Why Infosys continues to be an attractive bet

Institutional investors seem to be still betting big on Infosys  not withstanding the 12% drop in its stock price in 2012 so far. The latest data on share-holding pattern shows that non-promoter, non-institutional stake in the second largest ITexporter publicly listed in India touched a 12-year high in the September 2012 quarter. 

At the end of September 2012 quarter, institutions held a 57.8% stake in Infosys, the highest since the March 2001 quarter. Banks, insurance companies and domestic institutions, have significantly raised their stake from less than 1% 12 years ago to 13.3%. 
While foreign institutions have reported quarterly volatility, their stake too has improved from 34.6% to 39.4% during the period. 

Some analysts are optimistic over the company's strategy to build products and platform-driven business that is expected to serve as a major differentiator in the long term. 

To reduce their revenue dependence on employee headcount, Infosys has started focusing on products and platform based services. 

This is likely to drive the future growth in the next five years, says Barclays in a recent report. "The strategy would address concerns over managing employee growth as well as help differentiate the company over the longer term," Bhuvnesh Singh and Vaibhav Dhasmana of Barclays Equity Research said.