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Infosys-Lodestone Deal: A Giant Step Forward

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TNI Bureau: Despite the decline of sales and share, India’s leading IT Firm’s Lodestone acquisition deal is a giant step forward – said the analysts. This year Infosys has missed its sales targets, lost market share to local rivals and even deferred an annual pay hike. But the current step has been appreciated.

Aniruddha Mehta told NDTV Profit that the deal will help Infosys in sustaining the revenue flow. The deal is good from strategic and valuations perspective. The deal is cheaper when compared to the Axon deal for which HCL Tech paid about 2-times revenue.

Dipen Shah of Kotak securities says that the acquisition will likely become accretive in a few quarters, which is a slight departure from Infosys’ earlier strategy of not looking at acquisitions which would dilute earnings in the short term.

Earlier, investors had criticized Infosys in the past for its aversion to acquisitions despite holding nearly $4 billion in cash, and its inability to make progress in consulting to compete with rivals IBM and Accenture.

Infosys CEO SD Shibulal said the Lodestone acquisition was very much in line with Infosys 3.0 strategy and he feels very much happy for the acquisition.

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