Buy Infosys at a price of 3020: Angel Broking


Bangalore: Expecting the positive outlook for the company, Angel Broking has recommended buy rating on Infosys Technologies with a target of 3020, in its December 16, 2009 report. "Infosys has always focused on organic growth, maintaining its profitability and creating shareholders value, which the company achieved even during the global economic turmoil in financial year (FY) 2009. We believe the company is well poised to take advantage of the upcoming opportunities and face the challenges through its novel business plans and quality manpower. While the Infosys management at the analyst meet did indicate that near-term pressure on IT Budgets is expected to continue, we remain confident of the fact that in-line with the global economic recovery, demand for Indian IT services will be back to the forefront and companies like Infosys stand to benefit in particular on account of the availability of talent and delivery from a low-cost base. Thus, considering the above and the increasing focus of the company on non-linear initiatives along with its strategy to focus on newer geographies and services, we remain positive on the company and recommend a BUY on the stock with a 15-month Target Price of 3,020, valuing the stock at 22x its FY2012E EPS," says Angel Broking research report. The company which currently derives around $165 million from new engagement models, sees revenues from such engagements to be around $500 million going forward. These new engagement models (NEM) include application and outcome-based pricing, transaction-based pricing and platform based solutions that can be used to serve multiple customers without having to deploy additional software engineers. "Infosys currently has 84 clients in NEM model with deal size of $165 million. The company is currently looking at newer NEM opportunities which would be greater than $500 million to be executed going forward," said Angel Broking in a research note. On Non-linear front also, company is likely to perform more than expected. Revenues from new, non-linear initiatives will contribute 33 percent of the company's revenues, from around five percent currently.