Infosys has announced salary increments for off-shore and on-site employees. We see this as a first step to improve employee morale, which had been impacted. We expect other measures in due course to improve efficiencies and utilization levels. These factors, in addition to the recent rupee depreciation, should net out a large part of the margin impact due to the increments. Thus, our earnings estimates stand marginally changed. This initiative has come quicker than expected and we view it this positively. However, we believe that, improvement in revenue growth, which could be a major valuation trigger, could take some more time. Thus, we recommend ACCUMULATE (Reduce) with a PT of Rs.2469 (Rs.2324).
Dipen Shah, Head of Private Client Group Research, Kotak Securities:
Dipen Shah, Head of Private Client Group Research, Kotak Securities:
