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Merrill says Infosys to beat own forecast

Infosys Technologies Ltd, a leading Indian software services provider, is likely to beat its revenue growth forecast of 30 per cent for the year to March if first-quarter volume growth is sustained, Merrill Lynch said in a report dated July 10.

The strength of revenue earned by providing service at client sites, utilisation rates and salary flexibility were positives for India's second-largest software company by market value, the brokerage said after Infosys posted its April-June results on Tuesday.

However, Merrill said Infosys' share price will be under pressure in the near term after management discussed billing rate pressures in detail for the first time.

It said near-term price triggers were weak but prospects could improve after the US market stabilises.

Merrill analyst Mitali Ghosh maintained her earnings per share estimate of Rs 118.57 for the year to March 31, 2002 and retained a "buy" recommendation on the stock. Infosys earned Rs 94.76 per share in the past year to March.

"We maintain our profit estimates, though we will likely be fine tuning volume and pricing assumptions," the report said.

Infosys' shares on Tuesday closed down 0.7 per cent at Rs 3494.85 due to concerns aroused by the company's comments about pricing.

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