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Infosys guidance could be lower

March 31, 2007

Infosys Technologies Ltd, will announce its results for the FY06-07 and will issue a guidance for FY08-09 on the 13th of April. With FBT coming into force from April-1st, Infosys was forcing all its employees to exercise options to avoid taxes. Adding to IT exporters woes is the weak dollar.

Infosys stock has taken a beating of 20% from its high of Rs 2,400. Merill Lynch expects Infosys guidance for EPS growth to be in early 20s and will disappoint the market. The report further adds that the outsourcing story is intact and Merill maintains a BUY with a 12 month target price of Rs 2,600 which is slightly optimistic.

In the near term, their will be weakness in Infy stock however one who wants to take exposure should do so only from long term perspective [12 Months]. TCS has fallen by just 8% from its high of Rs 1,300. I don’t agree with analysts who are biased in recommending a 5% discounted target for TCS compared to Infosys. I feel it is unjustified looking at the way TCS is cutting deals and expanding.

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