Hold Infosys; target of Rs 2519: R K Global
R K Global has recommended hold rating on Infosys with a target price of Rs 2519 in its September 12, 2012 research report. According to the research firm, Infosys has been reeling on the revenue front for the last couple of quarters.
September 17, 2012 / 12:41 IST
R K Global has recommended hold rating on Infosys with a target price of Rs 2519 in its September 12, 2012 research report. According to the research firm, Infosys has been reeling on the revenue front for the last couple of quarters, Q1FY’13 has been eponymous as the company for the first time declined to give a guidance citing global macroeconomic issues.
“Infosys, India's second largest IT firm has acquired Zurich-based Lodestone Holdings AG in a deal valued at CHF330 mn or US$350 mn(over `1,900 crores). It indicates an increase in aggression in terms of inorganic growth for Infosys, something that we previously quipped about. Though, in terms of revenue, the Lodestone’s contribution (Lodestone is a US$210 mn co.) on a present basis looks mere but the 200+ client base is a ready addition to Infosys’s clients portfolio taking the total client list to 900+. In relation to the company’s continue underperformance, the acquisition was long expected and it remains the only route to deliver top-line growth.”“The company has been reeling on the revenue front for the last couple of quarters, in fact, Q1FY’13 has been eponymous as the company for the first time declined to give a guidance citing global macroeconomic issues and lower revenue visibility. However, post acquisition, it may take Infosys a step closer to its goal of becoming a software-and-services giant providing clients with higher value services and consulting. The company has recently completed implementing Infosys 3.0, a strategy that it expects will take it towards this goal. Lodestone will add 850 employees to Infosys' 150,000, including 750 consultants experienced in business management software from SAP AG. The Infosys’ consulting division has seasoned skills in the vertical; the company will just have to pitch or client mine its entire portfolio of app. Dev. to maintenance. So in-turn, it can bring in more revenues. Post-acquisition, the combined practice focusing on SAP programs will deliver revenues of more than USD1 bn. Positive for long-term period.”“In most of our reports earlier, we stressed on “re-structuring” and we also mentioned the effect of re-structuring will take time. Though, it isn’t close yet but reaping from acquisitions is still 3Qs away. Our earlier TP of Rs 2,519 has been hit on 10th Sep’12 (giving a ~13% return since 13th July) and we aren’t modifying or revaluing at this moment and would prefer to wait till Q2FY’13 numbers. We would like to wait for further guidance from the company. We re-iterate our earlier TP of Rs 2,519 and a rating of hold,” says R K Global 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.To read the full report click on the attachment 
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