Considering the general reserves of the company, which stood at a high of Rs 111.85 crore on March 31, 1998, analysts have made a strong case for the company to maintain the ratio of 1:1 in 1999.

The announcement saw brokers rushing to take fresh positions at the counter. Reflecting the move made by institutional as well as local investors to share the benefits, which would accrue on account of the bonus, the stock shot up by over 5 per cent to close at Rs 2,675.75.

During intra-day trades, the stock shot up from the day's low of Rs 2,564 to register a high of Rs 2,688 with a phenomenal volume of over 2.25 lakh shares on BSE. While the stock traded with a difference of Rs 1.50 between BSE and NSE, itshot up to Rs 2,750 in early kerb deals. By 6.30 p.m. the stock had moved up further to Rs 2,850 at 6.30 pm. Volumes were also considerably higher at kerb deals.

According to market analysts, the reason for the stock to be traded at a premium of over 2.76 per cent in kerb deals is the bonus history of the company. It should be recalled that twice in the past the company has rewarded investors with a bonus, issued in the ratio of 1:1.

The first bonus was issued in 1994, which saw the equity rise from Rs 3.35 crore to Rs 7.26 crore, while the second bonus was issued in 1997 which propped up the equity to a high of Rs 14 crore. The current equity is pegged at Rs 16.02 crore due to the fresh shares issued to the employees under the `employment stock option' scheme.

"Historical EPS is not significant in the case of Infosys. Based on the growth prospects of the company, one should peg the EPS at Rs 71.50," said a senior analyst of Prabhudas Liladhar, a leading brokerage house. Currently the company's EPS isRs 37.7, while market expects the EPS to touch a high of Rs 71.50.