Infosys a buy opportunity: Deven Choksey

Deven Choksey, MD, KR Choksey Securities, in a chat with ET Now, talks about Infosys.

What is your call on Infosys?

If you look at the Infosys, you need to take Infosys’s and TCS’s cash flows that they have generated in the last year, you probably find that both the companies have almost generated similar kind of a cash flow. The difference which came in both the companies case is the tax rate. Infosys has been on a higher tax rate in the last year which TCS would be in this particular year. So from that point of view if you look at it the Infosys has been basically paying higher tax compared to TCS and the valuation wise if you look at it the enterprise value of Infosys is quoting almost 40% discount to TCS though the pre-tax flow is same. So in my view point once the DTC comes into play in next financial year this differential will go away and Infosys would probably get re-rated. The 40% difference between TCS and Infosys would certainly disappear. So to my mind this particular stock is suggesting that it should be a buy opportunity even if you consider 133-135 earnings per share as a possibility in FY12, then in such situation on core organic basis itself I think the stock is not looking that expensive. Over and above that rerating possibility and most important thing 16,000 crore was a cash in balance sheet and some kind of organic growth which the management has silently indicated yesterday to an extent could drive up the stock price. So I am relatively confident that Infosys should be a buy opportunity and not a sell opportunity. Those who sold probably they took the advantage of the sentiment yesterday.