bullish on Infosys and has recommended buy rating on the stock with a target of Rs 2716 in its April 16, 2012 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$ 6.99 billion (LTM Q4-FY12). Infosys defines designs and delivers technology-enabled business solutions for Global 2000 companies. Infosys also 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. has reported net profit of Rs. 23160.00 million for the quarter ended on March 31, 2012 as against Rs. 18180.00 million in the same quarter last year, an increase of 27.39%. It has reported net sales of Rs. 88520.00 million for the quarter ended on March 31, 2012 as against Rs. 72500.00 million in the same quarter last year, a rise of 22.10%. Total income grew by 23.99% to Rs. 95040.00 million from Rs. 76650.00 million in the same quarter last year. During the quarter, it reported earnings of Rs. 40.49 a share.”

“During the quarter, Net sales rose by 22.10% to Rs. 88520.00 million from Rs.72500.00 million in the same quarter last year and the Total Profit for the quarter ended March 2012 was Rs.23160.00 million grew by 27.39% from Rs.18180.00 million compared to same quarter last year. The basic EPS of the company stood at Rs. 40.49 for the quarter ended March 2012 from Rs. 31.78 for the quarter ended March 2011.”

“At the current market price of Rs. 2403.30, the stock is trading at 15.00 x FY13E and 13.31 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.160.17 and Rs.180.51 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 17% and 15% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 10.00 x for FY13E and 8.90 x for FY14E. Price to Book Value of the stock is expected to be at 3.39 x and 2.71 x respectively for FY13E and FY14E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 2716 for medium to ong term investment,” says Firstcall Research report.

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