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Showing posts from December 21, 2008

3i Infotech: Buy

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Investors with a two-year horizon can buy the shares of 3i Infotech, considering its strong business prospects and very attractive valuation. At Rs 40, the share trades at just three times its likely 2008-09 earnings. Concerns over the IT sector in general and worries about 3i Infotech's BFSI (banking, financial services and insurance)-centric business model has caused the stock to be beaten down considerably to the point of being quite undervalued. However, the company's lower US dependence, focus on basic banking and insurance operations, and inorganic growth prospects render it attractive. 3i Infotech has a robust business model comprising a blend of products, services and transaction processing offerings. The service-mix features near-equal contribution from IT products, services and transaction processing. Transaction processing is a low-margin service, yet it may be less prone to a cut in discretionary spends of clients. Its inorganic moves are also targeted a…