Great time for Indian Software Industry
Going by what's been heard on European trading floors, Infosys is targeting Capgemini as potential buyout and analysts are excited about synergies.
Post buyout synergies, Infosys can compete for large deals in consulting where margins are attractive and can improve its rankings to among Top Fives after IBM, Accenture and EDS.
Infosys has already said it's looking at acquisitions in niche categories in this case, perhaps consulting for newer markets and it appears Capgemini may provide that platform.
"Capgemini is a good idea. It will merge well with Infosys sitting on a lot of cash and it is good for them to diversify," said Vineet Goel, Senior Analyst, Atherstone Institute of Research.
Raising funds won't be an issue with Rs 6,000 crore cash lying idle on the balance sheet and the just plain numbers also may do the talking.
Capgemini stock has gained nearly six per cent in last two trading sessions where as Infosys stock closed on a flat note on Friday.
Analysts say that Capgemini's lower profitability, large European workforce with high salaries and restrictive labour laws make it an unattractive acquisition target for Infosys.
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