Infosys Technologies
Research: Angel Broking
Rating: Buy
CMP: Rs 1,748

Infosys Technologies, India's second largest software services company, was recently in news for having acquired the UK-based SAP consulting outfit, Axon Group plc for a consideration of £407.1mn ($753.1 mn, Rs 3,310cr). The transaction is expected to close by November 2008.

Axon has around 2,000 employees and for the year ended December 31, 2007, reported revenues of £204.5mn (US $378.3mn, Rs1,660cr) and net profits of £20.2mn ($37.4mn, Rs 160cr).

This is by far the largest-ever acquisition made by the company and reflects its strategic intent to grow and develop stronger competencies in its consulting business. While the deal is margin-dilutive in the short-term, it is likely to become EPS-accretive by FY2010.

At the CMP, the stock is trading at a P/E of 14.4x FY2010E EPS. Angel Broking maintains a buy on the stock, with a target price of Rs 2,124.