Infosys dream run continues

Infosys ADRs on Monday were the third highest net gainers on the Nasdaq, rising 13.38 per cent or $15 to $ 131-3/8. Two ADRs are equivalent to one domestic share. At Monday’s close on Nasdaq two ADRs were worth $ 262.75, while the domestic share on the BSEwas trading at around $175, converting the rupee price to dollars at an exchange rate of Rs 43.55 per dollar.

Infosys’ soaring profile was illustrated by the NasdaqAmex international magazine’s choice of an interview with chairman and chief executive officer N R Narayana Murthy as the cover story for this month’s edition.

The ADR price represents a 33 per cent premium over the domestic share. The domestic share has risen around 140 per cent on the Indian market since the ADR launch, but analysts say the rise is warranted.

"Its price-to-earnings ratio of 75, based on current year earnings estimates, is justified compared to industry average of about 40-45," analysts said, adding that the firm is likely to post a net profit of Rs 300 crore in 1999-2000 (April-March) compared to a profit of about Rs 135 crore in the previous year and per share earnings of nearly Rs 100 against Rs 42 last year.

Analysts said the premium for the stock on the Nasdaq would continue not only because of tighter liquidity onthe US exchange but also because of the US investors’ tendency to reward growth. Infosys also represented the only choice for US investors wanting an India play, although several other Indian companies are considering a US listing.

Dealers said investors were returning their focus to software shares as they were seen as a safe haven amid the political uncertainty and an imminent oil price hike hurting the modest industrial recovery.

They said the software sector was also expected to post robust second quarter performance for 1999/2000 (April-March). Infosys will announce its results on October 8. "Infosys is the sector leader and is naturally the first investment choice," said the chief dealer of a local brokerage.

Satyam to buy 9% stake in In Touch

MUMBAI: Satyam Computer Services will buy a 9.06 per cent stake in US firm In Touch Technologies (ITTL). The board of Satyam Computer has approved an investment of $2.5 million in the US company which makes software for telecommunications.

"Satyamhas decided to make this strategic investment in ITTL with a view to access the company’s customer base," a company statement said on Tuesday. The US company is engaged in the development of computer telephony integration platform to bring cost effectiveness and flexibility to global telecom service providers, a Satyam statement said on Tuesday.

The company has three products, NetManager, CallManager and CallMonitor which are ready for the market while other derivative products are in the development pipeline, it said. "This is in line with the company’s overall strategy of making investments in companies engaged in providing state-of-the-art solutions to niche markets," it said.