Buy Infosys; target Rs 3650: Emkay
Brokerage house Emkay Global Financial Services is bullish on Infosys and has recommended buy rating on the stock with a target price of Rs 3,650 in its September 26, 2013 research report.
September 27, 2013 / 13:11 IST
Emkay's research report on Infosys
"Infosys management has clearly indicated the intention to address the issue over FY11-13 both through a focus on: 1) improving the revenue growth trajectory (note that the company's revenue growth of <16 percent and 6 percent in FY12 and FY13, respectively, was lower than that of the industry and peers), and 2) cost optimization (improving utilization both onsite and offshore, aligning onsite costs with project/market requirements, more location optimization, etc.). In our view, an improvement in the overall demand environment and an uptick in discretionary spending, coupled with a greater focus on the “bread and butter' business and IT services (63 percent of revenues in FY13), will drive improvement in revenue growth trajectory going forward. However, we believe that its cost optimization benefits should show results more quickly (improving both onsite and offshore utilization, aligning onsite costs with market/project requirements), given that these initiatives are internal to the company and not much dependent on help from the external environment.""We upgraded Infosys to BUY in June'13, and view the company's initiatives being the right steps in restoring the predictability and consistency that was akin to Infosys for long before the series of mishaps through FY11-13. We expect the company to return to its ‘PSPD' mode of execution that has been its hallmark through most of the past decade. Infosys remains our top-pick in the Tier-I space. BUY stays with an unchanged TP of Rs 3,650, which is based on ~17x FY15 and 15x FY16E earnings," says Emkay Global Financial Services research report.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. 
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