Infosys: A market performer

ANALYST'S CORNER

Khandwala Securities grades Infosys as Market Performer at Rs 2,297. The report states that pricing remains stable in short to medium-term, while having little premium from new clients added.

The company is offering its services upstream in consulting, which helps in maintaining margins. Onsite effort content is less in many of the new services added, which include infrastructure management and back-office support.

These services drive the future business growth while keeping margins higher than that the industry average. The company is targeting big orders from the clients and is expected to win orders of over $100 million in the future.

Progeon-Infosys' BPO arm-is exploring all possible ways for expanding business to new segments like retail. BPO business witnessed 150 per cent growth last year.

Infosys Consulting is expected to break even by the fourth quarter of FY 2006. Core banking replacement wave is catching up globally and management is confident to grab the opportunities.

Its enterprise solution business has witnessed 65.7 per cent compound annual growth rate (CAGR) in last three years.

Maruti Udyog: Good Buy

Khandwala Securities recommends a Buy on Maruti Udyog at Rs 476 with a target price of Rs 600. The report states that the company plans to enter the diesel car market -which is roughly 20 per cent of passenger car market -by December 2006, an area that lies unexplored by company.

It has a huge growth potential with its current market share of around 50 per cent, after catering to the 80 per cent of the market (petrol-based cars), leading to an effective market share of 62.5 per cent at present.

The company has entered into a JV with its foreign promoter to set up a manufacturing unit with an initial capacity of 1,00,000 units which can be hiked to 2,50,000 units.

Commercial production of the same will begin by the end of 2006. The new company will be called as Maruti Suzuki Automobile India, in which Maruti will hold 70 per cent.

Gateway Distriparks: Upside potential

Joindre Capital Services recommended a Buy on Gateway Distriparks at Rs 170. The company is a leading provider of port related logistics services.

It has a container freight station (CFS) at Navi Mumbai and an inland container depot (ICD) in Haryana. It has also acquired 100 per cent stake in CFS at Chennai and has entered into a JV for CFS at Visakhapatnam.

The report adds, "The company is promoted by Wind Mill Group, Thakral Group, Parameshwara Holdings (Singapore) and Prism International of India. Investors like IDFC and Tamasek give the company an ability to understand the industry scenario better in global perspective."

Post expansion, it has total capacity of 2,92,000 TEU, with an expected realisation of Rs 6,450 per TEU. The report expects sale for FY06E to increase to Rs 158 crore, a growth of 68.5 per cent. The stock is traded at 18.46x FY06E earnings.