Near term demand visibility is strong - The budgets are generally expected to be flattish but the outsourcing/offshoring should rise. BFSI and retail are looking strong with the telecom sector still sluggish and expected to remain so in the near term. The emerging geographies of Germany and France are opening to outsourcing and demand is better than ever for these countries.

Pricing stable, not likely to increase in 2-3 quarters - As of now the pricing is expected to be stable with few instances of regular price negotiations with clients. The management does not expect increase in the billing rate for the next 2-3 quarters. Cloud computing - Cloud computing is still in nascent stage but the company is gearing to capture this emerging trend of spending by investing in skill development.

Hiring commenced for next year - Infosys is on track to hire 50,000 (gross) employees in FY11. It has made campus visits and given 20,000 offers for the next year. The salary levels of freshers are at the same level compared to the previous year. Attrition is going down - On a month on month basis, the number is going down as more freshers join the workforce. Utilisation has peaked - The utilisation is expected to go down as lot of freshers have joined in Q3FY11 and expected to further join in Q4FY11.

Stronger recovery in the global macro economic environment will happen over a period of time. Higher investments in IT by large clients and the diversified portfolio of services of large Indian IT vendors will help them to grow faster than mid tier IT vendors. We therefore believe that the large caps will outperform mid-caps in the near term.

Infosys is currently trading at 25.8x and 21.1x FY11E and FY12E earnings respectively. We maintain `BUY' on the stock with a target price of Rs3,500 based on 23x FY12E earnings.