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Infosys' Partnership Pact With Rolls-Royce is Strategic Fit

Zacks Equity Research

Infosys INFY recently announced that it has been appointed as a long-term strategic partner by Rolls-Royce PLC UK to deliver digital and engineering services.

Per the agreement, Infosys will leverage its turbo machinery and propulsion practice to offer Rolls-Royce end-to-end engineering and digital services that will help the latter meet its rising customer expectations for sustainable energy.

Notably, Rolls-Royce has customers across more than 150 countries including above 400 airlines and leasing customers, 160 armed forces, 4,000 marine customers comprising 70 navies and 5,000 plus power and nuclear customers.

Infosys boasts a diverse profile, delivering complex programs in aero and land-based gas turbines covering component development, next-generation manufacturing technologies, service engineering, support, testing and validation services.

Kishore Jayaraman, president of India & South Asia at Rolls-Royce, stated: “Given the successful track record of Infosys in turbo machinery and propulsion engineering services, they are the right partner to support our goals set out in the coming years."

Infosys’ Alliance Efforts Augur Well for Growth

Infosys has been strengthening its core competencies by pursuing strategic collaborations and acquisitions. The company’s alliance strategy is targeted at teaming up with leading technology providers, which allows it to cash in on the emerging technologies in a mutually beneficial and cost-competitive manner.

Over the last few quarters, Infosys has collaborated with many bigwigs to fortify its portfolio and market share. In order to boost digital, cloud, legacy modernization and automation business, Infosys cemented strategic tie-ups with Google, Adobe, Microsoft, Amazon Web Services and salesforce.com.

To drive engineering services, the company has partnered with General Electric to deliver solutions in the field of automation, digital trends and the Internet of Things.

Segment wise, in the last reported quarter, Manufacturing plus Energy, Utilities, Resources & Services recorded maximum sequential growth of 7.6% and 7.4%, respectively.

Further, the company signed 14 large deals with a total contract value (TCV) of more than $1.57 billion, driven by higher investment in sales and a firm focus on building a client-supportive portfolio.

Infosys Limited Revenue (TTM)

Infosys Limited Revenue (TTM) | Infosys Limited Quote

Zacks Rank & Stocks to Consider

Infosys currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader technology sector are CommVault Systems, Inc. CVLT, eGain Corporation EGAN and Fortinet Inc. FTNT, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for CommVault, eGain and Fortinet is projected at 15.8%, 30% and 16.8%, respectively.

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