COMPANY UPDATE

29 AUG 2016

Infosys
BUY
INDUSTRY
IT
CMP (as on 26 Aug 2016) Rs 1,020
Target Price
Rs 1,350
Nifty

8,573

Sensex

27,782

KEY STOCK DATA

Bloomberg

INFO IN

No. of Shares (mn)

MCap (Rs bn) / ($ mn)

2,297
2,332/34,946

6m avg traded value (Rs mn)

4,469

STOCK PERFORMANCE (%)

52 Week high / low
Absolute (%)
Relative (%)

Rs 1,279 / 1,009

3M
6M
(17.3) (9.0)
(22.7) (29.0)

12M
(4.2)
(12.2)

SHAREHOLDING PATTERN (%)

Promoters

12.75

FIs & Local MFs

17.25

FIIs

40.46

Public & Others

29.54

Source : BSE

Apurva Prasad
apurva.prasad@hdfcsec.com
+91-22-6171-7327
Amit Chandra
amit.chandra@hdfcsec.com
+91-22-6171-7345

A bumpy road, to success!

We attended Infosys Analyst Meet, where the
company largely showcased its progress around
digital technologies. We marginally reduce our 2Q
estimates to reflect near-term headwinds (RBS &
consulting division). Our conviction on INFY remains
intact led by (1) Improving market share, buoyed by
large deal wins, (2) Higher resilience in BFSI over
peers, (3) Increased automation impact on
efficiencies in fixed-price contracts (44% of revenue),
(4) Continued evidence of renew as seen in the
multi-vertical/services skilling plus a recast of sales
performance incentives, and (5) Proof of better
execution (stable sub-con expense) ably supported
by the early success of the MANA automation/AI
platform.
We revise FY17E US$ revenue growth to 9.7% (10.7%
earlier) factoring near-term client-specific headwinds
while EPS remains unchanged on EBIT% of
25.5/26.1% for FY17/18E. INFY is attractive at 13.6x
FY18E (20% discount to TCS valuations) and we
maintain BUY with TP of Rs 1,350, 18x FY18E EPS.

Highlights

Probability of FY17E revenue guidance being

revised downwards is higher based on clientspecific risks that have emerged from higher
uncertainties; ramp-up of recent large deals,
stability in India business, consulting & Finacle and
IMS traction will be strong offsets.

Management expects 2Q growth to be higher than

1Q growth; weve factored 3.4% QoQ as compared

to 2.2% in 1Q (1Q/2Q QoQ average since FY11 at
2.7/5.3% in CC).

1Q large deals (US$ 809mn) included 50% rebid as

compared to 30% rebid share booked in the prior

quarter (US$757mn TCV); 1Q TCV higher by 16%
over FY16 avg.

Senior

level and high-performer attrition

continues
downward
progression
vs.
organizational level attrition that inched up in 1Q.

The MANA platform is being integrated across

service-lines and across existing projects/new

deals with categorical success. It is expected to
support operational efficiency ahead.

Near-term outlook: Cross currency impact in 2Q

as well as client-specific impact (RBS) may subdue

near-term performance offering opportunity for
disproportionate gains ahead.

Financial Summary
YE March (Rs mn)
Net Revenue
EBIT
APAT
Diluted EPS (Rs)
P/E (x)
EV / EBITDA (x)
RoE (%)

FY15
533,190
138,320
123,290
53.9
18.9
13.6
24.1

FY16
624,410
156,200
134,910
59.0
17.3
11.7
23.2

FY17E
698,720
178,156
157,025
65.4
15.6
10.3
23.8

FY18E
790,425
206,212
176,857
75.0
13.6
8.7
25.3

Source: Company, HDFC Sec Inst Research

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters

INFOSYS: COMPANY UPDATE

Improving revenue share (incremental revenue

addition trend)
(US$ mn)

TCS

3,500

953

857

12%

462

2,000

10.3%

9.9%
8.5%

10%
398

1,500

790

1,984

1,875

1,398

8%
4.7%

6%

2,011

4%
1,090

2.1%

2%
0%
FY14

FY15

FY16

Source: Company, HDFC sec Inst Research

Source: Company, HDFC sec Inst Research

Large deal TCV trend

QoQ CC revenue trend of 1Q-2Q

6.9%
1QFY15 1.5%

3.9%

4.2%
2QFY14

3.5%
1QFY14

2.4%
2QFY13

1QFY13 -0.5%

6.2%
2QFY12

1QFY12

2QFY11

3.4%

5.1%
1QFY11

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

3QFY14

2QFY14

230

368

440

809

757

688

700

1QFY15

600

700
500

450

600

Source: Company, HDFC sec Inst Research

4.2%

9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
-1%

8.1%

(US$ mn)
983

(US$ mn)
1,000
900
800
700
600
500
400
300
200
100
-

1QFY16

2QFY17E

FY13

FY16

1QFY17 1.8%

FY15

2QFY16

FY14

4.4%

FY13

1QFY16

FY12

2QFY15

1QFY14

2Q sequential growth in US$

revenue has averaged 5.3%
CC since FY11 as compared 1Q
average of 2.7% CC; weve
factored 4.2% QoQ CC (3.4%
in US$ terms)

Tier-1 IT

14%

2,500

500

Deal trends have been strong

and INFY targets to win
>US$1bn quarterly ahead; 1Q
TCV was 16% higher than
FY16 quarterly rate

Infosys

TCS

16%

3,000

1,000

INFYs BFSI revenue has

progressed better than TCS
and tier-1 IT; near-term
headwinds for INFY though

(YoY %)

Infosys

18%

4QFY14

INFY added US$790mn

incremental revenue in FY16
as compared to US$1.1bn
added by TCS; 42% share of
incremental business by INFY
as compared to 28% for the
prior 3 years

Better resilience in BFSI (BFSI growth trend)

Source: Company, HDFC sec Inst Research

Page | 2

INFOSYS: COMPANY UPDATE

Revenue Growth Trajectory

(US$mn)

YoY %

(%)
30%

14,000
12,000
10,000

20%
15%

29.5% 29.0%
25.8%

25%

24.0%

25.9% 25.0% 25.5% 26.1%

20%
15%

Source: Company, HDFC sec Inst Research

Source: Company, HDFC sec Inst Research

Relative valuation

Attrition trend

8
6
4
2
0
TCS

Infosys

Wipro

Source: Company, HDFC sec Inst Research

HCL Tech

FY18E

12.6

1QFY17

10

10

15.8

4QFY16

12

3QFY16

12

12.0

11.7

14.2 14.1
13.4

2QFY16

13

16.3

1QFY16

13.6

14

14.7

FY15

16

18.7 18.9
17.0

FY14

17.0

20
18
16
14
12
10
8
6
4
2
0

FY13

18

(%)

FY16-18 EPS CAGR %

FY12

P/E (FY18)

(x; %)

FY17E

FY16

0%

FY11

FY18E

FY17E

FY16

FY15

FY14

FY13

FY12

0%

FY11

5%

FY15

5%

2,000

10%

FY14

10%

4,000

Large deal wins are expected

to accelerate with greater
integration of MANA platform
across service-linesand will
support growth; 11.8% CAGR
US$ revenue expected over
FY16-18E

30%

FY13

6,000

6,041

8,249 8,711

35%

FY12

8,000

6,994 7,392

9,501

11,797
25%
10,421

(%)

FY11

MANA, SKAVA and EDGE

platforms are strong fills to
offset downward spiral in
legacy business

Margin Trajectory

US$ Revenue

Source: Company, HDFC sec Inst Research

Page | 3

INFOSYS: COMPANY UPDATE

Vertical Revenue Break-up

BFSI has been resilient even
as INFY faces near-term
headwinds within the vertical

Progress in the new; ATP 3year contract a strong

prototype in the analytics
space
(http://www.atpworldtour.co
m/en/stats)

(% Contribution)
BFSI
Insurance
Banking &Financial Services
Manufacturing
Retail, Logistics, CPG & Life Sciences
Retail & CPG
Transport & Logistics
Life Sciences
Health Care
Energy & Utilities, Comm. & Services
Energy & Utilities
Communication & Services
Others
Total

3QFY15
33.1
6.3
26.8
23.4
23.5
14.9
1.5
5.1
2.0
20.0
4.9
8.7
6.4
100.0

4QFY15
33.6
6.4
27.2
23.8
23.5
15.1
1.6
5.1
1.7
19.1
4.5
8.3
6.3
100.0

1QFY16
33.1
6.0
27.1
24.0
24.1
15.0
1.5
5.6
2.0
18.8
4.2
8.4
6.2
100.0

2QFY16
32.8
5.6
27.2
23.8
24.6
14.9
1.9
5.9
1.9
18.8
4.7
7.9
6.2
100.0

3QFY16
33.5
5.9
27.6
22.8
24.3
14.7
1.9
5.8
1.9
19.4
5.1
8.0
6.3
100.0

4QFY16
32.8
5.4
27.4
22.7
24.5
15.0
1.8
5.7
2.0
20.0
5.2
8.6
6.2
100.0

1QFY17
32.8
5.6
27.2
22.8
24.2
15.5
1.9
4.7
2.1
20.2
4.7
9.4
6.1
100.0

3QFY15
1.7
5.8
0.8
1.2
1.2
(1.9)
0.8
9.3
6.1
(1.7)
(10.2)
(1.5)
5.7
0.8

4QFY15
(1.2)
(1.1)
(1.2)
(1.0)
(2.7)
(1.4)
3.8
(2.7)
(17.3)
(7.0)
(10.6)
(7.1)
(4.2)
(2.7)

1QFY16
2.9
(2.0)
4.1
5.4
7.2
3.8
(2.0)
14.7
22.9
2.9
(2.5)
5.8
2.8
4.5

2QFY16
5.1
(1.0)
6.4
5.1
8.2
5.3
34.3
11.7
0.7
6.0
18.7
(0.3)
6.0
6.0

3QFY16
2.8
6.0
2.1
(3.6)
(0.6)
(0.7)
0.6
(1.1)
0.6
3.8
9.2
1.9
2.3
0.6

4QFY16
(0.5)
(7.0)
0.9
1.2
2.5
3.7
(3.7)
(0.1)
7.0
4.8
3.6
9.2
0.0
1.6

1QFY17
2.2
6.0
1.5
2.7
1.0
5.7
7.9
(15.7)
7.4
3.3
(7.6)
11.8
0.6
2.2

Source: Company, HDFC Sec Inst Research

Vertical-wise Revenue Growth

(QoQ, %)
BFSI
Insurance
Banking &Financial Services
Manufacturing
Retail, Logistics, CPG & Life Sciences
Retail & CPG
Transport & Logistics
Life Sciences
Health Care
Energy & Utilities, Comm. & Services
Energy & Utilities
Communication & Services
Others
Total
Source: Company, HDFC Sec Inst Research
Page | 4

INFOSYS: COMPANY UPDATE

Service Line Break-up

INFYs IMS share is lowest
compared to peers at 8.3% as
compared to TCS (15%),
Wipro (28%) and HCLT (39%);
lower legacy IMS vs peers
may also limit revenue
cannibalization accentuated
by the shift to cloud

Multiple BPM integrated

deals in the pipeline

(% Contribution)
Business Operations Services
Application Development
Application Maintenance
Infrastructure Management
Testing Services
Business Process Management
Product Engineering Services
Others
Consulting & Systems Integration
Products, Platforms & Solutions
Product Revenues
BPM Platforms
Others
Total

3QFY15
62.8
14.9
19.5
8.2
9.1
3.4
5.4
2.3
32.6
4.6
2.9
1.1
0.6
100.0

4QFY15
62.3
14.3
19.7
8.1
8.9
5.3
3.5
2.5
32.7
5.0
3.4
1.0
0.6
100.0

1QFY16
62.3
14.0
19.9
8.3
8.9
5.0
3.5
2.7
32.8
4.9
3.2
1.0
0.7
100.0

2QFY16
62.3
14.0
19.6
8.7
9.0
4.9
3.3
2.8
32.8
4.9
2.8
1.0
1.1
100.0

3QFY16
61.2
14.1
19.1
7.5
9.2
4.9
3.4
3.0
33.8
5.0
3.0
0.9
1.1
100.0

4QFY16
61.6
13.7
19.7
8.0
9.0
5.0
3.4
2.8
33.2
5.2
3.2
0.8
1.2
100.0

1QFY17
62.4
14.4
19.5
8.3
9.1
4.9
3.5
2.7
32.1
5.5
3.0
2.1
0.4
100.0

3QFY15
0.5
(6.7)
4.0
4.6
(2.4)
(32.8)
60.1
5.4
1.4
0.8
0.8
(7.6)
20.9
0.8

4QFY15
(3.4)
(6.6)
(1.7)
(3.8)
(4.8)
51.7
(36.9)
5.8
(2.4)
5.8
14.1
(11.5)
(2.7)
(2.7)

1QFY16
4.5
2.3
5.6
7.1
4.5
(1.4)
4.5
12.9
4.8
2.4
(1.7)
4.5
21.9
4.5

2QFY16
6.0
6.0
4.4
11.1
7.2
3.9
(0.0)
10.0
6.0
6.0
(7.2)
6.0
66.6
6.0

3QFY16
(1.1)
1.3
(1.9)
(13.3)
2.9
0.6
3.7
7.8
3.7
2.7
7.8
(9.4)
0.6
0.6

4QFY16
2.3
(1.3)
4.8
8.4
(0.6)
3.7
1.6
(5.2)
(0.2)
5.7
8.4
(9.7)
10.9
1.6

1QFY17
3.6
7.5
1.2
6.1
3.4
0.2
5.3
(1.4)
(1.1)
8.1
(4.1)
168.4
(65.9)
2.2

Source: Company, HDFC Sec Inst Research

Service Line Growth

Lower mix of consulting
revenue in the near-term will
support margins

Product revenue growth is

expected to improve ahead
with growth back in Finacle,
following a subdued 1Q

(QoQ, %)
Business Operations Services
Application Development
Application Maintenance
Infrastructure Management
Testing Services
Business Process Management
Product Engineering Services
Others
Consulting & Systems Integration
Products, Platforms & Solutions
Product Revenues
BPM Platforms
Others
Total
Source: Company, HDFC Sec Inst Research

Page | 5

INFOSYS: COMPANY UPDATE

Geographic Revenue Break-up

India-business is expected to
propel to growth in 2Q as new
projects in India are gaining
momentum

(% Contribution)
North America
Europe
India
Rest of the World
Total

3QFY15
61.6
24.0
2.5
11.9
100.0

4QFY15
62.8
23.1
2.5
11.6
100.0

1QFY16
63.2
22.4
2.2
12.2
100.0

2QFY16
63.3
22.9
2.3
11.5
100.0

3QFY16
62.5
23.2
2.8
11.5
100.0

4QFY16
61.9
23.4
3.0
11.7
100.0

1QFY17
62.0
23.0
2.7
12.3
100.0

3QFY15
2.1
(2.1)
14.5
(2.5)
0.8

4QFY15
(0.8)
(6.3)
(2.7)
(5.1)
(2.7)

1QFY16
5.2
1.3
(8.0)
9.9
4.5

2QFY16
6.2
8.4
12.8
(0.1)
6.1

3QFY16
(0.6)
1.9
20.4
0.6
0.6

4QFY16
0.6
2.5
8.9
3.4
1.6

1QFY17
2.4
0.5
(8.0)
7.5
2.2

4QFY15
55.2
44.8
100.0

1QFY16
56.1
43.9
100.0

2QFY16
56.1
43.9
100.0

3QFY16
56.5
43.5
100.0

4QFY16
56.5
43.5
100.0

1QFY17
57.0
43.0
100.0

4QFY15
(2.3)
(3.8)
(3.0)

1QFY16
6.3
2.6
4.6

2QFY16
6.5
6.2
6.3

3QFY16
1.3
(0.4)
0.5

4QFY16
1.3
1.3
1.3

1QFY17
2.8
0.9
2.0

Source: Company, HDFC Sec Inst Research

Geographic Revenue Growth

Despite large penetration in

top-10 clients, INFY expects
significantly higher scope
within its top-10; average
spend bucket opportunity of
US$1bn withinINFYs top-10
accounts as compared to
current averagetop-10
revenue of US$217mn

(QoQ, %)
North America
Europe
India
Rest of the World
Total
Source: Company, HDFC Sec Inst Research

Onsite-Offshore Split (IT Services + Consulting)

(% Contribution)
Onsite Revenue
Offshore Revenue
Total

3QFY15
54.8
45.2
100.0

Source: Company, HDFC Sec Inst Research

Onsite-Offshore Growth (IT Services + Consulting)

(QoQ, %)
Onsite revenue
Offshore revenue
Total

3QFY15
1.1
0.2
0.7

Source: Company, HDFC Sec Inst Research

Page | 6

INFOSYS: COMPANY UPDATE

Headcount, Attrition And Utilisation Data

While organizational attrition
inched up in 1Q, highperformer attrition and senior
management attrition
continued its downward
progression; high performer
attrition declined from 13.4%
in 4Q to 11.2% in 1Q

(Nos.)
Total headcount
Gross Additions
Lateral Additions
Net Additions
Quarterly Annualised Attrition (%)
Utilisation Including Trainees (%)
Utilisation Excluding Trainees (%)

3QFY15
169,638
13,154
6,094
4,227
18.2
75.7
82.7

4QFY15
176,187
14,471
8,334
6,549
13.4
72.8
78.6

1QFY16
179,523
11,889
5,886
3,336
14.2
75.7
80.2

2QFY16
187,976
17,595
7,452
8,453
14.1
75.4
81.3

3QFY16
193,383
14,027
6,115
5,407
13.4
74.2
80.6

4QFY16
194,044
9,034
5,266
661
12.6
74.7
80.1

1QFY17
197,050
13,268
5,260
3,006
15.8
76.5
80.5

Source: Company, HDFC Sec Inst Research

Key Assumptions

Over 104,000 employees have

undergone design training so
far

Particulars
Volume Growth (%)
Pricing Change (%)
USD Revenue Growth (%)
USD/INR Rate
EBITDA Margin (%)

FY14
10.5
1.2
11.6
60.75
24.0

FY15
9.3
(2.8)
5.6
61.18
25.9

FY16
14.5
(4.7)
9.1
65.69
25.0

FY17E
9.7
0.0
9.7
67.05
25.5

FY18E
12.3
0.9
13.2
67.00
26.1

Source: Company, HDFC Sec Inst Research

INFY attributed most seniorlevel exits to performance

shortfall barring few; INFY
has inducted leadership
bandwidth in Finacle and
Consulting business

Page | 7

INFOSYS: COMPANY UPDATE

Change In Estimates
Earlier estimates
FY17E

Revised estimates
FY17E

% change

Revenue (US$mn)
Revenue (Rsmn)
EBIT (Rsmn)
EBIT margin (%)
EPS (Rs)

10,515
705,013
178,335
25.3
65.4

10,421
698,720
178,156
25.5
65.4

(0.9)
(0.9)
(0.1)
20bps
0.0

Revenue (US$mn)
Revenue (Rsmn)
EBIT (Rsmn)
EBIT margin (%)
EPS (Rs)

FY18E
11,938
799,836
206,625
25.8
75.0

FY18E
11,797
790,425
206,212
26.1
75.0

% change
(1.2)
(1.2)
(0.2)
26bps
(0.0)

Particulars

Management has kept the full

year guidance unchanged at
10.5-12% CC while accepting
increased downside risk; we
expect management to revise
guidance downward by
100bps

Peer Valuation
Company
TCS
Infosys
Wipro
HCL Tech.
Tech Mahindra

Mcap CMP
(Rs bn) (Rs)
4,964 2,525
2,332 1,020
1,207
490
1,099
779
442
460

Reco.
NEU
BUY
NEU
BUY
NEU

TP
(Rs)
2,680
1,350
542
910
530

FY16
123.9
59.0
36.1
52.1
32.3

EPS (Rs)
FY17E FY18E
132.4 148.8
65.4
75.0
39.3
43.8
57.5
65.1
33.5
41.5

FY16
20.4
17.3
13.6
14.9
14.3

P/E (x)
FY17E FY18E
19.1
17.0
15.6
13.6
12.5
11.2
13.6
12.0
13.7
11.1

FY16
39.9
23.2
20.4
28.5
23.4

RoE (%)
FY17E FY18E
34.8
34.4
23.8
25.3
18.4
18.7
28.0
27.8
20.7
21.7

Source: HDFC sec Inst Research

Page | 8

INFOSYS: COMPANY UPDATE

Consolidated Income Statement

YE March (Rs mn)
Net Revenues (US $mn)
Growth (%)
Net Revenues
Growth (%)
Employee Expenses
SG&A and Other Operating Exp
EBIDTA
EBIDTA (%)
EBIDTA Growth (%)
Depreciation
EBIT
Other Income
PBT
Tax (incl deferred)
RPAT
APAT
APAT Growth (%)
EPS
EPS Growth (%)

Consolidated Balance Sheet

FY14
8,249
11.6
501,330
24.2
307,670
59,515
134,145
26.8
16.1
13,740
120,405
26,690
147,095
40,620
106,475
106,475
13.0
46.6
13.0

Source: Company, HDFC sec Inst Research

FY15
8,711
5.6
533,190
6.4
318,140
66,040
149,010
27.9
11.1
10,690
138,320
34,260
172,580
49,290
123,290
123,290
15.8
53.9
15.8

FY16
9,501
9.1
624,410
17.1
376,390
77,230
170,790
27.4
14.6
14,590
156,200
31,220
187,420
52,510
134,910
134,910
9.4
59.0
9.4

FY17E
10,421
9.7
698,720
11.9
423,995
79,930
194,795
27.9
14.1
16,640
178,156
31,932
210,088
60,631
149,457
149,457
10.8
65.4
10.8

FY18E
11,797
13.2
790,425
13.1
482,309
82,974
225,141
28.5
15.6
18,929
206,212
35,215
241,427
70,014
171,413
171,413
14.7
75.0
14.7

YE March (Rs mn)

FY14

FY15

FY16

FY17E

FY18E

2,860

5,720 11,440 11,440 11,440

SOURCES OF FUNDS
Share Capital - Equity
Reserves

472,440 541,910 606,350 626,179 707,442

Total Shareholders' Funds

475,300 547,630 617,790 637,619 718,882

Net Deferred Taxes

Long-term Provisions & Others
TOTAL SOURCES OF FUNDS

(5,920) (3,770) (2,800) (3,780) (3,780)

3,230

460

1,150

1,350

1,350

472,610 544,320 616,140 635,189 716,452

APPLICATION OF FUNDS
Net Block

60,550 76,850 86,370 82,043 92,991

CWIP

18,320 14,400 18,930 23,146 26,196

Goodwill & Other Intangible Assets

24,990 37,290 47,490 48,159 49,559

Investments

12,520 14,380 19,140 17,400 18,270

LT Loans & Advances, Others

17,420 43,270 59,650 60,650 61,077

Total Non Current Assets

Debtors
Cash & Equivalents

133,800 186,190 231,580 231,398 248,092

83,510 97,130 113,300 122,782 150,077
259,500 303,670 326,970 333,407 381,843

Other Current Assets

87,180 71,160 76,680 83,344 90,566

Total Current Assets

430,190 471,960 516,950 539,534 622,486

Creditors

1,730

1,400

3,860

4,948

5,645

Other Current Liabilities & Provns

89,650 112,430 128,530 130,795 148,482

Total Current Liabilities

91,380 113,830 132,390 135,743 154,127

Net Current Assets

338,810 358,130 384,560 403,791 468,359

TOTAL APPLICATION OF FUNDS

472,610 544,320 616,140 635,189 716,452

Source: Company, HDFC sec Inst Research

Page | 9

INFOSYS: COMPANY UPDATE

Consolidated Cash Flow

YE March (Rs mn)
Reported PBT
Non-operating & EO items
Interest Expenses
Depreciation
Working Capital Change
Tax paid
OPERATING CASH FLOW ( a )
Capex
Free cash flow (FCF)
Investments
Non-operating income
INVESTING CASH FLOW ( b )
Debt Issuance/(Repaid)
Interest Expenses
FCFE
Share capital Issuance
Dividend
FINANCING CASH FLOW ( c )
NET CASH FLOW (a+b+c)
EO items, others
Closing Cash & Equivalents

Key Ratios
FY14
147,095
(17,240)
0
13,740
(4,730)
(40,620)
98,245
(27,480)
70,765
1,710

FY15
172,580
(42,030)
0
10,690
(8,420)
(49,290)
83,530
(22,550)
60,980
33,430

FY16
FY17E
FY18E
187,420 210,088 241,427
(14,720) (1,780)
(427)
0
0
0
14,590
16,640
18,929
(3,130) (12,793) (16,133)
(52,510) (60,631) (70,014)
131,650 151,523 173,783
(32,110) (17,198) (34,327)
99,540 134,325 139,456
(11,490)
1,740
(870)

(25,770)
10,880 (43,600) (15,458)
0
0
0
0
0
0
0
0
70,765
60,980
99,540 134,325
0
1
0
1
(41,758) (107,647) (72,250) (84,848)
(41,758) (107,647) (72,250) (84,847)
30,717 (13,237)
15,800
51,219
10,463
57,407
7,500 (44,781)
259,500
303,670 326,970 333,407

Source: Company, HDFC sec Inst Research

(35,197)
0
0
139,456
0
(90,151)
(90,151)
48,436
0
381,843

PROFITABILITY (%)
EBITDA Margin
APAT Margin
RoE
RoIC or Core RoCE
RoCE
EFFICIENCY
Tax Rate (%)
Fixed Asset Turnover (x)
Debtors (days)
Payables (days)
Cash Conversion Cycle (days)
Net Debt/EBITDA (x)
Net Debt/Equity (x)
Interest Coverage (x)
PER SHARE DATA
EPS (Rs/sh)
CEPS (Rs/sh)
DPS (Rs/sh)
BV (Rs/sh)
VALUATION
P/E
P/BV
EV/EBITDA
OCF/EV (%)
FCF/EV (%)
FCFE/mkt cap (%)
Dividend Yield (%)

FY14

FY15

FY16

FY17E

FY18E

26.8
21.2
24.4
31.0
24.5

27.9
23.1
24.1
28.5
24.2

27.4
21.6
23.2
30.7
23.3

27.9
21.4
23.8
32.1
23.9

28.5
21.7
25.3
34.9
25.4

27.6
3.7
61
1
60
(1.9)
(0.5)
N.A.

28.6
3.4
66
1
66
(2.0)
(0.6)
N.A.

28.0
3.6
66
2
64
(1.9)
(0.5)
N.A.

28.9
3.6
64
3
62
(1.7)
(0.5)
N.A.

29.0
3.5
69
3
67
(1.7)
(0.5)
N.A.

46.6
52.6
31.5
207.9

53.9
58.6
29.8
239.6

59.0
65.4
27.3
270.3

65.4
72.7
32.0
279.0

75.0
83.3
34.0
314.5

21.9
4.9
15.4
4.7
3.4
3.0
3.1

18.9
4.3
13.6
4.1
3.0
2.6
2.9

17.3
3.8
11.7
6.6
5.0
4.3
2.7

15.6
3.7
10.3
7.6
6.7
5.8
3.1

13.6
3.2
8.7
8.9
7.2
6.0
3.3

Source: Company, HDFC sec Inst Research

Page | 10

INFOSYS: COMPANY UPDATE

RECOMMENDATION HISTORY
Infosys

1,500

Date
8-Oct-15
12-Oct-15
14-Jan-16
16-Apr-16
8-Jul-16
16-Jul-16
29-Aug-16

TP

1,400
1,300
1,200
1,100
1,000

CMP
1,157
1,123
1,129
1,173
1,157
1,073
1,020

Reco
BUY
BUY
BUY
BUY
BUY
BUY
BUY

Target
1,330
1,400
1,400
1,470
1,385
1,350
1,350

900

Aug-16

Jul-16

Jun-16

May-16

Apr-16

Mar-16

Feb-16

Jan-16

Dec-15

Nov-15

Oct-15

Sep-15

Aug-15

800

Rating Definitions
BUY
: Where the stock is expected to deliver more than 10% returns over the next 12 month period
NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period
SELL
: Where the stock is expected to deliver less than (-)10% returns over the next 12 month period

Page | 11

INFOSYS: COMPANY UPDATE

Disclosure:
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Page | 12