Infosys - Firmenbetrachtung von wordlyinvestor.com - 500 Beiträge pro Seite

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Source: http://biz.yahoo.com/wi/000804/10550.html

Friday August 4, 12:24 pm Eastern Time

worldlyinvestor.com Region of the Day
India`s Infosys Installed as Software King
By Robert Cyran, Correspondent

The wildly profitable software consultant isn`t cheap, but Infosys doesn`t have many bugs in its system.

One hopes that India`s software industry will eventually eclipse Silicon Valley, if only because it`s a more interesting place.

For instance, riots shut down Bangalore, India`s version of Silicon Valley, earlier this week. The reason? A forest bandit kidnapped the mega-star of Southern Indian film, Rajkumar.

Despite theses occasional flashes of color and the odd disruptions, the Indian software industry has been growing like gangbusters for over a decade. While the rest of the country has grown 6% per year, software companies have consistently grown at over 50% per year.

Infosys Technologies (Nasdaq:INFY - news) reigns over the industry as undisputed king. Over the past decade, profits have grown annually at 76% and even accelerated in the latest first quarter to 100%. Growth is expected to continue, if not at the pace of the last quarter. According to First Call/Thomson Financial, analysts expect Infosys` profits to grow 75% this year.

Unfortunately, the stock is no stranger to momentum investors. After its ADRs debuted at split-adjusted $23 each in 1999, it peaked in March this year at an incredible $350 a share. It`s dropped 70% since then to $106 a share -- still a pricey 128 times expected 2000 earnings.



``The drop is an excellent buying opportunity because most of the excess has been bled off of the ADR as more Indian companies sell stock in America,`` says Bhupinder S. Ahuja, an analyst for Deutsche Bank in India. Ahuja thought the stock was overvalued until recently.

Visa Applications and Outfitting Nordstrom
Infosys sets up and customizes software for big American clients like Nordstrom (NYSE:JWN - news) and Visa. These companies find that outsourcing companies like Infosys can do it better, cheaper and faster than they could in-house.

Software-consulting profits are highly dependent on how many employees the company has. The more consultants, the more billing hours you collect from clients. Since Indian employees are cheap, Infosys can charge much less than US competitors such as Sapient (Nasdaq:SAPE - news) or Cambridge Technology Partners (Nasdaq:CATP - news) while still running a profit.

Luckily, Infosys isn`t in danger of running out of talent in India despite adding 1,000 employees in the first quarter. In the last year, they recruited about 1,600 new employees from over 180,000 applicants. Infosys remains the employer of choice in a country that pumps out tech graduates.

A Fair Wager
The problem, of course, is that as the Indian software industry grows, Indian wages will rapidly climb as Indian and foreign software companies bid for skilled workers. Wages for Indian technology workers are rising 30% annually.

There`s still plenty of room for comfort, though.

``Their quality is as high as the US companies, yet Infosys charges only $60 an hour compared to over $200 an hour for the US companies,`` says Ahuja. Another big advantage to the industry is the time difference.

``They can work on projects while everyone in America is asleep. The 12-hour time difference isn`t going away,`` says Jayesh Parekh an analyst at SMIFS Securities in Mumbai.

Obscene Margins
The best solution to rising wages is to increase the productivity of its workers. In other words, Infosys has to switch from quantity to quantity with quality.

It has already been extremely successful. Infosys likes to stress that it is one of the highest-ranked companies in the world, according to the Software Engineering Institute. Revenue composition reflects it, too. Highly profitable e-business now accounts for 29% of total revenue. As a result, the average billing rate rose and gross margins reached an incredible 47%.

``Keep in mind that it will most likely be harder and harder for Infosys to keep up its growth rate as the company grows bigger,`` says Parekh. He foresees profits slowing down to a 65% to 70% annual rate over the next three years.

A Profitable Passage to India
The key for Infosys in the future is to raise the percentage of work done in India. Although Infosys charges much more per hour for an employee in the US, the company earns more per hour on each Indian employee. Therefore, the more work done in India, the more profits generated.

In the first quarter, only 48% of e-services revenue came from Indian-based employees despite having markedly fewer employees in the US; as Infosys adds customers, it needs employees on site to set up new applications.

``As e-business grew in importance, they needed to do more work on-site but the percentage is probably near its peak and will fall in the future,`` says Ahuja.

The danger for Infosys is a heavy reliance on North American companies. Nearly three-quarters of all revenue come from US companies, despite faster growth and higher margins outside North America.

If the US slows down, Infosys` shares may be in for a hard ride. On the other hand, any downturn would only accelerate outsourcing to Indian companies like Infosys.


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Und noch eine gute Betrachtung zur Zukunft von Infosys

Source: http://biz.yahoo.com/wi/000804/10561.html

Friday August 4, 3:46 pm Eastern Time

worldlyinvestor.com Fund Talk
Indian Fund Can`t Dodge Short-Term Slide
By Brad Durham, Special to worldlyinvestor.com

MSDW India fund takes a long-term view to investments, but it has suffered in the recent slump.

A fund invested for the long and winding road ahead is the MSDW India Fund (NYSE:IIF - news), a closed-end fund that currently trades on the New York Stock Exchange currently at nearly 40% discount to net asset value (NAV).

After showing much promise earlier this year, the Indian equity market has been hit with a double whammy in recent weeks. The country`s central bank has responded to the weakening local currency by raising interest rates, drying out liquidity in the market. And the return of that sinking feeling on Nasdaq -- to which the technology-laden Indian market is highly correlated -- is further eroding investor sentiment.

But all this static sets up a possible buying opportunity for value investors who believe in the long-term recovery of the Indian market on the back of strong economic growth and a rising middle class, and who couldn`t give a rupee about the current market noise.

``We take a four- to five-year view on the companies selected for the fund and the annual portfolio turnover is low, at around 25%,`` says Vinod Sethi, a portfolio manager of the fund, which is managed by Morgan Stanley Dean Witter. About 80% of the fund`s holdings are considered core long-term positions.

Much Appreciation
Price appreciation, for the most part, has grown the fund`s top holding, Infosys Technologies (Nasdaq:INFY - news), from 2% when it first entered the portfolio in 1994 to its current 21% weighting. It has staged a good run for the fund and may still have legs as earnings continue to be robust on growing information technology exports. The company posted year-on-year earnings growth of more than 100% for the second quarter.

Even so, Sethi reduced his position in Infosys, and other technology, media and telecom (TMT) stocks, in April and is reluctant to buy more of the stock at its current valuation -- a price/earnings ratio of about 100.

The same goes for fellow diversified IT firms Satyam Computer and Wipro, even though the latter is likely to get a boost from a NYSE listing that may happen by late summer. Satyam Computer subsidiary Satyam Infoway (Nasdaq:SIFY - news) trades on the Nasdaq.

``We have a neutral weighting in technology because of the high valuations and the lack of certainty over the direction in stock prices,`` explains Sethi.

Holding Out for a Hero
The portfolio manager is more hopeful that consumer companies appealing to India`s growing middle class will fuel the fund in coming months. The fund`s second-largest holding is Hero Honda, the Indian subsidiary of the Japanese vehicle maker Honda (NYSE:HMC - news).

The fund`s portfolio is as noteworthy for what it doesn`t own as for what it does. The management team has nothing in market heavyweight Hindustan Lever, which comprises about 17% of the benchmark BSE 30 Index. Sethi thinks the valuation is too high for Unilever`s (NYSE:UN - news) Indian subsidiary.

It has appeared a wise move, since Hindustan Lever reported disappointing second-quarter earnings in late July and has led the BSE 30 index down by about 10% in July.

``We are biased towards non-cyclical growth stocks that address the mass market,`` says Sethi. He cites power company BHEL, where the fund has a 3.2% position, and a 3.2% allocation to Tata Tea, the world`s largest integrated tea-plantation company.

Concern that profits will be hurt by falling tea prices has recently dragged down the share price of Tata Tea. And the fund`s 4% allocation to HDFC Bank, an arm of Housing and Development Finance Corp., the country`s biggest home mortgage lender, is sensitive to rising interest rates.

Diminishing Returns
The fund`s share price has dropped 36.36% year to date through July 31 and NAV has dropped 27.82%, giving up some of last year`s scorching 144% return for share price and NAV.

Over one year through July 31, the fund`s share price has fallen 1.18% but NAV has risen 9.92%. Three-year annualized returns show a discrepancy between the NYSE-listed shares, down 9.14%, and the NAV, up 10.73%.

With all of the India country funds trading at huge discounts, it seems that India has a public-relations problem among US investors. Indian share prices haven`t helped this year, declining by about 18% through the end of July.

Sethi manages the fund along with Ruchir Sharma and other members of Morgan Stanley`s Indian investment team, including two traders, an analyst and support staff. The fund also draws upon the considerable TMT and India expertise in the firm`s New York and Singapore offices. The group has ample opportunity to get out of the office, visiting the 80 or so companies in the portfolio at least twice a year.

Brad Durham is a founder of www.eMergingPortfolio.com, a Web site for emerging market investors.

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