Infotech Enterprises hit by MStanley downgrade

Morgan Stanley downgrades engineering software services provider Infotech Enterprises  to "equal weight" form "overweight", while maintaining its target price at Rs 220, citing concerns about margins after a meeting with management.

The investment bank worries the "strong" headcount addition seen in the first half of the year will come without a corresponding increase in revenues or project starts.

Morgan Stanley says it believes management is looking to achieve revenue growth towards the lower end of 11-14% in fiscal 2013.

However, the investment bank warns "Infotech would need steep improvement in revenue growth" to more than around 5% quarter-on-quarter in the second half to achieve 11% revenue growth in fiscal 2013.