In an interview with CNBC-TV18, Bhavin Shah, JP Morgan, speaks about the results and gives his outlook going forward.Q: What have you reworked now as your FY11 EPS target? What could be a price that the stock could support?
A: On back of these very strong results, the magnitude of the surprise that they have delivered, the kind of the underlying currents that they have talked about in terms of their business—seeing more velocity, looking at signing more of a few hundred million dollar deals— and just a general improvement in the financial services industry, I think it’s very easy to expect a robust sequential direction in the next several quarters. So if you do a quick back of the envelope type of calculations, it is not difficult to imagine an EPS in the range of Rs 130 or so for FY11.
Q: There were many comments that came in from the management about global recovery and aggressive hiring that seem to indicate that things are now improving not just for Infosys, but across the entire IT sector. In that case going forward, what is the kind of uptick many of the IT companies in terms of pricing stability would see now?
A: The pricing environment is bound to be far more robust, companies may actually be able to point out to the rupee appreciation or either one of the cost pressure and the general inflationary environment in India, putting pressure on wages that is some of the reasons why they might be able to hold on to strong pricing indicators. So a moderate improvement in pricing is quite realistic and not necessarily the next 2-3 quarters, but say 3-4 quarters off.
Q: The last two quarters have clearly gone down to TCS as being the stars of the IT bunch. From what you have seen today, do you think Infosys might actually steal the march this quarter?
A: The corollary of that is Infosys had underperformed in terms of the quarterly numbers. So yes they have come out with a bang here and it’s not likely that we see even bigger surprises from the other big companies. But I think the main message is that the industry as a whole is facing some pretty nice environment at this point of time.