Goldman maintains buy on Infosys

BANGALORE: Goldman Sachs said it has maintained its buy rating on Indian
computer software blue chip Infosys Technologies Ltd. with a 12-month share
price target of Rs 10,300.

This represents an 80 per cent gain from Infosys' closing price of Rs 5,719
on Monday at the Bombay Stock Exchange. "Right now investors are concerned
because of the macro environment but Infosys' business continues to grow in
strength," one of the two analysts, Rajeev Gupta, who compiled the research
report dated February 23, told Reuters.

Goldman issued the report after organizing a weeklong road show in the United
States for the Infosys management. Infosys has been on Goldman's recommended
list since October 30. "While investor mood with respect to the overall
technology market continues to be cautious, recent customer checks and surveys
point to IT outsourcing as one of the safe havens within global
technology," Goldman said.

It expects this to benefit the Indian IT services sector. The United States
accounts for about 60 per cent of India's software service exports, which are
expected to exceed $6 billion this year, up more than 50 per cent from last
year.

Infosys' shares have fallen 16 per cent this month compared to a five per
cent drop in Bombay's 30-stock index. The stock has lost 25 per cent over the
past three months and about 35 per cent over the past 12 months, falling along
with other local tech stocks.

Goldman said Infosys was trading at 68 times its forecasted earnings per
share for the current year to March and at 45 times next year's forecast
earnings. "Given the tough economic conditions, we do not expect Infosys'
multiples to expand," Goldman said.

"However, we continue to have strong confidence in Infosys' ability to
meet our growth expectations, which should make the shares increasingly
appealing to investors, even without multiple expansion," Goldman said.

Infosys, last month announced October-December net profit surged 125 per cent
to Rs 1.66 billion ($35.66 million), on sales of Rs 5.52 billion, up 136 per
cent from a year earlier.

(C) Reuters Limited 2001.