India's Infosys shares rally after Axon Group acquisition
Wood Group profit up 39 pct as sales and margins riseIt said closing the offer and effectively integrating Axon would be the key challenges for Infosys in the medium term, while retaining its "buy" rating on the stock with a price target of 2,027 rupees.
"Axon is a strategic fit for Infosys, which has been consistently looking to expand its consulting and package implementation capabilities and also its presence in Europe," Kotak said.
Last month, Infosys CEO Kris Gopalakrishnan told Reuters the company planned to cut dependence on the United States to about 40 percent from more than 60 percent now, as a slowdown in the world's largest economy hits outsourcing deals.
Infosys, which got 63 percent of its revenue from the United States in the June quarter, planned to boost contribution from Europe to 40 percent from 27 percent, while other markets would account for the remaining 20 percent, he had said.
Infosys, which develops applications, designs supply chains and offers back-office services, counts ABN AMRO, Goldman Sachs and Philips Electronics among its more than 560 clients.
Analysts say the acquisition would boost Infosys' presence in the high-margin technology consulting business, a segment Indian companies are focusing to win large global deals.
Infosys expects its consulting business unit to break-even in the current financial year ending in March, Gopalakrishnan had said. The unit reported a loss of $13 million last year. Last month, Infosys, which the market values at $22.5 billion, reported a 21 percent rise in quarterly profit but warned of challenging times ahead as its major Western clients battle weakening economies.
(Editing by Ranjit Gangadharan)
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