3QFY2017 Result Update | IT

January 17, 2017

Infosys

BUY

CMP

`1,038

Performance highlights

Target Price

`1,249

(` cr)

3QFY17

2QFY17

% chg (qoq) 3QFY16

% chg (yoy)

Investment Period

12 Months

Net revenue

17,273

17,310

(0.2)

15,902

8.6

EBITDA

4,769

4,724

0.9

4,328

10.2

Stock Info

EBITDA margin (%)

27.6

27.3

31bp

27.2

39bp

Sector

PAT

3,708

3,606

2.8

3,465

7.0

Market Cap (` cr)

219,519

Source: Company, Angel Research

Net Debt (` cr)

(30,250)

The Q3FY2017 result of Infosys was better than expected on the EBIT and Net

Beta

0.8

Profit fronts. The company posted a 1.4% sequential de-growth in USD revenues

52 Week High / Low

1,278/900

to US$2,551mn v/s US$2,561mn expected. On Constant Currency (CC) terms,

Avg. Daily Volume

259,717

de-growth was 0.3%. The volume growth during the quarter was 0.2% qoq. On

Face Value (`)

EBIT front, the company reported an EBIT margin of of 25.1% v/s 24.5%

BSE Sensex

27,288

expected, up 20bps qoq. Consequently, PAT, came in at `3,708cr v/s `3,569cr

Nifty

8,413

as expected, a growth of 2.8% qoq. On guidance front, FY2017 revenue

Reuters Code

INFY.BO

guidance was revised to 8.4% - 8.8% from 8.0% - 9.0% in constant currency. We

Bloomberg Code

INFY@IN

maintain our BUY rating on the stock, with a Target Price of `1,249.

Quarterly highlights: In rupee terms, revenues came in at

`17,273cr v/s

Shareholding Pattern (%)

`17,275cr expected, down 0.2% qoq. In terms, of Industry, the FSI was the only

Promoters

12.8

segment which grew by 0.2% qoq on CC terms, while rest of the verticals took a

MF / Banks / Indian Fls

18.8

dip. MFG & Hi-Tech, RCL and ECS posted a qoq dip of 0.5%, 0.4% and 0.8%

FII / NRIs / OCBs

57.8

on CC terms respectively. In terms of Geography, on Constant Currency basis,

Indian Public / Others

10.6

USA dipped by 0.6% qoq, Europe grew by 1.0% qoq, India dipped by 0.1% qoq,

while ROW dipped by 1.5% qoq. On EBIT front, the company posted an EBIT of

25.1% v/s 24.5% expected, up 20bps qoq. Consequently, PAT, came in at

Abs.(%)

3m 1yr

3yr

`3,708cr v/s `3,569cr expected, recording a growth of 2.8% qoq.

Sensex

(1.4)

11.6

28.3

Infosys

(7.0)

(16.2)

2.6

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

revenue growth guidance to 8.4%-8.8% in CC terms from 8%-9% earlier. It gave

a guidance of achieving sales of US$20bn by FY2020. Hence, we maintain our

BUY rating on the stock with a Target Price of `1,249.

3-year price chart

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

EPS (`)

53.7

59.0

62.5

69.4

P/E (x)

17.8

16.2

15.3

13.8

Source: Company, Angel Research

P/BV (x)

4.0

3.6

3.3

3.0

RoE (%)

22.5

21.8

21.3

21.6

RoCE (%)

20.8

20.7

21.2

22.2

Sarabjit kour Nangra

EV/Sales (x)

3.5

3.0

2.6

2.3

+91 22-39357800 Ext: 6806

EV/EBITDA (x)

12.6

10.9

9.8

8.5

[email protected]

Source: Company, Angel Research; Note: CMP as of January 16, 2017

Please refer to important disclosures at the end of this report

Infosys | 3QFY2017 Result Update

Exhibit 1: 3QFY2017 performance (IFRS, consolidated)

(` cr)

3QFY17

2QFY17

% chg (qoq)

3QFY16

% chg (yoy)

9MFY17

9MFY16

% chg (yoy)

Net revenue

17,273

17,310

(0.2)

15,902

8.6

51,365

45,891

11.9

Cost of revenue

10,405

10,547

(1.3)

9,621

8.2

31,230

27,797

12.4

Gross profit

6,868

6,763

1.5

6,281

9.3

20,135

18,094

11.3

SG&A expenses

2,099

2,039

2.9

1,953

7.5

6,192

5,654

9.5

EBITDA

4,769

4,724

0.9

4,328

10.2

13,943

12,440

12.1

Depreciation

435

415

4.6

369

17.8

1,253

1,040

20.5

EBIT

4,334

4,309

0.6

3,959

9.5

12,690

11,400

11.3

Other income

820

760

7.9

802

2.2

2,333

2,353

(0.8)

PBT

5,154

5,069

1.7

4,761

8.3

15,023

13,753

9.2

Income tax

1,446

1,460

(1.0)

1,296

11.6

4,268

3,857

10.7

Exceptional item

(2)

Reported PAT

3,708

3,606

2.8

3,465

7.0

10,757

9,896

8.7

Adjusted PAT

3,708

3,606

2.8

3,465

7.0

10,755

9,896

8.7

EPS

16.2

15.8

2.8

15.2

6.7

47.1

43.3

8.7

Gross margin (%)

39.8

39.1

69bp

39.5

26bps

39.2

39.4

(23)bp

EBITDA margin (%)

27.6

27.3

31bp

27.2

39bps

27.1

4bp

EBIT margin (%)

25.1

24.9

19bp

24.9

19bps

24.7

24.8

(14)bp

PAT margin (%)

21.5

20.8

64bp

21.8

(32)bp

20.9

21.6

(63)bp

Source: Company, Angel Research

Exhibit 2: 3QFY2017 - Actual Vs Angel estimates

(` cr)

Actual

Estimate

% Var.

Net revenue

17,273

17,275

(0.0)

EBITDA margin (%)

27.6

26.9

PAT

3,708

3,569

3.9

Source: Company, Angel Research

Revenues just in-line with expectation

Infosys, posted results better than expected on the EBIT and Net Profit fronts. The

company posted a 1.4% sequential de-growth in USD revenues to US$2,551mn

v/s US$2,561mn expected. On Constant Currency terms, de-growth was 0.3%

sequentially. The volume growth during the quarter was 0.2% qoq. In rupee terms,

revenues came in at `17,273cr v/s `17,275cr expected, down 0.2% qoq.

In terms, of Industry, the FSI was the only segment which grew by 0.2% qoq on CC

terms, while rest of the verticals took a dip. MFG & Hi-Tech, RCL and ECS posted

a qoq dip of 0.5%, 0.4% and 0.8% on CC terms respectively.

In terms of Geography, USA dipped by 0.6% qoq on CC basis, Europe grew by

1.0% qoq on CC basis, India dipped by 0.1% qoq on CC basis, while ROW

dipped by 1.5% qoq on CC basis.

January 17, 2017

Infosys | 3QFY2017 Result Update

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

8.0

6.0

4.4

4.0

3.3

3.1

2.5

2.7

2.3

2.4

2.2

2.0

1.8

0.6

0.2

0.1

0.0

3QFY16

4QFY16

1QFY17

2QFY17

3QFY17

Offshore

Onsite

Total volume growth

Source: Company, Angel Research

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

6.0

5.0

4.0

2.2

3.9

3.0

3.1

1.9

2.0

2.4

1.0

2.2

1.1

0.2

0.3

0.0

3QFY16

4QFY16

1QFY17

2QFY17

3QFY17

Revenue growth (constant currency)

Volume growth

Source: Company, Angel Research

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

33.3% to revenues, de-grew by 0.6% qoq; in CC terms, revenue from FSI grew by

0.2% qoq. The Manufacturing industry vertical, which contributed 22.5% to

revenues, de-grew by 1.5% qoq. In CC terms, the revenue from this vertical

de-grew by 0.5% sequentially.

The Retail, CPG and Logistics segment (RCL; contributed by 23.5% to revenues)

reported a 1.5% qoq de-growth. In CC terms, the revenue from RCL de-grew by

0.4% qoq. The Energy Utilities and Communications & Services segment

contributed 20.7% to revenue, reporting a de-growth of 2.1% qoq in revenue and

0.8% qoq on CC basis.

January 17, 2017

Infosys | 3QFY2017 Result Update

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

Particulars

% to revenue

% growth QoQ

% growth YoY

FSI

33.3

(0.8)

5.3

Banking and financial services

27.2

(2.1)

4.4

Insurance

6.1

5.5

9.6

Manufacturing

22.5

(1.4)

4.6

RCL

23.5

(1.4)

2.5

Retail and CPG

14.6

(3.4)

5.3

Transport and logistics

2.0

3.8

11.6

Life Sciences

4.6

0.8

(15.9)

Healthcare

2.3

3.1

28.3

ECS

20.7

(2.3)

13.1

Energy and utilities

5.0

2.7

3.9

Communication and services

9.1

(4.5)

20.6

Others

6.6

(2.9)

11.0

Source: Company, Angel Research

In terms of geographies, revenue from North America de-grew by 0.6% qoq in CC

terms, while other geographies such as Europe grew by 1.0% qoq and RoW de-

grew by 1.5% qoq (both in CC terms). India posted a 0.1% qoq de-growth in CC

terms.

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

6.0

5.2

4.9

5.0

3.9

4.0

3.6

3.7

3.2

3.0

2.4

2.7

2.0

1.0

0.6

0.5

0.3

0.0

(1.0)

(0.6)

(1.5)

(2.0)

3QFY16

4QFY16

1QFY17

2QFY17

3QFY17

North America

Europe

Rest of the world

Source: Company, Angel Research

January 17, 2017

Infosys | 3QFY2017 Result Update

Hiring and utilization

Infosys added 9,120 gross employees in 3QFY2017, of which 4,000 were lateral

additions. The net reduction number for the quarter stood at 66. Attrition (for

standalone entity) cooled down in 3QFY2017; it came down to 18.4% (LTM) v/s

20.0% in 2QFY2017.

Exhibit 7: Employee metrics

3QFY16 4QFY16 1QFY17 2QFY17 3QFY17

Gross addition

14,027

9,034

13,268

12,717

9,120

Net addition

8,620

661

3,006

2,779

(66)

Gross lateral emp. addition

6,115

5,266

5,260

5,752

4,000

Attrition - LTM basis (%)*

18.1

17.3

21.0

20.0

18.4

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

The utilization rate including trainees grew by 100bps qoq to 77.8% (higher than

77.7% as in 2QFY2017); while excluding trainees, it de-grew by 60bps qoq to

81.9%.

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

82.5

81.9

80.6

80.5

80.1

77.7

77.8

76.5

74.7

74.2

3QFY16

4QFY16

1QFY17

2QFY17

3QFY17

Including trainees

Excluding trainees

Source: Company, Angel Research

Margins expand

On the operating front, EBDITA and EBIT margins expanded by ~31bps qoq and

~19bps qoq to 27.6% v/s an expected 26.9% and 25.1% respectively. Pressure on

margins because of a decline in realization was offset by employee cost savings.

The drivers for this were - lower variable payout, lower leave costs with lapsing of

leaves taken in the holiday season and adjustment of interest rates in the US

leading to lower liabilities.

January 17, 2017

Infosys | 3QFY2017 Result Update

Exhibit 9: Trend in EBIT margin

100

25.5

24.9

25.1

24.9

(60)

(50)

24.1

(100)

(140)

(150)

(200)

3QFY16

4QFY16

1QFY17

2QFY17

3QFY17

Margin movement (qoq)

EBIT margin (%)

Source: Company, Angel Research

Client pyramid

Infosys added 77 new clients (gross additions) during the quarter, taking its

total active client base to 1,136. The client addition was across the board. he

company bagged New deals with TCV of US$664mn, during the quarter. TCV of

deal wins on LTM basis is US$3.4bn, which is 39% higher.

Exhibit 10: Client metrics

Particulars

3QFY16 4QFY16 1QFY17 2QFY17 3QFY17

Top client (% of revenue)

3.5

3.6

3.5

3.1

Gross Client addition

Active client

1045

1092

1126

1136

1152

US$1mn-5mn

294

290

306

300

316

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$664mn during the quarter.

 Changes in the regulatory landscape around visa usage are anticipated.

However, the company has been driving local hiring, and reducing

dependency on H1B visas.

 Infosys maintained its guidance of EBIT margin band of 24-26% for the

medium term.

January 17, 2017

Infosys | 3QFY2017 Result Update

Investment arguments

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

growth guidance for FY2017. The company has issued 8.4%-8.8% CC growth v/s

8%-9% qoq CC growth guidance earlier. This implies 4QFY2017, CC revenue

growth of 0.3-1.8% qoq. 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 USD terms, the guidance is

given at 10.0%-10.4% on the basis of exchange rate as on December 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 Target Price of `1,249.

January 17, 2017

Infosys | 3QFY2017 Result Update

Exhibit 11: Key assumptions

Parameters

FY2017E

FY2018E

Revenue growth - USD terms (%)

9.0

10.0

USD-INR rate

66.0

Revenue growth - INR terms (%)

9.5

13.0

EBITDA margin (%)

27.0

Tax rate (%)

28.0

EPS growth (%)

6.4

11.0

Source: Company, Angel Research

Exhibit 12: One-year forward PE (x)

2000.0

1750.0

1500.0

1250.0

1000.0

750.0

500.0

250.0

0.0

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

(`)

(%)

EBITDA (%)

P/E (x)

EPS CAGR (%)

EV/Sales (x)

RoE (%)

HCL Tech

Buy

831

1,000

20.4

20.5

13.0

9.6

1.8

17.9

Infosys

Buy

956

1,249

30.7

27.0

13.8

8.4

2.3

21.6

TCS

Buy

2,259

2,620

16.0

27.6

15.5

8.5

3.1

33.1

Tech Mahindra

Buy

487

600

23.2

17.0

12.2

11.4

1.1

20.7

Wipro

Buy

483

590

22.1

18.1

12.1

5.3

1.7

19.3

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 1,000 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.

January 17, 2017

Infosys | 3QFY2017 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

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

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

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

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

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

Other income

2,359

2,669

3,427

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

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

January 17, 2017

Infosys | 3QFY2017 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

Invest. in certificates of deposit

859

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

Derivative financial instrum.

101

215

101

116

Prepayments and other CA

2,123

2,636

3,296

4,448

3,964

4,480

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

Intangible assets

368

342

638

985

342

Available for sale fin. 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

1,876

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

Derivative financial instrum.

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

63,382

69,737

Other components of equity

307

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

January 17, 2017

Infosys | 3QFY2017 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

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

(Inc)/dec in other non current ass.

(1,253)

(138)

(1,248)

(1,517)

1,110

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

January 17, 2017

Infosys | 3QFY2017 Result Update

Key ratios

Y/E March

FY2013

FY2014

FY2015

FY2016

FY2017E

FY2018E

Valuation ratio (x)

P/E

23.3

20.2

17.8

16.2

15.3

13.8

P/CEPS

20.8

17.9

16.4

14.6

13.7

12.3

P/BVPS

5.5

4.6

4.0

3.6

3.3

3.0

Dividend yield (%)

1.1

1.7

1.9

2.6

3.3

3.6

EV/Sales

4.9

3.8

3.5

3.0

2.6

2.3

EV/EBITDA

17.0

14.0

12.6

10.9

9.8

8.5

EV/Total assets

4.2

3.3

2.8

2.5

2.3

2.1

Per share data (`)

EPS

Cash EPS

Dividend

Book value

173

207

239

269

293

321

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

0.2

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

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

6.4

5.8

5.9

6.4

Receivables days

January 17, 2017

Infosys | 3QFY2017 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)

January 17, 2017