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Infosys acquires Gen-i in New Zealand
„ Event: Infosys acquires Gen-i’s software solutions service
Infosys has signed an agreement to acquire New Zealand based Gen-i’s software
solutions practice and to enter into strategic partnership for IT consulting and
cloud-based offerings. The deal will cost US$4m. Gen-i is the IT services arm of
Telecom New Zealand, an existing client for Infosys. The deal is part of an asset
and people transfer from Telecom New Zealand. Infosys will take over 110
employees as part of the deal, which is expected to be completed by June 2011.
„ Impact: Acquisition to enable penetration into the NZ market
Infosys views the acquisition and go-to-market partnership with Gen-i as a means
to gain a strong foothold into the IT services market in New Zealand, which is
estimated at US$2bn. Infosys currently has minimal presence in this market with a
small employee base of around 40 people.
„ Action: Minimally accretive transaction, unlikely to trigger upsides
We expect this transaction to be minimally accretive in FY12 with revenue of
US$10mn for 9m FY12 with operating margins in line with Infosys’ company
average. We hope to see Infosys utilise its cash reserves (US$3.7bn) to enhance its
market position through meaningfully sized acquisitions in future, but expect this
transaction to have little near term impact on earnings or stock price .
„ Valuation: maintain Buy rating, price target Rs3,550
We believe the more moderate expectations for FY12 earnings growth and cheaper
valuations offer room for potential upsides. We maintain our Buy rating with a
DCF based price target of Rs3,550.
Q Infosys Technologies Ltd.
Infosys is the second largest IT services company in India with US$4.8bn
revenue and around 114,000 employees in FY10. Its services include application
development and maintenance, consulting services and package implementation,
business process management, infrastructure management, and testing services.
It provides these services to international clients through offshore development
facilities in India and other global centres. Infosys derives 66% of its revenue
from the US, 23% from Europe, and the rest from Asia Pacific.
Q Statement of Risk
A sharp decline in IT Services spending could result in downward revision of
our earnings estimates.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Infosys acquires Gen-i in New Zealand
„ Event: Infosys acquires Gen-i’s software solutions service
Infosys has signed an agreement to acquire New Zealand based Gen-i’s software
solutions practice and to enter into strategic partnership for IT consulting and
cloud-based offerings. The deal will cost US$4m. Gen-i is the IT services arm of
Telecom New Zealand, an existing client for Infosys. The deal is part of an asset
and people transfer from Telecom New Zealand. Infosys will take over 110
employees as part of the deal, which is expected to be completed by June 2011.
„ Impact: Acquisition to enable penetration into the NZ market
Infosys views the acquisition and go-to-market partnership with Gen-i as a means
to gain a strong foothold into the IT services market in New Zealand, which is
estimated at US$2bn. Infosys currently has minimal presence in this market with a
small employee base of around 40 people.
„ Action: Minimally accretive transaction, unlikely to trigger upsides
We expect this transaction to be minimally accretive in FY12 with revenue of
US$10mn for 9m FY12 with operating margins in line with Infosys’ company
average. We hope to see Infosys utilise its cash reserves (US$3.7bn) to enhance its
market position through meaningfully sized acquisitions in future, but expect this
transaction to have little near term impact on earnings or stock price .
„ Valuation: maintain Buy rating, price target Rs3,550
We believe the more moderate expectations for FY12 earnings growth and cheaper
valuations offer room for potential upsides. We maintain our Buy rating with a
DCF based price target of Rs3,550.
Q Infosys Technologies Ltd.
Infosys is the second largest IT services company in India with US$4.8bn
revenue and around 114,000 employees in FY10. Its services include application
development and maintenance, consulting services and package implementation,
business process management, infrastructure management, and testing services.
It provides these services to international clients through offshore development
facilities in India and other global centres. Infosys derives 66% of its revenue
from the US, 23% from Europe, and the rest from Asia Pacific.
Q Statement of Risk
A sharp decline in IT Services spending could result in downward revision of
our earnings estimates.
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