Stock report on Infosys Technologies from Angel Broking. Recommends to buy shares for good returns on the back of strategy and focus.
Reco price: Rs 2,545
Current market price: Rs 2,526.50
Target price: Rs 3,020
Upside:19.5%
Brokerage: Angel Broking
New engagement models (NEM) are expected to be the key growth drivers for Infosys’ overall business, going forward. Infosys currently has 84 clients in NEM model with deal size of around $165 million and is looking at NEM opportunities, which would be greater than $500 million to be executed, going forward. The company's efforts on the non-linear front are expected to contribute around 33 per cent to its overall revenues, up from the current 5 per cent. The Consulting and Package Implementation services is also expected to register robust growth, contributing around 30 per cent to the company's revenues, with the balance expected to be contributed by the core ADM services in the next five years time frame.
As per the company, interactions with its clientele indicates that IT budgets for CY10 are expected to be flat or marginally lower as there still exists some uncertainty with respect to economic revival. However, Infosys’ increasing focus on non-linear initiatives along with its strategy to focus on newer geographies and services are positive. At Rs 2,545, Infosys trades at 21.7 times its estimated 2010-11 EPS, leaving room for further upside. Maintain "buy stocks" rating.
