Infosys trading at attractive valuations…BUY with a target of Rs 3800/-

The company has seen one more top-level exit.  Mr. BG Srinivas (President and Member of the Board) resigned from Infosys.  This marked the 10th big exit from the company.  The timing of the exit at a time when we had been hearing that they are close to choosing a new CEO means that they are nearing finalization of a name.  The search had been broadened and perhaps this may mean that the new CEO will be younger, and will therefore have more years in the role, the presence of Narayan Murthy will help any new person to get going very quickly.

Media reports also suggest and Mr Nandan Nilekani and Mr Mohandas Pai may be back in some role.  Or, again media reports indicate that it could be an insider, and that probability is higher, as time and again Mr Murthy has emphasized that their internal leadership strength is good.  There is a possibility that if the position is filled internally there could be some more exits.

Notwithstanding that Infosys systems and culture will prevail.  The company has also returned to better earnings over the last couple of quarters.  The outlook for IT also remains strong.  The sharp correction is more on the back of sentiment than anything else, once the new CEO is announced investor confidence will return, in the meantime it means that for long term investors this is an opportunity to add a bluechip at a very good price. Giving the FY15E EPS a range of about Rs 205-210 Infosys is trading at very attractive valuations.  BUY with a target of Rs3800/-


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