Indian ADRs to Buy, Sell

Infosys Technologies (Infosys)is a global technology services company with diversified offerings across multiple verticals and service lines. The technology major has global delivery centers and the company's BPO recently acquired a 100% interest in McCamish Systems LLC., an Atlanta-based business process solutions provider.

Infosys Technologies posted revenue growth of 10.2%, the strongest in the past 3 years. Strong volumes, increased realization, and tailwinds from cross currency supported robust top-line performance. Operating margins rose 160 bps to 33.3% in the September quarter, compared to the prior quarter, owing to favorable currency movement and higher utilization.

The low December quarter guidance of 4.5% is due to more number of holidays and the slow decision-making process. Overall, analysts suggest that revision of the earlier 4-5% guidance to 24%-25% has already been factored in the markets with valuations not compelling enough. The stock is trading at 25 times its estimated 2011 earnings. Uncertainly in the macro environment, currency, and regulatory issues could pose challenges going forward.

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