Prabhudas Lilladher has a “reduced” rating on Infosys

cmp: Rs 1,135.70

Price target: Rs 1,246

Prabhudas Lilladher has given Infosys Technologies a “reduce” rating as the short-term outlook for the company and the software industry is quite weak.

���While we expect Infosys to outperform most other players in the industry, we rate the stock as “reduce���” with a target of Rs 1,246���, the report reads.

With a difficult FY10E and a full-tax FY11E, the company’s two-year (FY09-11) earnings CAGR is unlikely to be above 10-15%, it adds. According to the brokerage house, the company’s pricing power on new contracts would remain under pressure as competitors’ pricing behavior on new contracts has become aggressive.���

While Infosys has seen some weakness in the BFSI space recently, the company expects that weakness to spread to retail and potentially manufacturing operations over the next few quarters, management adds. The brokerage house also expects a further reduction in Infosys’ US dollar forecast. Prabhudas Lilladher has a “reduced” rating on Infosys

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