Brics PCG: 'Buy' Infosys

Brics PCG has recommended a 'BUY' on Infosys with a one-year target price of Rs 3,739.

Infosys Technologies has entered into a partnership with US-based NorthStar to provide the latter with consulting and application development services.

NorthStar is a leading provider of enterprise wealth management software solutions to financial service institutions. It has an impressive client list which includes Charles Schwab, Citigroup, Legg Mason and Merill Lynch.

While the financial implications of the deal cannot be judged at this early stage, the partnership will further consolidate Infosys's leading position in the BFSI (Banking, Financial Services and Insurance) vertical, which contributed 28.5% of the company's total revenues in FY06.

They expect Infosys to record an EPS of Rs 117.7 in FY07 and Rs 149.8 in FY08. At the current price of Rs 2,762, the stock is trading at 23.5x and 18.4x on FY07E and FY08E respectively.

With the rupee depreciating against the dollar in this quarter, the company's operating ratios are expected to improve.