The mere announcement from the company that it was considering a bonus at its board meeting has driven the stock to a new high. On BSE, the scrip hit the upper-end of the filter and crossed the Rs 3000-mark on Tuesday. On NSE, it touched an all-time high of Rs 3110. The scrip will keep rising till it goes ex-bonus. Considering the company's earnings potential, the ex-bonus price could settle down at anywhere around Rs 1800 to Rs 2000. Going by its track-record and healthyreserve position of Rs 157 crore, the bonus issue is likely to be in the ratio of 1:1.

For the past six years the company has been growing at a compounded rate of 75 per cent. Over the next three years, the company has the potential to grow at the rate of 60-65 per cent every year. The company's Rs 157 crore reserve on an equity of Rs 16 crore translates into a book value of Rs 108 per share. For the six-month ended September 30, 1998, the company reported a net profit of Rs 52 crore against the full year's profit of Rs 60 crore. Based on the company's first-half performance, the annualised EPS works out to Rs 65. For the full-year, the company is likely to report an EPS of Rs 70. At the current market price, the company enjoys a discounting of 42.8 times. A zero-debt company, Infosys has nearly 1200 employees covered under its employee stock option plan (ESOP). The company's market capitalisation as on March 31, 1998, stood at Rs 2,963 crore. In less than nine months, the company's market capitalisationhas increased to Rs 4982 crore.

It may be recalled that in April 1997, following the announcement of a bonus issue, the Infosys stock zoomed from Rs 1300 to Rs 2800 level till it went ex-bonus at Rs 1400 in September, 1997. The government had approved the company's US $ 75 million ADR issue. However, due to slackened primary market conditions in US the company had postponed its ADR to the next calender year. The company was planning to issue ADRs for `strategic reasons'. Infosys had hoped to use the listing to create a $ 50 million ESOP in order to attract talent from abroad. It had also announced plans to acquire US software companies in an attempt to turn global.

In case Infosys goes ahead with its plans to list on Nasdaq, its shareholders can hope to reap substantial benefits. The company will be able to tap foreign talent as well acquire global software companies which will further improve its earnings potential.