Stay invested in Infosys, advice experts

MERGER SPECULATION: Infosys merger with Capegemini could be for a BPO arm say market experts.

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New Delhi: Mehraboon Irani of investment firm Darashaw & Company advices investors to hold on to those Infosys Technologies stocks.

On the Infosys Capegemini merger, Irani says that mulling an acquisition of the size of Capgemini—that is Europe’s largest IT service firm—seems unlikely considering the fact that Infosys’ turnover is less than one-third of what Capgemini is.

“The profit of Infosys is more than double of Capgemini but that is a different issue. If these two entities combine, it gives you a turnover of around USD 14 billion. I would personally believe that if this is going to happen, it would be c,” he was quoted by moneycontrol.com.

Rising rupee has posed serious worries for the IT firms that have operations in the United States. If the rupee appreciation abates for the time being, it will be good for Infosys. But if it doesn’t happen soon, for the first time in the market history of Infosys, we could see possibly margins contracting a little bit.

“There could be a little bit of setback to off-shoring sometime in 2009, when a new President takes over in the US. But these concerns apart, I personally have always felt that Infosys is a wealth creator and will remain a wealth creator. Heavyweights in IT like Infosys, Satyam, Wipro and even TCS will be doing well in the short run,” said Irani.

He further added, “I personally feel that all eyes should now be on the guidance that Infosys gives us, what it comments about the rupee appreciation, what sort of guidance it is going to give for the coming quarters. I think that is going to be very important. So for traders, Infosys is not a stock that I am going to recommend but for investors, who are going to lose their patience, they may possibly exit. But otherwise as far as acquisition goes, I would tell investors to stay invested in Infosys. But as I mentioned earlier I could be mainly for the BPO outfit rather than for the entire company.”

With excerpts from a moneycontrol report