Six Month Call

Infosys

CMP: 1870
Target 1: 2354
Target 2: 2442

Current Quote of Infosys


Infosys Technologies has outlined its strategy to survive in an appreciating currency environment coupled with the end of the tax holiday in FY10. The company has over the past three years developed a number of solution-based offerings, which currently account for about 12% of revenues. These offerings enjoy margins higher than the company average. The company's nascent service offerings like infrastructure management, testing and consulting are growing at a rapid pace and are likely to be significant contributors going forward with margins higher than the company's average. Infosys also plans to make incremental capacity additions in SEZs thereby partly mitigating the impact of the higher taxes post the tax holiday period. The recent acquisition of Philips BPO adds delivery centers in Poland , Thailand and Chennai along with a $250 mn contract spread over five years. The company also hinted to the possibility of Philips becoming one of its top 10 customers by offering other services. I believe that the company is well poised to weather the current storm based on the above measures and recommend a buy on the stock.

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