Mumbai: As a bellwether for India’s technology companies, Infosys Technologies Ltd has long been the darling of analysts because of the firm’s policy of providing performance guidance for the next fiscal year and a reputation of consistently beating the set target.
But, amid global markets turmoil and its impact on Indian technology giants as well as the rupee’s sharp rise against the US dollar in the past one year, Infosys, for the first time, failed to meet, let alone beat, its revenue and profit targets for 2007-08.
This, in turn, has made at least some analysts quite uncertain on how its shares will perform. A Mint analysis of share price targets set by analysts from a dozen domestic and foreign brokerages in India shows a huge difference of opinion, ranging from a low of Rs1,341 to a high of Rs2,160 over the next 12 months. The shares closed at Rs1,599.95 on Wednesday, up 12.5% in two days.
Ajay Mathrani of Deutsche Bank is the clear bull with a 12-month price target of Rs2,160 a share, which he set on 30 March, prior to the quarterly results that came out on 15 April. India Infoline Ltd is at the low end.
Analysts of some foreign brokerages who track Infosys, including CLSA Asia Pac’s Bhavtosh Vajpayee and Goldman Sachs’ Julio Quinteros Jr, are on the bearish side. Vajpayee set a Rs1,650 a share, 12-month price target on Wednesday, while the Goldman analyst’s Rs1,685 a share call was made on 7 February.
Unlike in the previous years, “there is no room for Infosys to upgrade its guidance for FY09,” said Amar Ambani, head of research at Indian Infoline, explaining the rationale behind the bearishness.
The US recession is also a big worry for Infosys which derives 62% revenues from that region.
Another worry would be the continued change expected in the currency value. Infosys pegged the rupee’s value against the dollar at 40 for its annual guidance. “If the rupee strengthens, it will dent profits,” Ambani said.
Infosys set its earnings per share (EPS) target for fiscal 2009 at Rs92.30-93.90. The revenue growth view was pegged at 19.2-21.1% range.
Lehman Brothers’ analyst Harmendra Gandhi has made a safe bet on the stock price, post-results, of around Rs1,870. Analysts at two other foreign brokerages, UBS Securities and Credit Suisse Securities, both set a target of Rs1,950 on the stock on Wednesday.
Apart from Deutsche’s Mathrani, Vipin Khare of Morgan Stanley and Pankaj Kapoor of ABN Amro Securities, too, are bullish on the stock. Khare predicts the stock at Rs2,030 at the same time next year, while Kapoor bets on it at Rs2,150.
Macquarie’s Suveen Cahinani on Tuesday set a Rs2,100 target. Among the domestic brokerage houses, Motilal Oswal Financial Services Ltd’s Vikas Jadav had set a pre-result target of Rs1,750, while Angel Broking Ltd’s analysts target Infosys stock at Rs1,822 mid-April next year.
Ashwin Ramarathinam contributed to this story.