Accumulate Infosys Stocks at Declines : LKP Research

“Infosys is de-risking its clients profile, which is evident from the fact that contribution from top 10 clients, which was 34.3% in Q1FY05 has come down to 31.7% for Q1FY07. Better client mining ability together with increasing share of offshore revenue (average 51% for past eight quarters) will lead to better operating margins. Infosys is looking for some overseas acquisitions, mainly in Europe, to strengthen its footprints in European market.”

“There is a clear shift in global outsourcing contracts towards small to medium contract value (USD 50-200 million) and multi-vendor outsourcing. From the services perceptive, package implementation, Testing Services and Business Process Management have shown good growth in past few quarters. These high end services are expected to grow, strengthening the operating profit margins.”

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