1QFY2017 Result Update | IT

July 20, 2016

Infosys

BUY

CMP

`1,082

Performance highlights

Target Price

`1,370

(` cr)

1QFY17

4QFY16

% chg (qoq)

1QFY16

% chg (yoy)

Investment Period

12 Months

Net revenue

16,782

16,550

1.4

14,354

16.9

EBITDA

4,450

4,589

(3.0)

3,758

18.4

EBITDA margin (%)

26.5

27.7

51bp

26.2

2bp

Stock Info

PAT

3,436

3,597

(4.5)

3,030

13.4

Sector

Source: Company, Angel Research

Market Cap (` cr)

248,461

Net Debt (` cr)

(30,250)

Infosys’ numbers for 1QFY2017 have come in lower than our expectations. Its

Beta

0.8

revenues grew 2.2% on a sequential basis to US$2,501mn (V/s US$2,548mn

52 Week High / Low

1,278/987

expected); the growth was mostly volume led. In INR terms, revenues came in at

`16,782cr (V/s `17,072cr expected), up 1.4% qoq. In constant currency (CC)

Avg. Daily Volume

225,158

terms, sales grew 1.7% qoq. On the operating front, the EBDITA and EBIT

Face Value (`)

margins dipped by ~121bp qoq and ~140bp qoq to 26.5% and 24.1%

BSE Sensex

27,747

respectively. Consequently, the PAT de-grew by 4.5% qoq to `3,436cr (V/s

Nifty

8,509

`3,514cr expected). The FY2017 revenue guidance has been revised to 10.5%-

Reuters Code

INFY.BO

12.0% in CC terms. We maintain our Buy rating on the stock with a target price

Bloomberg Code

INFY@IN

of `1,370.

Quarterly highlights: The company’s revenues for the quarter grew 2.2% on a

Shareholding Pattern (%)

sequential basis to US$2,501mn (V/s US$2,548mn expected) with the growth

Promoters

12.8

mostly being led by volumes. In INR terms, revenues came in at `16,782cr (V/s

MF / Banks / Indian Fls

18.0

`17,072cr expected), up 1.4% qoq. In CC terms, sales grew 1.7% qoq. In terms

FII / NRIs / OCBs

58.8

of geographies, USA, Europe, and RoW posted a CC qoq growth of 2.4%,

Indian Public / Others

10.4

(0.3)%, and 4.9% respectively, while India dipped by 8.2% qoq on a CC basis

during the quarter. In terms of verticals, FSI posted a CC qoq growth of 1.7%,

and Manufacturing & Hi-Tech posted a CC qoq growth of 2.4%. On the

Abs.(%)

3m 1yr

3yr

operating front, the EBDITA and EBIT margins dipped by ~121bp qoq and

Sensex

7.5

(2.5)

37.8

~140bp qoq to 26.5% and 24.1% respectively. Consequently, the PAT de-grew

Infosys

(12.7)

8.0

54.6

by 4.5% qoq to `3,436cr (V/s `3,514cr expected).

Outlook and valuation: Following a soft start to the year, Infosys cut its FY2017

revenue growth guidance to 10.5-12.0% in CC terms from 11.5-13.5% earlier.

3-year price chart

This implies an ask rate of 3.1%-4.1% for the remainder of the year. It gave a

1,400

1,200

guidance of achieving sales of US$20bn by FY2020. We maintain our Buy rating

1,000

on the stock.

800

Key financials (Consolidated, IFRS)

600

Y/E March (` cr)

FY2015

FY2016

FY2017E

FY2018E

400

Net sales

53,319

62,441

69,934

79,025

200

% chg

6.4

17.1

12.0

13.0

Adj. net profit

12,330

13,491

14,886

16,529

% chg

13.5

9.4

10.3

11.0

EBITDA margin (%)

27.9

27.4

27.5

Source: Company, Angel Research

EPS (`)

53.7

59.0

64.8

72.0

P/E (x)

20.1

18.3

16.7

15.0

P/BV (x)

4.5

4.0

3.7

3.3

RoE (%)

22.5

21.8

22.0

22.3

RoCE (%)

20.8

20.7

22.1

23.0

Sarabjit kour Nangra

EV/Sales (x)

4.1

3.4

3.0

2.6

+91 22-39357800 Ext: 6806

EV/EBITDA (x)

14.5

12.5

10.9

9.4

[email protected]

Source: Company, Angel Research; Note: CMP as of July 18, 2016

Please refer to important disclosures at the end of this report

Infosys | 1QFY2017 Result Update

Exhibit 1: 1QFY2017 performance (IFRS, consolidated)

(` cr)

1QFY17

4QFY16

% chg (qoq)

1QFY16

% chg (yoy)

FY2016

FY2015

% chg (yoy)

Net revenue

16,782

16,550

1.4

14,354

16.9

62,673

53,319

17.5

Cost of revenue

10,278

9,893

3.9

8,812

16.6

37,655

32,081

17.4

Gross profit

6,504

6,657

(2.3)

5,542

17.4

25,018

21,238

17.8

SG&A expenses

2,054

2,068

(0.7)

1,784

15.1

7,723

6,604

16.9

EBITDA

4,450

4,589

(3.0)

3,758

18.4

17,295

14,634

18.2

Depreciation

403

369

9.2

312

29.2

1,443

802

79.9

EBIT

4,047

4,220

(4.1)

3,446

17.4

15,852

13,832

14.6

Other income

753

771

(2.3)

758

(0.7)

3,122

3,427

PBT

4,800

4,991

(3.8)

4,204

14.2

18,974

17,259

9.9

Income tax

1,362

1,394

(2.3)

1,175

15.9

5,251

4,929

6.5

Exceptional item

(3)

(1)

Reported PAT

3,436

3,597

(4.5)

3,030

13.4

13,726

12,329

11.3

Adjusted PAT

3,436

3,597

(4.5)

3,030

13.4

13,723

12,329

11.3

EPS

15.0

15.7

(4.5)

13.6

11.0

60.1

54.0

11.3

Gross margin (%)

38.8

40.2

(147)bp

38.6

15bps

39.9

39.8

9bp

EBITDA margin (%)

26.5

27.7

(121)bp

26.2

34bps

27.6

27.4

15bp

EBIT margin (%)

24.1

25.5

(138)bp

24.0

11bps

25.3

25.9

(65)bp

PAT margin (%)

20.5

21.7

(126)bp

21.1

(63)bp

21.9

23.1

(123)bp

Source: Company, Angel Research

Exhibit 2: 1QFY2017 - Actual Vs Angel estimates

(` cr)

Actual

Estimate

% Var.

Net revenue

16,782

17,072

(1.7)

EBITDA margin (%)

26.5

26.7

(13)

PAT

3,436

3,514

(2.2)

Source: Company, Angel Research

Revenues below expectation

For 1QFY2017, Infosys posted a 2.2% sequential growth in USD

revenues to

US$2,501mn (V/s US$2,548mn expected), with the growth mostly being volume

led. In INR terms, revenues came in at `16,782cr (V/s `17,072cr expected), up

1.4% qoq.

On CC basis, the company posted a 1.7% qoq growth on the sales front. The

blended realization declined by 0.5% qoq in CC terms while volumes in IT Services

grew 2.2% qoq, which is lower than the 2.4% qoq growth seen in the previous

quarter. Volumes grew 3.3% qoq onsite and 1.8% qoq offshore. The lower than

expected software revenue growth is attributed to delays in commencement of

ramp-up in large deals, and unanticipated headwinds in discretionary spending in

consulting services and package implementation.

In terms of geographies, USA posted a CC qoq growth of 2.4%, Europe posted a

CC qoq growth of 0.3%, ROW posted a CC qoq growth of 4.9%, while India

dipped by 8.2% qoq on a CC basis during the quarter. In terms of verticals, FSI,

Manufacturing & Hi-Tech, RCL, and ECS posted a CC qoq growth of 1.7%, 2.4%,

0.7% and 2.4% respectively.

July 20, 2016

Infosys | 1QFY2017 Result Update

Exhibit 3: Trend in volume growth QoQ (Effort wise)

6.6

5.4

4.9

4.4

3.7

3.5

3.3

3.1

2.5

2.7

2.3

2.4

2.2

1.8

1QFY16

2QFY16

3QFY16

4QFY16

1QFY17

Offshore

Onsite

Total volume growth

Source: Company, Angel Research

Exhibit 4: Trend in volume and USD revenue growth (QoQ)

6.9

5.4

4.4

3.7

2.4

1.1

2.2

3.1

1.9

1QFY16

2QFY16

3QFY16

4QFY16

1QFY17

Revenue growth (constant currency)

Volume growth

Source: Company, Angel Research

Industry-wise, revenue from FSI, the company’s anchor vertical which contributed

by 32.8% to revenues, grew by 2.2% qoq; in CC terms, revenue from FSI grew by

1.7% qoq. The Manufacturing industry vertical, which contributed by 22.8% to

revenues, grew by 2.9% qoq. In CC terms, the revenue from this vertical grew by

2.4% sequentially.

The Retail, CPG and Logistics segment (RCL; contributed by 24.2% to revenues)

reported a 1.0% qoq growth. In CC terms, the revenue from RCL grew by 0.7%

qoq. The Energy Utilities and Communications & Services segment (contributed by

20.0% to revenue) reported a growth of 3.1% qoq in revenue, with Energy and

Utilities posting the biggest fall among verticals of 7.6% qoq.

July 20, 2016

Infosys | 1QFY2017 Result Update

Exhibit 5: Growth trend in industry segments (Reported basis)

Particulars

% to revenue

% growth QoQ

% growth YoY

FSI

32.8

2.2

9.9

Banking and financial services

27.2

1.5

11.3

Insurance

5.6

6.0

3.5

Manufacturing

22.8

2.7

5.3

RCL

24.2

1.0

11.3

Retail and CPG

15.5

5.7

14.6

Transport and logistics

1.9

7.9

40.4

Life Sciences

4.7

(15.7)

(7.0)

Healthcare

2.1

7.4

16.4

ECS

20.2

4.8

19.1

Energy and utilities

4.7

(7.6)

24.1

Communication and services

9.4

11.8

24.1

Others

6.1

0.6

9.1

Source: Company, Angel Research

In terms of geographies, revenue from North America grew by 2.4% qoq in CC

terms, while other geographies such as Europe de-grew by 0.3% qoq and RoW

grew by 4.9% QoQ (both in CC terms). India posted an 8.2% qoq de-growth in

CC terms.

Exhibit 6: USD growth trend in geographies QoQ (CC basis)

9.7

8.3

7.1

6.2

5.1

4.9

3.9

3.6

3.2

2.4

1.2

0.5

0.6

0.3

(0.3)

(2)

1QFY16

2QFY16

3QFY16

4QFY16

1QFY17

North America

Europe

Rest of the world

Source: Company, Angel Research

July 20, 2016

Infosys | 1QFY2017 Result Update

Hiring and utilization

Infosys added 13,268 gross employees in 1QFY2017, of which 5,260 were lateral

additions. The net addition number for the quarter stood at 3,006. Attrition (for

standalone entity) heated up in 1QFY2017; it increased to 21.0% (LTM) V/s 17.3%

in 1QFY2017. The Management has attributed the same to seasonality of the

business.

Exhibit 7: Employee metrics

1QFY16 2QFY16 3QFY16 4QFY16 1QFY17

Gross addition

11,889

17,595

14,027

9,034

13,268

Net addition

3,336

8,453

8,620

661

3,006

Gross lateral emp. addition

5,886

7,452

6,115

5,266

5,260

Attrition - LTM basis (%)*

19.2

19.9

18.1

17.3

21.0

Source: Company, Angel Research, Note-* excluding subsidiaries

The utilization rate including trainees grew by 180bp qoq to 76.5% (higher than

74.7% as in 4QFY2016); while excluding trainees, it grew by 40bp qoq to 80.5%.

Exhibit 8: Trend in utilization (Services and Consulting + Projects)

81.3

80.6

80.5

80.2

80.1

76.5

75.7

75.4

74.7

74.2

1QFY16

2QFY16

3QFY16

4QFY16

1QFY17

Including trainees

Excluding trainees

Source: Company, Angel Research

Margins dip

On the operating front, EBDITA and EBIT margins dipped by ~121bp qoq and

~140bp qoq to 26.5% (V/s an expected 26.7%) and 24.1% respectively. In

1QFY2017, wage hike and visa expenses impacted margins by 140bp and 80bp

qoq respectively. However, the company was able to offset the impact to 80bp

through cost optimization and variable pay reduction.

July 20, 2016

Infosys | 1QFY2017 Result Update

Exhibit 9: Trend in EBIT margin

200.0

26.0

25.5

150.0

25.5

100.0

150

24.9

25.0

50.0

0.0

24.5

(60)

(50.0)

24.0

24.1

24.0

(100.0)

(140)

23.5

(150.0)

(170)

(200.0)

23.0

1QFY16

2QFY16

3QFY16

4QFY16

1QFY17

Margin movement (qoq)

EBIT margin (%)

Source: Company, Angel Research

Client pyramid

Infosys added 95 new clients (gross additions) during the quarter, taking its

total active client base to 1126. The client addition was across the board. The

company bagged new deals with TCV of US$757mn, during the quarter. TCV of

deal wins for FY2016 is US$2.9bn, which is 49% higher.

Exhibit 10: Client metrics

Particulars

1QFY16 2QFY16 3QFY16 4QFY16 1QFY17

Top client (% of revenue)

3.7

3.5

3.6

Gross Client addition

Active client

987

1011

1045

1092

1126

US$1mn-5mn

287

284

294

290

306

US$5mn-10mn

US$10mn-20mn

US$20mn-50mn

US$50mn-100mn

US$100mn-200mn

US$200mn-300mn

US$300mn plus

Source: Company, Angel Research

Concall Highlights

 Infosys won deals worth TCV of US$757mn during the quarter.

 Owing to a weak beginning for FY2017, Infosys has reduced its guidance for

the year to 10.5-12% growth in CC terms. The revised guidance implies an

even higher ask rate than earlier of 3-4% in the remainder of the year.

July 20, 2016

Infosys | 1QFY2017 Result Update

Investment arguments

Revenue guidance revised for FY2017: The Management has lowered its revenue

growth guidance for FY2017. The company has issued a 10.5-12.0% qoq CC

growth guidance from 11.5-13.5% (in CC terms) earlier. In INR terms the

guidance has been revised downwards to 11.7-13.2% from 12.7-14.7% earlier on

the basis of exchange rate as on March 31, 2016. For FY2016, the company

posted a 13.3% growth in CC terms V/s a guidance of 12.8-13.2% growth (in CC

terms). We expect the company to post ~12.5% USD revenue growth in FY2017.

The company expects to lead industry growth and reach a milestone of achieving

sales of US$20bn by FY2020. Currently, we have factored in moderate growth for

FY2017 (INR and USD growth of 12.5%).

Aims to be US$20bn company by FY2020: The Management believes the

traditional IT services model is dying and a structural change is taking place in the

industry. Pricing pressure is being witnessed in commoditized services, thus

necessitating the company to pursue newer growth avenues including acquisitions

in areas like automation. The outsourcing services provider is therefore looking to

ramp up its productivity through automation and is looking for acquisitions to

boost growth. Infosys' cash and cash equivalents were at US$5.2bn as at the end

of March 2015.

The company expects its revenue to rise to US$20bn by FY2020, from US$8.7bn

now, as it focuses on acquisitions and on winning more new technology services,

implying a 14% CAGR over the period. In the near term, we expect Infosys to post

a 12.5% USD revenue growth in FY2017. Over FY2016-18E, we expect USD and

INR revenue to grow at a CAGR of 12.5% and 12.5%, respectively.

Operating margin likely to be range bound in near term: Going ahead, given a

stable rupee, higher S&M spends, and wage hikes in FY2017, we expect the EBIT

margin to remain at 25.1% in FY2017 and FY2018 (V/s 25.0% in FY2016). Over

FY2016-18E, we expect an EBIT CAGR of 13.2%. However, as part of its `Vision

2020’ (target to have US$20bn revenues at

30% operating margins and

US$80,000 per employee revenue productivity by CY2020), the Management

expects acceleration in revenue growth and margin improvement to reflect ahead

of the increase in revenue productivity.

Outlook and valuation

The company has downgraded its USD revenue growth guidance for FY2017 to

10.5-12.0% on CC basis. We expect the company to post ~12.5% USD revenue

growth in FY2017. It aims to reach a milestone of achieving sales of US$20bn by

FY2020. Also, the company plans to utilize cash properly through increased

dividends and acquisitions, so that it can increase its capital efficiency. The stock

currently trades at a valuation of 15.0x its FY2018E earnings. We recommend an

Buy on the stock with a price target of `1,370.

July 20, 2016

Infosys | 1QFY2017 Result Update

Exhibit 11: Key assumptions

Parameters

FY2017E

FY2018E

Revenue growth - USD terms (%)

12.0

13.0

USD-INR rate

65.7

Revenue growth - INR terms (%)

12.0

13.0

EBITDA margin (%)

27.5

Tax rate (%)

28.0

EPS growth (%)

10.3

11.0

Source: Company, Angel Research

Exhibit 12: One-year forward PE (x)

2,000

1,750

1,500

1,250

1,000

750

500

250

Price

26x

22x

18x

14x

10x

Source: Company, Angel Research

Exhibit 13: Recommendation summary

Company

Reco

CMP Tgt. price

Upside

FY2018E FY2018E

FY2016-18E

FY2018E

(`)

(%)

EBITDA (%)

P/E (x)

EPS CAGR (%)

EV/Sales (x)

RoE (%)

HCL Tech

Buy

723

1,000

38.4

20.5

11.3

26.5

1.8

17.9

Infosys

Buy

1,082

1,370

26.6

27.5

15.0

10.4

2.6

22.3

TCS

Buy

2,448

3,004

22.7

28.3

15.4

13.0

3.0

35.5

Tech Mahindra

Buy

506

700

38.4

17.0

12.3

13.2

1.2

20.7

Wipro

Buy

552

680

23.1

23.8

12.1

9.9

1.6

19.6

Source: Company, Angel Research

Company Background

Infosys is the second largest IT company in India, employing over

1,857,776

professionals (as of FY2016). The company services more than 1000 clients across

various verticals, such as financial services, manufacturing, telecom, retail and

healthcare. Infosys has the widest portfolio of service offerings amongst Indian IT

companies, spanning across the entire IT service value chain - from traditional

Application Development and Maintenance to Consulting and Package

Implementation to Products and Platforms.

July 20, 2016

Infosys | 1QFY2017 Result Update

Profit and loss statement (IFRS, consolidated)

Y/E March (` cr)

FY2013

FY2014

FY2015

FY2016

FY2017E FY2018E

Net sales

40,352

50,133

53,319

62,441

69,934

79,025

Cost of revenue

24,158

30,767

31,817

37,595

36,016

40,698

Gross profit

16,194

19,366

21,502

24,846

27,624

31,215

% of net sales

40.1

38.6

40.3

39.8

39.5

Selling and mktg exp.

2,034

2,625

2,941

3,431

3,846

4,346

% of net sales

5.0

5.2

5.5

General and admin exp.

2,609

3,107

3,663

4,292

4,546

5,137

% of net sales

6.5

6.2

6.9

6.5

EBITDA

11,551

13,634

14,898

17,123

19,232

21,732

% of net sales

28.6

27.2

27.9

27.4

27.5

Dep and amortization

1,122

1,374

1,066

1,503

1,678

1,897

% of net sales

2.8

2.7

2.0

2.4

EBIT

10,429

12,260

13,832

15,620

17,553

19,835

% of net sales

25.8

24.5

25.9

25.0

25.1

Other income

2,359

2,669

3,427

3,122

Profit before tax

12,788

14,929

17,259

18,742

20,675

22,957

Provision for tax

3,367

4,062

4,929

5,251

5,789

6,428

% of PBT

26.3

27.2

28.6

28.0

PAT

9,421

10,648

12,330

13,491

14,886

16,529

Exceptional item

219

Adj. PAT

9,421

10,867

12,330

13,491

14,886

16,529

EPS (`)

41.0

47.3

53.7

59.0

64.8

72.0

July 20, 2016

Infosys | 1QFY2017 Result Update

Balance sheet (IFRS, consolidated)

Y/E March (` cr)

FY2013

FY2014

FY2015

FY2016

FY2017E FY2018E

Current assets

Cash and cash equivalents

21,832

25,950

30,367

32,697

38,348

42,689

Available for sale financial assets

1,739

2,197

874

Investment in certificates of deposit

859

103

Trade receivables

7,083

8,351

9,713

11,330

11,749

13,276

Unbilled revenue

2,435

2,811

2,845

3,029

Derivative financial instruments

101

215

101

116

Prepayments and other current assets

2,123

2,636

3,296

4,448

4,056

4,583

Total current assets

35,313

43,019

47,289

51,798

57,476

63,872

Non-current assets

Property, plant and equipment

6,468

7,887

9,125

10,530

10,730

10,930

Goodwill

1,976

2,157

3,091

3,764

2,157

Intangible assets

368

342

638

985

342

Available for sale financial assets

394

1,252

1,345

1,811

1,252

Deferred income tax assets

503

656

537

536

656

Income tax assets

1,092

1,522

4,089

5,230

Other non-current assets

237

220

238

735

1,632

Total non-current assets

11,038

14,036

19,063

23,591

21,999

22,199

Total assets

46,351

57,055

66,352

75,389

79,475

86,071

Current liabilities

Trade payables

189

173

140

386

173

Derivative financial instruments

Current income tax liabilities

1,329

2,187

2,818

3,410

3,787

Client deposits

Unearned revenue

823

660

1,052

1,332

660

Employee benefit obligations

614

954

1,069

1,341

954

Provisions

213

379

478

512

379

Other liabilties

3,082

4,745

5,796

6,225

5,545

Total current liabilities

6,286

9,138

11,383

13,239

11,538

Non-current liabilities

Deferred income tax liabilties

119

160

256

Employee benefit obligations

149

323

115

323

Other liabilities

Total non-current liabilities

268

387

206

371

387

Total liabilities

6,554

9,525

11,589

13,610

11,925

Equity

Share capital

286

572

1,144

Share premium

3,090

2,241

Retained earnings

36,114

43,584

50,531

57,655

63,595

70,190

Other components of equity

307

570

739

570

571

Total equity

39,797

47,530

54,763

61,779

67,550

74,146

Total liabilties and equity

46,351

57,055

66,352

75,389

79,475

86,071

July 20, 2016

Infosys | 1QFY2017 Result Update

Cash flow statement (IFRS, consolidated)

Y/E March (` cr)

FY2013

FY2014

FY2015

FY2016 FY2017E FY2018E

Pre tax profit from operations

10,429

12,260

13,832

15,620

17,553

19,835

Depreciation

1,122

1,374

1,066

1,503

1,678

1,897

Pre tax cash from operations

11,551

13,634

14,898

17,123

19,232

21,732

Other income/prior period ad

2,359

2,669

3,427

3,122

Net cash from operations

13,910

16,303

18,325

20,245

22,354

24,854

Tax

3,367

4,062

4,929

5,251

5,789

6,428

Cash profits

10,543

12,241

13,396

14,994

16,565

18,426

(Inc)/dec in current assets

(2,464)

(2,271)

(1,942)

(2,968)

(27)

(2,055)

Inc/(dec) in current liabilties

1,520

2,852

2,245

1,856

(1,701)

(Inc)/dec in net trade WC

(944)

581

303

(1,112)

(1,728)

(2,055)

Cashflow from operating actv.

9,599

12,822

13,699

13,882

14,837

16,371

(Inc)/dec in fixed assets

(2,181)

(2,793)

(2,304)

(2,908)

(1,878)

(2,097)

(Inc)/dec in investments

(1,362)

(1,317)

2,089

789

(inc)/dec in sale of financial assets

(382)

(858)

(93)

(466)

559

(Inc)/dec in deferred tax assets

(242)

(583)

(2,448)

(1,140)

(120)

Inc/(dec) in other non current liab.

147

119

(181)

165

(Inc)/dec in other non current ass.

(1,253)

(138)

(1,248)

(1,517)

1,353

Cashflow from investing actv.

(5,273)

(5,570)

(4,185)

(5,077)

(70)

(2,097)

Inc/(dec) in debt

Inc/(dec) in equity/premium

(280)

1,099

450

889

(1,421)

(1,410)

Dividends

2,805

4,233

5,547

7,364

7,695

8,523

Cashflow from financing actv.

(3,085)

(3,134)

(5,097)

(6,475)

(9,116)

(9,933)

Cash generated/(utilised)

1,241

4,118

4,417

2,330

5,651

4,342

Cash at start of the year

20,591

21,832

25,950

30,367

32,697

38,348

Cash at end of the year

21,832

25,950

30,367

32,697

38,348

42,689

July 20, 2016

Infosys | 1QFY2017 Result Update

Key ratios

Y/E March

FY2013

FY2014

FY2015

FY2016

FY2017E FY2018E

Valuation ratio (x)

P/E

26.4

22.9

20.1

18.3

16.7

15.0

P/CEPS

23.6

20.3

18.5

16.6

15.0

13.5

P/BVPS

6.2

5.2

4.5

4.0

3.7

3.3

Dividend yield (%)

1.0

1.5

1.7

2.3

3.0

3.3

EV/Sales

5.6

4.4

4.1

3.4

3.0

2.6

EV/EBITDA

19.4

16.0

14.5

12.5

10.9

9.4

EV/Total assets

4.8

3.8

3.3

2.8

2.6

2.4

Per share data (`)

EPS

Cash EPS

Dividend

Book value

173

207

239

269

294

323

Dupont analysis

Tax retention ratio (PAT/PBT)

0.7

Cost of debt (PBT/EBIT)

1.2

EBIT margin (EBIT/Sales)

0.3

0.2

0.3

Asset turnover ratio (Sales/Assets)

0.9

0.8

0.9

Leverage ratio (Assets/equity)

1.2

Operating ROE

23.7

22.4

22.5

21.8

22.0

22.3

Return ratios (%)

RoCE (pre-tax)

22.5

21.5

20.8

20.7

22.1

23.0

Angel RoIC

45.8

43.7

39.5

36.7

42.9

45.9

RoE

23.7

22.9

22.5

21.8

22.0

22.3

Turnover ratios(x)

Asset turnover (fixed assets)

3.7

3.6

2.8

2.6

3.2

3.6

Receivables days

July 20, 2016

Infosys | 1QFY2017 Result Update

Research Team Tel: 022 - 39357800

E-mail: [email protected]

Website: www.angelbroking.com

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Infosys

1. Financial interest of research analyst or Angel or his Associate or his relative

2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives

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Ratings (Based on expected returns

Buy (> 15%)

Accumulate (5% to 15%)

Neutral (-5 to 5%)

over 12 months investment period):

Reduce (-5% to -15%)

Sell (< -15)

July 20, 2016