<b>Infosys Q4 Analysis</b>: Watch the rupee!

FY-08

FY-07

FY-08

FY-07

FY-08

Infosys 13,893  17,308    3,850 4,66669.1181.58 BROKERS' ESTIMATES Brics 14,029  19,286   3,718 4,84667.1087.10 Citigroup 14,049 18,328 3,767 4,83266.2784.74 JP Morgan 13,909 18,598 3,685 4,85066.2086.90 M Lynch 13,986 18,740 3,749 4,91667.2387.86 M Oswal 14,038 18,655 5,757 4,87167.3087.20 Religare 14,010 18,330 3,770 4,91067.9086.80 UBS 14,088 18,730 3,780 4,86768.2887.89
The revenue guidance of Rs 17,038-17,308 crore for FY08 is lower by Rs 1,000-2,000 crore when compared with analysts estimates of Rs 18,300-19,300 crore. The company expects net profit of Rs 4,666 crore and earnings per share of Rs 81.58 for the fiscal year 2007-08 when compared with net profit of Rs 4,832-4,916 crore and EPS of Rs 84.74-87.89 estimated by analysts.

A major trigger for the stock is that the company has strong cash reserves. Infosys currently has a cash balance of Rs 5,507 crore and investment of Rs 839 crore as on March 31, 2007.

In today's high interest environment, will it increase its other income in FY08? Going by the FY08 guidance, it should add Rs 4,000 crore cash to its kitty by the end of FY08. This means it will be sitting on a cash of around Rs 10,000 crore by the end of FY08.

Infosys has been growing organically at a healthy pace. Till date, they have not looked at any inorganic growth. Possibly, global valuations are on the higher side, but this cash can come in handy when there is a slowdown in the global IT space. They can seriously look at buying a sizeable company with its huge cash in hand.