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Deeptha Rajkumar

IN an otherwise volatile market, the stock of i-flex Solutions remained upbeat on reports of its inclusion in the MSCI standard index. The stock ended the day at Rs 693.75, up 1.18 with 3.87 lakh shares traded on the NSE. On the BSE, the stock ended at Rs 693.25, up 1.14 with 1.37 lakh shares traded.

While the gains were modest, there is expectation that following its inclusion in MSCI, the stock should outperform the market.

I-flex solutions provides software solutions in the banking, financial services and insurance space. While fundamentals have been sustaining interest in the stock, sceptics opine that its weightage in MSCI would not result in any sharp upsides. "In all likelihood its weightage in the index will not be very high. That said, one is likely to see some gains at the counter, which will be more psychological than anything else," an analyst with a leading domestic broking house said.

Market sources are of the view that with FIIs increasingly taking direct exposure in the Indian market, its inclusion must be viewed more as a routine market development. "This is more for passive FII investors who make allocations based on the index," sources reasoned.

Analysts maintain that the company's flagship product, Flexcube would continue to propel growth. According to Motilal Oswal, product deal wins should continue to be strong with the company expected to add 44 clients in FY04. "The company's scalable product business model is good. The services business should show good volume growth with some pricing pressure, in line with the sector," a Motilal Oswal report said.

I-flex offers a comprehensive range of products — Flexcube, Microbanker and more recently Revelues — and customised services that enable financial institutions to cut costs and mitigate risk.

However, good fundamentals apart, there is a growing perception that at these levels valuations look a bit stretched. "The results clearly belied company projections. At times one gets the feeling that they are trying to talk up the stock price. Despite what is portrayed, the company is not impervious to competition, domestically and globally," an analyst said.

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