2QFY2017 Result Update | IT
October 20, 2016
Infosys
BUY
CMP
`1,038
Performance highlights
Target Price
`1,249
(` cr)
2QFY17
1QFY17
% chg (qoq) 2QFY16
% chg (yoy)
Investment Period
12 Months
Net revenue
17,310
16,782
3.1
15,635
10.7
EBITDA
4,724
4,450
6.2
4,305
9.7
Stock Info
EBITDA margin (%)
27.3
26.5
78bp
27.5
(24)bps
Sector
IT
PAT
3,606
3,436
4.9
3,398
6.1
Market Cap (` cr)
238,469
Source: Company, Angel Research
Net Debt (` cr)
(30,250)
Infosys’ numbers for 2QFY2017 have come in higher than our expectations. Its
Beta
0.8
revenue posted a 3.5% sequential growth to US$2,587mn (V/s US$2,561mn
52 Week High / Low
1,278/996
expected). In constant currency terms (CC), the sales grew by 3.9% qoq, while
Avg. Daily Volume
246,752
the volume grew by 4.0% (1QFY2017 qoq growth was 2.2%). On the operating
Face Value (`)
5
margin front, the EBIT margins grew by 78bp qoq to 24.9% (V/s 24.5% expected)
BSE Sensex
28,051
on back of the high volume growth. Consequently, the PAT grew by 4.9% qoq to
Nifty
8,678
`3,606cr (V/s `3,546cr expected). The company downgraded the guidance to
Reuters Code
INFY.BO
8-9% CC growth from earlier 10.5-12.0% CC growth. We maintain our Buy
Bloomberg Code
[email protected]
rating on the stock with a target price of `1,249.
Quarterly highlights: The company’s revenue posted a 3.5% sequential growth to
Shareholding Pattern (%)
US$2,587mn (V/s US$2,561mn expected). In CC terms, the sales grew by 3.9%,
Promoters
12.8
while the volume grew by 4.0% (1QFY2017 qoq growth was 2.2%). In terms of
MF / Banks / Indian Fls
18.0
geographies, the CC qoq growth posted by USA, Europe, India, and ROW was
FII / NRIs / OCBs
58.8
2.7%, 3.7%, 28.7%, and 5.2%, respectively. In terms of verticals, the CC qoq
Indian Public / Others
10.4
growth posted by FSI, MFG & Hi-Tech, RCL, and ECS was 5.2%, 2.1%, 1.2%, and
7.3%, respectively. On the operating margin front, the EBIT margins grew by
Abs.(%)
3m 1yr
3yr
78bp qoq to 24.9% (V/s 24.5% expected) on back of the high volume growth.
Consequently, the PAT grew by 4.9% qoq to `3,606cr (V/s `3,546cr expected).
Sensex
1.1
3.1
34.3
Infosys
(4.0)
(5.1)
25.2
Outlook and valuation: Following a soft start to the year, Infosys cut its FY2017
revenue growth guidance to 8-9% in CC terms from 10.5-12.0% earlier. It gave
a guidance of achieving sales of US$20bn by FY2020. We maintain our Buy
3-year price chart
rating on the stock.
1,400
Key financials (Consolidated, IFRS)
1,200
Y/E March (` cr)
FY2015
FY2016
FY2017E
FY2018E
Net sales
53,319
62,441
68,350
77,236
1,000
% chg
6.4
17.1
9.5
13.0
800
Adj. net profit
12,330
13,491
14,354
15,928
600
% chg
13.5
9.4
6.4
11.0
400
EBITDA margin (%)
27.9
27.4
27.0
27.0
EPS (`)
53.7
59.0
62.5
69.4
P/E (x)
19.3
17.6
16.6
15.0
Source: Company, Angel Research
P/BV (x)
4.4
3.9
3.5
3.2
RoE (%)
22.5
21.8
21.3
21.6
RoCE (%)
20.8
20.7
21.2
22.2
Sarabjit kour Nangra
EV/Sales (x)
3.9
3.3
2.9
2.5
+91 22-39357800 Ext: 6806
EV/EBITDA (x)
13.9
12.0
10.8
9.4
[email protected]
Source: Company, Angel Research; Note: CMP as of October 18, 2016
Please refer to important disclosures at the end of this report
1
Infosys | 2QFY2017 Result Update
Exhibit 1: 2QFY2017 performance (IFRS, consolidated)
(` cr)
2QFY17
1QFY17
% chg (qoq)
2QFY16
% chg (yoy)
1HFY17
1HFY16
% chg (yoy)
Net revenue
17,310
16,782
3.1
15,635
10.7
34,092
29,989
13.7
Cost of revenue
10,547
10,278
2.6
9,412
12.1
20,825
18,177
14.6
Gross profit
6,763
6,504
4.0
6,223
8.7
13,267
11,812
12.3
SG&A expenses
2,039
2,054
(0.7)
1,918
6.3
4,093
3,702
10.6
EBITDA
4,724
4,450
6.2
4,305
9.7
9,174
8,110
13.1
Depreciation
415
403
3.1
312
33.2
818
670
22.2
EBIT
4,309
4,047
6.5
3,993
7.9
8,356
7,440
12.3
Other income
760
753
0.9
793
(4.2)
1,513
1,551
PBT
5,069
4,800
5.6
4,786
5.9
9,869
8,991
9.8
Income tax
1,460
1,362
7.2
1,387
5.3
2,822
2,562
10.1
Exceptional item
3
2
1
5
-
Reported PAT
3,606
3,436
4.9
3,398
6.1
7,042
6,429
9.5
Adjusted PAT
3,606
3,436
4.9
3,398
6.1
7,047
6,429
9.6
EPS
15.8
15.0
4.9
13.6
16.5
30.8
28.1
9.6
Gross margin (%)
39.1
38.8
32bp
39.8
(73)bps
38.9
39.4
(47)bps
EBITDA margin (%)
27.3
26.5
78bp
27.5
(24)bps
26.9
27.0
(13)bps
EBIT margin (%)
24.9
24.1
78bp
25.5
(64)bps
24.5
24.8
(30)bps
PAT margin (%)
20.8
20.5
36bp
21.7
(90)bp
20.7
21.4
(77)bps
Source: Company, Angel Research
Exhibit 2: 2QFY2017 - Actual Vs Angel estimates
(` cr)
Actual
Estimate
% Var.
Net revenue
17,310
17,133
1.0
EBITDA margin (%)
27.3
26.9
40bps
PAT
3,606
3,546
1.7
Source: Company, Angel Research
Revenues above expectation
Infosys posted a sequential revenue growth of
3.5% to US$2,587mn (V/s
US$2,561mn expected). In terms of Constant Currency (CC), the sales posted a
qoq growth of 3.9%, while the volume growth came in at 4.0% (1QFY2017 qoq
growth was 2.2%).
In INR terms, revenues came in at `17,310cr (V/s `17,133cr expected), up 3.1%
qoq. On CC basis, the company posted a 3.9% qoq growth on the sales front,
while volumes grew 3.1% qoq onsite and 4.4% qoq offshore. Blended realization
declined by 0.1% qoq in CC terms. Volumes in IT Services grew 4.0% qoq, which is
higher than the 2.2% qoq growth seen in the previous quarter.
In terms of geographies, the CC qoq growth posted by USA, Europe, India, and
ROW was 2.7%, 3.7%, 28.7%, and 5.2%, respectively. In terms of verticals, the
CC qoq growth posted by FSI, MFG & Hi-Tech, RCL, and ECS was 5.2%, 2.1%,
1.2%, and 7.3%, respectively.
October 20, 2016
2
Infosys | 2QFY2017 Result Update
Exhibit 3: Trend in volume growth QoQ (Effort wise)
8
6
4.4
4.4
4.0
4
3.73.7
3.5
3.3
3.1
3.1
2.5
2.7
2.3
2.4
2.2
2
1.8
0
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
Offshore
Onsite
Total volume growth
Source: Company, Angel Research
Exhibit 4: Trend in volume and USD revenue growth (QoQ)
8
7
6.9
6
5
4.0
4
1.9
3.9
3
3.7
2.2
3.1
2
1.1
2.2
1
2.4
0
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
Revenue growth (constant currency)
Volume growth
Source: Company, Angel Research
Industry-wise, revenue from FSI, the company’s anchor vertical which contributed
by 33.1% to revenues, grew by 4.4% qoq; in CC terms, revenue from FSI grew by
5.2% qoq. The Manufacturing industry vertical, which contributed by 22.5% to
revenues, grew by 2.1% qoq. In CC terms, the revenue from this vertical grew by
2.1% sequentially.
The Retail, CPG and Logistics segment (RCL; contributed by 23.5% to revenues)
reported a 0.4% qoq growth. In CC terms, the revenue from RCL grew by 1.2%
qoq. The Energy Utilities and Communications & Services segment (contributed by
20.9% to revenue) reported a growth of 7.0% qoq in revenue and 7.3% qoq on
CC basis.
October 20, 2016
3
Infosys | 2QFY2017 Result Update
Exhibit 5: Growth trend in industry segments (Reported basis)
Particulars
% to revenue
% growth QoQ
% growth YoY
FSI
33.1
4.4
9.1
Banking and financial services
27.4
4.2
8.9
Insurance
5.7
5.3
10.1
Manufacturing
22.5
2.1
2.2
RCL
23.5
0.4
3.3
Retail and CPG
14.9
(0.6)
8.2
Transport and logistics
1.9
3.4
8.2
Life Sciences
4.5
(1.0)
(17.5)
Healthcare
2.2
8.4
25.2
ECS
20.9
7.0
19.1
Energy and utilities
4.8
5.6
10.5
Communication and services
9.4
3.4
28.7
Others
6.7
13.6
16.9
Source: Company, Angel Research
In terms of geographies, revenue from North America grew by 2.7% qoq in CC
terms, while other geographies such as Europe grew by 3.7% qoq and RoW grew
by 5.2% qoq (both in CC terms). India posted a 28.7% qoq growth in CC terms.
Exhibit 6: USD growth trend in geographies QoQ (CC basis)
9
8.3
8
7.1
7
6.2
6
5.2
4.9
5
3.9
3.7
4
3.6
3.2
3
2.7
2.4
2
0.5
0.6
1
0.3
0.3
0
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
North America
Europe
Rest of the world
Source: Company, Angel Research
October 20, 2016
4
Infosys | 2QFY2017 Result Update
Hiring and utilization
Infosys added 12,717 gross employees in 2QFY2017, of which 5,752 were lateral
additions. The net addition number for the quarter stood at 2,779. Attrition (for
standalone entity) heated up in 2QFY2017; it increased to 20.0% (LTM) V/s 21.0%
in 1QFY2017.
Exhibit 7: Employee metrics
2QFY16 3QFY16 4QFY16 1QFY17 2QFY17
Gross addition
17,595
14,027
9,034
13,268
12,717
Net addition
8,453
8,620
661
3,006
2,779
Gross lateral emp. addition
7,452
6,115
5,266
5,260
5,752
Attrition - LTM basis (%)*
19.9
18.1
17.3
21.0
20.0
Source: Company, Angel Research, Note-* excluding subsidiaries
The utilization rate including trainees grew by 180bp qoq to 77.7% (higher than
76.5% as in 1QFY2017); while excluding trainees, it grew by 200bp qoq to
82.5%.
Exhibit 8: Trend in utilization (Services and Consulting + Projects)
85
82.5
83
81.3
80.6
80.5
80.1
81
79
77
77.7
75
76.5
75.4
73
74.7
74.2
71
69
67
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
Including trainees
Excluding trainees
Source: Company, Angel Research
Margins expanded
On the operating front, EBDITA and EBIT margins expanded by ~78bp qoq and
~78bp qoq to 27.3% (V/s an expected 26.9%) and 24.9% respectively. In
2QFY2017, operational efficiency, favorable onsite/offshore mix, optimization of
onsite expenses, and moderation of subcontracting expenses offset the headwind
of higher variable payout.
October 20, 2016
5
Infosys | 2QFY2017 Result Update
Exhibit 9: Trend in EBIT margin
200.0
26
25.5
25.5
150.0
150
100.0
24.9
80
25
50.0
24.9
60
0.0
(60)
(50.0)
24.1
24
(100.0)
(140)
(150.0)
(200.0)
23
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
Margin movement (qoq)
EBIT margin (%)
Source: Company, Angel Research
Client pyramid
Infosys added 78 new clients (gross additions) during the quarter, taking its
total active client base to 1136. The client addition was across the board. The
company bagged new deals with TCV of US$1,209mn, during the quarter. TCV of
deal wins LTM of US$3.1bn, which is 34% higher.
Exhibit 10: Client metrics
Particulars
2QFY16 3QFY16 4QFY16 1QFY17 2QFY17
Top client (% of revenue)
3.7
3.5
3.6
3.6
3.5
Gross Client addition
82
75
89
95
78
Active client
1011
1045
1092
1126
1136
US$1mn-5mn
284
294
290
306
300
US$5mn-10mn
89
90
91
88
91
US$10mn-20mn
84
82
89
93
97
US$20mn-50mn
35
23
32
35
35
US$50mn-100mn
19
15
17
21
24
US$100mn-200mn
17
7
8
11
12
US$200mn-300mn
8
5
5
6
5
US$300mn plus
1
1
1
1
1
Source: Company, Angel Research
Concall Highlights
Infosys won deals worth TCV of US$1,209mn during the quarter.
Owing to a weak beginning for 1HFY2017, Infosys has reduced its guidance
for the year to 8-9% V/s 10.5-12% growth earlier in CC terms.
Infosys maintained its guided EBIT margin band of 24-26% for the medium
term.
October 20, 2016
6
Infosys | 2QFY2017 Result Update
Investment arguments
Revenue guidance revised for FY2017: The Management has lowered its revenue
growth guidance for FY2017. The company has issued 8-9% CC growth V/s 10.5-
12.0% qoq CC growth guidance earlier. In 2QFY2017, the guidance was reduced
to factor the impact of ramp-down in RBS, softness/uncertainty in some other
clients, and slower growth than anticipated in some service lines. In INR terms, the
guidance has been revised downwards to 9.2-10.2% V/s 11.7-13.2% 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 ~9.0% 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 9.5% and 9.0%
respectively).
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 9.0% and 9.5%, 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 24.6% in FY2017 and FY2018 (V/s 25.0% in FY2016). Over
FY2016-18E, we expect an EBIT CAGR of 10.3%. 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 8-
9% on CC basis. We expect the company to post ~9.0% 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 a Buy on the stock
with a price target of `1,249.
October 20, 2016
7
Infosys | 2QFY2017 Result Update
Exhibit 11: Key assumptions
Parameters
FY2017E
FY2018E
Revenue growth - USD terms (%)
9.0
10.0
USD-INR rate
66.0
66.0
Revenue growth - INR terms (%)
9.5
13.0
EBITDA margin (%)
27.0
27.0
Tax rate (%)
28.0
28.0
EPS growth (%)
6.4
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
0
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
FY2018E
(`)
(`)
(%)
EBITDA (%)
P/E (x)
EPS CAGR (%)
EV/Sales (x)
RoE (%)
HCL Tech
Buy
834
1,000
19.9
20.5
13.0
9.6
1.8
17.9
Infosys
Buy
1,038
1,249
20.3
27.0
15.0
8.4
2.5
21.6
TCS
Buy
2,398
3,004
25.2
27.3
16.0
10.1
3.2
33.9
Tech Mahindra
Buy
426
700
64.5
17.0
10.3
13.2
0.9
20.7
Wipro
Buy
481
680
41.3
17.9
13.0
1.3
1.7
18.1
Source: Company, Angel Research
Company Background
Infosys is the second largest IT company in India, employing over
1,94,044
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.
October 20, 2016
8
Infosys | 2QFY2017 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
68,350
77,236
Cost of revenue
24,158
30,767
31,817
37,595
35,542
40,163
Gross profit
16,194
19,366
21,502
24,846
26,998
30,508
% of net sales
40.1
38.6
40.3
39.8
39.5
39.5
Selling and mktg exp.
2,034
2,625
2,941
3,431
3,759
4,248
% of net sales
5.0
5.2
5.5
5.5
5.5
5.5
General and admin exp.
2,609
3,107
3,663
4,292
4,785
5,407
% of net sales
6.5
6.2
6.9
6.9
7.0
7.0
EBITDA
11,551
13,634
14,898
17,123
18,455
20,854
% of net sales
28.6
27.2
27.9
27.4
27.0
27.0
Dep and amortization
1,122
1,374
1,066
1,503
1,640
1,854
% of net sales
2.8
2.7
2.0
2.4
2.4
2.4
EBIT
10,429
12,260
13,832
15,620
16,814
19,000
% of net sales
25.8
24.5
25.9
25.0
24.6
24.6
Other income
2,359
2,669
3,427
3,122
3,122
3,122
Profit before tax
12,788
14,929
17,259
18,742
19,936
22,122
Provision for tax
3,367
4,062
4,929
5,251
5,582
6,194
% of PBT
26.3
27.2
28.6
28.0
28.0
28.0
PAT
9,421
10,648
12,330
13,491
14,354
15,928
Exceptional item
-
219
-
-
-
-
Adj. PAT
9,421
10,867
12,330
13,491
14,354
15,928
EPS (`)
41.0
47.3
53.7
59.0
62.5
69.4
October 20, 2016
9
Infosys | 2QFY2017 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
38,249.6
42,480.2
Available for sale fin. assets
1,739
2,197
874
75
75
75
Invest. in certificates of deposit
-
859
93
103
103
103
Trade receivables
7,083
8,351
9,713
11,330
11,483
12,976
Unbilled revenue
2,435
2,811
2,845
3,029
3,029
3,029
Derivative financial instrum.
101
215
101
116
116
116
Prepayments and
2,123
2,636
3,296
4,448
3,964
4,480
other current assets
Total current assets
35,313
43,019
47,289
51,798
57,020
63,258
Non-current assets
Property, plant and equipm.
6,468
7,887
9,125
10,530
10,730
10,930
Goodwill
1,976
2,157
3,091
3,764
2,157
2,157
Intangible assets
368
342
638
985
342
342
Available for sale fin. Assets
394
1,252
1,345
1,811
1,252
1,252
Deferred income tax assets
503
656
537
536
656
656
Income tax assets
1,092
1,522
4,089
5,230
5,230
5,230
Other non-current assets
237
220
238
735
1,876
1,793
Total non-current assets
11,038
14,036
19,063
23,591
22,243
22,360
Total assets
46,351
57,055
66,352
75,389
79,262
85,618
Current liabilities
Trade payables
189
173
140
386
173
173
Derivative financial instrum.
-
-
3
5
-
-
Current income tax liabilities
1,329
2,187
2,818
3,410
3,787
3,787
Client deposits
36
40
27
28
40
40
Unearned revenue
823
660
1,052
1,332
660
660
Employee benefit obligations
614
954
1,069
1,341
954
954
Provisions
213
379
478
512
379
379
Other liabilties
3,082
4,745
5,796
6,225
5,545
5,545
Total current liabilities
6,286
9,138
11,383
13,239
11,538
11,538
Non-current liabilities
Deferred income tax liabilties
119
64
160
256
64
64
Employee benefit obligations
149
323
46
115
323
323
Other liabilities
-
-
-
-
-
-
Total non-current liabilities
268
387
206
371
387
387
Total liabilities
6,554
9,525
11,589
13,610
11,925
11,925
Equity
Share capital
286
286
572
1,144
1,144
1,144
Share premium
3,090
3,090
3,090
2,241
2,241
2,241
Retained earnings
36,114
43,584
50,531
57,655
63,382
69,737
Other components of equity
307
570
570
739
570
571
Total equity
39,797
47,530
54,763
61,779
67,337
73,693
Total liabilties and equity
46,351
57,055
66,352
75,389
79,262
85,618
October 20, 2016
10
Infosys | 2QFY2017 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
16,814
19,000
Depreciation
1,122
1,374
1,066
1,503
1,640
1,854
Pre tax cash from operations
11,551
13,634
14,898
17,123
18,455
20,854
Other income/prior period ad
2,359
2,669
3,427
3,122
3,122
3,122
Net cash from operations
13,910
16,303
18,325
20,245
21,577
23,976
Tax
3,367
4,062
4,929
5,251
5,582
6,194
Cash profits
10,543
12,241
13,396
14,994
15,994
17,781
(Inc)/dec in current assets
(2,464)
(2,271)
(1,942)
(2,968)
331
(2,008)
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)
(1,370)
(2,008)
Cashflow from operating actv.
9,599
12,822
13,699
13,882
14,624
15,773
(Inc)/dec in fixed assets
(2,181)
(2,793)
(2,304)
(2,908)
(1,840)
(2,054)
(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
16
-
(Inc)/dec in other non current ass.
(1,253)
(138)
(1,248)
(1,517)
1,110
83
Cashflow from investing actv.
(5,273)
(5,570)
(4,185)
(5,077)
(276)
(1,971)
Inc/(dec) in debt
-
-
-
-
-
-
Inc/(dec) in equity/premium
(280)
1,099
450
889
(1,101)
(1,048)
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)
(8,796)
(9,572)
Cash generated/(utilised)
1,241
4,118
4,417
2,330
5,553
4,231
Cash at start of the year
20,591
21,832
25,950
30,367
32,697
38,250
Cash at end of the year
21,832
25,950
30,367
32,697
38,250
42,480
October 20, 2016
11
Infosys | 2QFY2017 Result Update
Key ratios
Y/E March
FY2013
FY2014
FY2015
FY2016
FY2017E
FY2018E
Valuation ratio (x)
P/E
25.3
21.9
19.3
17.6
16.6
15.0
P/CEPS
22.6
19.5
17.8
15.9
14.9
13.4
P/BVPS
6.0
5.0
4.4
3.9
3.5
3.2
Dividend yield (%)
1.0
1.5
1.8
2.4
3.0
3.3
EV/Sales
5.3
4.2
3.9
3.3
2.9
2.5
EV/EBITDA
18.6
15.4
13.9
12.0
10.8
9.4
EV/Total assets
4.6
3.7
3.1
2.7
2.5
2.3
Per share data (`)
EPS
41
47
54
59
63
69
Cash EPS
46
53
58
65
70
77
Dividend
11
16
19
25
31
35
Book value
173
207
239
269
293
321
Dupont analysis
Tax retention ratio (PAT/PBT)
0.7
0.7
0.7
0.7
0.7
0.7
Cost of debt (PBT/EBIT)
1.2
1.2
1.2
1.2
1.2
1.2
EBIT margin (EBIT/Sales)
0.3
0.2
0.3
0.3
0.2
0.2
Asset turnover ratio (Sales/Assets)
0.9
0.9
0.8
0.8
0.9
0.9
Leverage ratio (Assets/equity)
1.2
1.2
1.2
1.2
1.2
1.2
Operating ROE
23.7
22.4
22.5
21.8
21.3
21.6
Return ratios (%)
RoCE (pre-tax)
22.5
21.5
20.8
20.7
21.2
22.2
Angel RoIC
45.8
43.7
39.5
36.7
41.2
44.2
RoE
23.7
22.9
22.5
21.8
21.3
21.6
Turnover ratios(x)
Asset turnover (fixed assets)
6.2
6.2
6.4
5.8
5.9
6.4
Receivables days
84
86
81
86
84
77
October 20, 2016
12
Infosys | 2QFY2017 Result Update
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
DISCLAIMER
Angel Broking Private Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited,
Bombay Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL
and Portfolio Manager with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Private Limited is a
registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number
INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing
/dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed public
offering of securities of the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the
companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine
the merits and risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Pvt. Limited has not independently verified all the information contained within this document. Accordingly, we cannot
testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document.
While Angel Broking Pvt. Limited endeavors to update on a reasonable basis the information discussed in this material, there may be
regulatory, compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from
or in connection with the use of this information.
Disclosure of Interest Statement
Infosys
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
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)
October 20, 2016
13