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Wednesday, February 29, 2012

Infotech Enterprises - Stock Analysis and Recommendation

Here are excerpts from Analyst meet of Infotech Enterprises (Infotech). This meet was focused on giving investors an idea about company's sysetms, processes and projects. The report of this meet is published by Angel Broking, a stock broking and stock research house.

The major take away from the meet was that the company is on the right track in terms of making investments to strengthen its product portfolio and is taking initiatives to improve its financial metrics.

Focus on systems and process to provide scalability:
During the meet, Mr. BVR Mohan Reddy, Infotech’s Chairman and Managing Director, highlighted that the company is now focusing on strengthening its leadership along with improving its systems and processes and making them scalable. Further, the company will take in SAP integration, as currently three of the company’s subsidiaries are operating independently.

Healthy market opportunity:
As per Zinnov Consulting, a leading IT consulting firm, the engineering market is expected to reach US$40bn by 2020 from US$10.4bn currently (led by industries such as aerospace, automotive, consumer electronics and telecom). Infotech, being a leader in the aerospace and telecom engineering spaces, has strong relationships with clients in these areas and, hence, can capitalize on this opportunity.

Focus on improving client mining:
Infotech’s management is currently focusing on adding and increasing its wallet share from ‘must have’ accounts across its target verticals. The company is doing this by changing the incentive structure of customer-facing roles and is investing considerably to improve client mining and account management skills.

Stock Valuation:
At current stock price of Rs.148, the stock trades at 8.6x FY2013E EPS of Rs.17.1. One may buy stocks of Infotech Enterprises in small chunks for target stock price of Rs.162, valuing it at 9.5x FY2013E EPS.

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