target price: Rs 1,246
Prabhudas Lilladher has a ���reduce��� rating on Infosys Technologies as it feels that the outlook for the company and the software industry is quite weak in the near-term.
���While we expect Infosys to perform better than most other players in the industry, we rate the stock ���reduce��� with a target of Rs 1,246,��� says the report.
With a difficult FY10E and full-tax FY11E, the two-year earnings CAGR (FY09-11) for the company is unlikely to be over 10-15%, it adds. According to the broking house, the company���s pricing power in fresh contracts would remain under pressure as ���pricing behaviour by competition has turned aggressive in new contracts.���
While Infosys has seen some weakness in the BFSI domain in the recent past, the outfit expects this weakness to ���spread to retail and possibly the manufacturing domains as well.��� Of the various service lines, Enterprise Solutions may be worst affected over the next few quarters, according to the management, it adds. The broking house is also expecting another reduction in US dollar guidance by Infosys.