Merrill sees Infosys profits booming
BOMBAY, Sept 21 (Reuters) - Indian software firm Infosys Technologies Ltd's net profit
and earnings per share growth will boom over the next three years, helped by a surge in
revenues driven by Internet services, Merrill Lynch said in a report.
``We expect earnings per share to grow at 74 percent annually over FY1999-2002 driven
by 57 percent revenue growth, higher margins and higher non-operating income,' said the report, dated September 14 and
made available to Reuters on Tuesday.
The report forecast Infosys's 1999/2000 (April-March) net profit at 2.38 billion rupees, rising to 7.02 billion by 2001/2002
and 1999/2000 sales at 7.66 billion rupees, rising to 19.62 billion by 2001/2002.
Infosys posted a net profit of about 1.35 billion rupees and total income of 5.13 billion in 1998/99.
The Infosys stock had appreciated 400 percent since December and has bullish long term prospects, Merrill said.
``We believe this could be because the company continues to grow ahead of consensus estimates and our own belief is based
on its future growth prospects,' it said.
``We expect Internet services to be a big driver of Infosys's future growth and account for 20-25 percent of its revenues by
2001/2002,' analyst Ajay Sharma at Merrill's Indian affiliate DSP Merrill Lynch told Reuters on Tuesday.
``Infosys is giving a major thrust in the direction of capitalizing on this opportunity in Internet services and is ramping up its team
in this area,' Sharma said.
Infosys is India's only company listed on a U.S. exchange. Both its domestic shares and ADRs on the Nasdaq have risen by
about 30 percent in the past week.
The domestic market was tracking runaway gains in its ADRs, which were trading at 134- in early Tuesday deals on the
Nasdaq, after being offered six months ago at $34.
The share ended Tuesday up 564.75 rupees at 7,624.70 on the Bombay exchange.
The report, released before the latest surge in the stock, had issued buy recommendations.
``We re-initiate coverage on the stock with a buy rating over both the intermediate and long term (local shares),' the report
said.
``We have re-initiated coverage on the American Depositary Receipts (ADRs) with an accumulate rating in the intermediate
term and a buy in the long term,' it said. |
