Infy touches record highs on NASDAQ - (Source:Probity Research,India)
Ratan:
It is true.
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The ADR (2ADR = 1 equity share) of India's premier software company, Infosys Technologies gained about 65% last week to close at $110.75. The ADR touched a record high of US$121.875 before closing lower at US$110.75 with traded volumes of 4,43,6000. The underlying stock closed at Rs5,110 on Friday, with traded volumes of 2,77,000 shares in both NSE and BSE. The company announced a 156% growth in net profits for Q1/2000. This has prompted all analysts to upgrade their earnings forecast. The company has always announced pleasant earnings surprises. Given this, we can confidently assume that growth in net profits would at least be 150%. Assuming a forecast net profit of Rs300mn, the stock is trading at 54 times FY2000 earnings. This valuation is steep, but justified given the quality of management and track record of sustained earnings growth. Infosys is undoubtedly the best exposure to the fast growing Indian IT sector. The ADR is trading at a premium of 87% to the domestic underlying stock. A part of the premium can be explained on the basis of an illiquid market for ADRs. The other reason may be a likely announcement in the near future. Rumors range from a stock split to a bonus to a possibly acquisition. The company management is tight lipped as usual, but such a sharp spike implies that there cannot be smoke without a fire. |
