15 July 2016
1QFY17 Results Update | Sector: Technology
Infosys
Buy
BSE SENSEX
27,837
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, INRm/ Vol ‘000
Free float (%)
S&P CNX
8,541
INFO IN
2,296.9
2,462.9 / 36.7
1278 / 969
-14/-20/10
4183
87.3
CMP: INR1,072
TP: INR1,320 (+23%)
Momentum stopped in its tracks; 2Q crucial
Significant revenue miss derails momentum…:
Infosys’ (INFO) 1QFY17 constant
currency (CC) revenue growth of 1.7% QoQ was significantly below our estimate of
+3.7% QoQ, impacted by a slowdown in discretionary spending in Consulting/Package
Implementation (CSI) and slower/delayed ramp-ups in a few large deals won earlier.
We note that until 3QFY16, INFO had bucked the trend of industry-wide slowdown in
CSI, which was a key driver of its growth delta. EBIT margin of 24.1% (-140bp QoQ) was
in line with our estimate. PAT of INR34.4b (-4.5% QoQ) too was below our estimate of
INR36b due to revenue miss and lower other income.
…and revised guidance necessitates immediate rebound:
Following a soft start to the
year, INFO cut its FY17 revenue growth guidance to 10.5-12% in CC, from 11.5-13.5%
earlier. This implies an ask rate of 3.1%-4.1% for the remainder of the year. Seasonally
weak 2H puts the onus of rebound on 2Q performance, even considering that
contribution from new services will not follow the seasonal pattern.
Macro challenges adding on to industry transitioning?
TCS cited potential slowdown
in ramp-ups and decision deferrals as possible headwinds for BFSI in the foreseeable
future, following the Brexit vote. INFO witnessed delays in a few large deals, which
impacted its 1Q performance. While the impact of the Brexit event will become clearer
gradually, companies have already felt the effects of the uncertainty in this quarter.
Financials & Valuation (INR b)
Y/E Mar
2016 2017E 2018E
Net Sales
624.4 708.7 821.8
EBITDA
170.8 192.4 224.1
PAT
134.9 143.5 167.2
EPS (INR)
59.0
62.8
73.2
Gr. (%)
9.4
6.4
16.5
BV/Sh (INR)
270.3 302.7 339.6
RoE (%)
24.7
23.2
24.1
RoCE (%)
23.2
21.9
22.8
P/E (x)
18.2
17.1
14.7
P/BV (x)
4.0
3.5
3.2
Estimate change
TP change
Rating change
Uncertainty limits near-term triggers:
We have cut our USD revenue estimates
for FY17/18 by 2.4%/3.2% and earnings estimates by 5.5%/4.3%. Under its new
management, INFO has steadily addressed concerns around revenue growth,
operating margins and new age services over the past 18 months. A soft start
to FY17 pushes the recovery back by a few steps, and we believe a good 2Q will
be crucial for industry-average growth in FY17. Momentum in top-25 accounts
and deal wins lend confidence toward that end. We believe INFO is investing in
all the right areas to regain and sustain its growth leadership, compounded by
industry-leading margins. Our price target of INR1,320 discounts FY18 earnings
by 18x. We maintain our
Buy
rating.
Ashish Chopra
(Ashish.Chopra@MotilalOswal.com); +91 22 6129 1530
Sagar Lele
(Sagar.Lele@MotilalOswal.com); +91 22 6129 1531
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Infosys
1QFY17 Revenue: A subdued beginning
INFO’s 1QFY17 CC USD revenues grew 1.7% QoQ, significantly below our
estimate of 3.7% QoQ. Reported USD revenue growth was 2.2% QoQ v/s our
estimate of 4.0% QoQ, indicating a +50bp impact due to the movement of
currencies against the USD.
Soft revenue growth was attributed to [1] Delays in commencement of ramp-up
in large deals, [2] Unanticipated headwinds in discretionary spending in
consulting services and package implementation, and [3] Decline in smaller
areas like Finacle and revenue from India.
Blended realization declined by 0.5% QoQ in CC. Volumes in IT Services grew
2.2% QoQ, which is lower than the 2.4% QoQ growth seen in the previous
quarter. Split up for the quarter, volume growth was 3.3% QoQ at onsite and
1.8% at offshore.
Exhibit 1: Volume growth momentum lower in 1QFY17 (YoY, %)
IT Services Volume Growth YoY
14.2
11.0
7.3
7.2
11.5
14.9
13.6
15.4
11.9
Source: MOSL, Company
Revenues from Products continued their revival, growing 8.1% QoQ, despite a
decline in Finacle.
The onsite:
offshore mix got slightly skewed towards onsite for both revenues
and effort, with the offshore composition at 43% and 70.1% respectively.
Rupee revenue was INR167.8b, +1.4% QoQ (below our estimate of INR170.2b).
Realized currency rate during the quarter was INR67.10/USD v/s our assumption
of INR66.89/USD.
Exhibit 2: Revenue growth in constant currency was 1.7% during the quarter; and 2.2% in USD terms
Revenue (USDm)
4.4
2.6
1.1
1.9
1.7
Growth (CC, QoQ, %)
6.9
3.9
1.5
2.0
3.2
0.8
2,159
0.6
-2.7
Revenue (USD m)
4.5
Growth (% QoQ)
6.0
1.6
2.2
(0.4)
2,133 2,201 2,218 2,159 2,256 2,392 2,407 2,446 2,501
2,133 2,201 2,218
2,256 2,392 2,407 2,446 2,501
Source: MOSL, Company
15 July 2016
2

Infosys
While the verticals of Manufacturing & Hi-Tech (2.4% QoQ CC), and ECS (2.4%
QoQ CC) grew above the company average; growth in the verticals of Financial
Services & Insurance (1.7% QoQ CC) and RCL (0.7% QoQ CC) was lower.
Growth across geographies was dominated by North America, which grew by
2.4% QoQ CC. Europe declined by 0.3% QoQ CC and India by 8.2% QoQ CC.
Deal wins during the quarter were higher than the previous quarters as it won
large deals with a TCV of USD809m. This compares to USD757m TCV in 4QFY16.
TCV of deal wins LTM is USD2.9b, which is 49% higher YoY.
Exhibit 3: Life Sciences has been a drag in 1Q (USD QoQ)
Verticals
BFS
Insurance
Manufacturing
Retail and CPG
Transport and Logistics
Life Sciences
Healthcare
Energy and Utilities
Telecom
Others
Contribution to
rev (%)
27.2
5.6
22.8
15.5
1.9
4.7
2.1
4.7
9.4
6.1
Growth - QoQ
(%)
1.5
6.0
2.7
5.7
-2.9
-15.7
7.4
-7.6
11.8
4.0
Contr to incr rev
(%)
18
14
27
38
-3
-40
7
-18
45
11
4-Qtr CQGR
2.7
0.9
1.2
3.5
8.9
-1.8
3.9
5.5
5.5
2.6
Source: Company, MOSL
Exhibit 4: Growth bogged down by Consulting and Package Implementation
Services
Business IT Services
App. Development
App Maintenance
Infra Mgmt Services
Testing Services
BPM
Product Engg Services
Others
Consulting Package Impl & Others
Products, Platforms and Solutions
Contribution to Growth
- Contr to incr 4-Qtr
rev (%)
QoQ (%)
rev (%)
CQGR
62.4
3.8
56
2.6
14.4
7.5
46
3.3
19.5
1.2
11
2.1
8.3
6.1
22
2.6
9.1
3.4
14
3.2
4.9
0.2
0
2.1
3.5
5.3
8
2.6
2.7
-1.4
-2
2.6
32.1
-1.1
-17
2.1
5.5
8.1
19
5.6
Source: Company, MOSL
Exhibit 5: India declined sharply during the quarter
Geographies
North America
Europe
India
Rest of the world
Contribution to
rev (%)
62.0
23.0
2.7
12.3
Growth - QoQ
(%)
1.6
-0.3
-8.7
6.6
Contr to incr rev
(%)
66
5
-11
39
4-Qtr CQGR
2.1
3.3
8.0
2.8
Source: Company, MOSL
Deal win improvement continues
INFO’s improvement over the last year is highlighted by three metrics more than
most others – [1] improvement in deal wins, [2] Reduction in attrition, and [3]
Improvement in growth in top clients.
15 July 2016
3

Infosys
Exhibit 6: 49% YoY growth in deal wins
Deal wins TCV in the last twelve months (USDm)
2,909
1,958
LTM ending June 2015
LTM ending June 2016
Source: MOSL, Company
Exhibit 7: Attrition down by over 500bp in FY16; but higher in 1Q
19.5
20.1
20.4
Exits
18.9
15.8
14.2
10,627
1QFY15
10,128
2QFY15
8,927
3QFY15
7,922
4QFY15
8,553
1QFY16
14.1
9,142
2QFY16
13.4
8,620
3QFY16
12.6
8,373
4QFY16
10,262
1QFY17
Standalone Attrition (%)
Source: MOSL, Company
Exhibit 8: Top 10 clients grew by 3.3% QoQ, and top 20 by 4.4% QoQ
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
18.7
18.3 16.5
15.1
7.9
0.3
0.3
11.7
9.7 10.0
8.7
5.8
2.62.2
8.3
4.32.2
3.52.83.84.34.7
-6.6 -8.7
-7.1
Top client
-2.1
-2.3
Top 2-5 accounts
Top 6-10 accounts
Source: MOSL, Company
Profitability: Pricing pressure offset by multiple levers
EBITDA margin declined by 150bp QoQ (in line with our est. of -150bp) to 26.5%.
In 1Q, the wage hike and visa expenses impacted margins by 140bp and 80bp
QoQ respectively. However, it was able to offset the impact to the extent of
80bp through cost optimization and variable pay reduction.
Utilization excluding trainees was 81.1%, +30bp QoQ (v/s estimate of 82%) and
that including trainees was 77.2%, +170bp QoQ.
PAT was INR34.4b, compared to our estimate of INR35.95b, -4.5% QoQ, on the
back of lower than anticipated revenue and Other Income.
15 July 2016
4

Infosys
Exhibit 9: EBIT margin at the lower end of guided band of 24-26%
EBIT Margins (%)
11.8
12.4
13.3
11.9
12.4
12.3
SG&A
12.3
12.5
12.2
25.1
1QFY15
26.1
2QFY15
26.7
3QFY15
25.7
4QFY15
24.0
1QFY16
25.5
2QFY16
24.9
3QFY16
25.5
4QFY16
24.1
1QFY17
Source: MOSL, Company
Exhibit 10: Utilization (in. trainees) improved during the quarter
83.0
Utilization Incl. Trainees
83.4
80.9
79.3
76.6
76.6
Utilization Excl. Trainees
82.0
81.4
80.8
81.1
81.4
76.3
76.2
73.8
76.3
75.1
75.5
77.2
Source: MOSL, Company
Guidance lowered to factor 1Q miss
INFO had earlier guided for FY17 YoY CC revenue growth of 11.5%-13.5%. The
guidance implied a CQGR of 2.95-3.7% over the course of FY17, compared with
3.55% demonstrated in FY16.
Owing to a weak beginning for FY17, factoring in uncertainty in the
macroeconomic environment and the decline in small pockets like Finacle and
India; INFO reduced its guidance to 10.5-12% growth in CC.
The revised guidance implies an even higher ask rate than earlier of 3.1-4.1% in
the remainder of the year.
Progress in new initiatives
To date INFO has had more than 227 client engagements where the Infosys
Information Platform (IIP) has been used. There is significant traction in
adoption, evident from the fact that client engagements stood at 220 in 4QFY16,
200 in 3QFY16, 160 in 2QFY16, and 117 in 1QFY16.
INFO launched MANA, its AI based platform and translated it to work with a
number of clients including JCI and Syngenta.
Automation is being driven across various parts of the organization. The
company managed to free up 2,150 FTE across the areas of ADM, package
systems maintenance, BPO and IMS.
15 July 2016
5

Infosys
Integration of Skava has been going well since it got acquired. 1QFY17 was a
good quarter for Skava. Services of Skava can be extended to Financial Services,
from its current presence in the Retail vertical.
During the quarter, EdgeVerve sustained momentum with 16 wins and 21 go-
lives for both the Finacle and Edge suite of solutions.
During the quarter, INFO made an investment in Trifacta, a provider of data
wrangling software that enables the transformation of data for analysis. As part
of this investment, Trifacta will provide a data wrangling solution for IIP and
Infosys’ other platforms and offerings.
Change in estimates
We have cut our revenue forecast for FY17/18E by 2.4/3.2% to factor in the
weaker-than-anticipated 1Q. A soft start in the challenging macro pushes the
recovery back a few paces. Growth rebound in 2Q will be crucial for industry-
average growth in FY17.
INFO is starting the year at the lower end of its guided EBIT margin range of 24-
26%. Although it maintained its guided band for the medium term; given the
tepid start to the year and current momentum, we are expecting flattish
margins over the next two years.
Consequently, we have cut our earnings estimate by 5.5/4.3% for FY17/18E.
Exhibit 11: Change in estimates
FY16
65.7
9,501
9.1
25.0
59.0
9.4
Revised
FY17E
67.8
10,456
10.0
24.9
62.8
6.4
FY18E FY16
70.0 65.7
11,741 9,501
12.3
9.1
25.3 25.0
73.2 59.0
16.5
9.4
Earlier
FY17E
67.7
10,713
12.8
25.2
66.5
12.6
FY18E
70.0
12,124
13.2
25.7
76.4
15.0
FY16
0.0%
0.0%
0bp
0bp
0.0%
Change
FY17E
0.1%
-2.4%
-271bp
-30bp
-5.5%
FY18E
0.0%
-3.2%
-88bp
-45bp
-4.3%
INR/USD
USD Revenue (m)
USD rev. growth (%)
EBIT Margin (%)
EPS (INR)
EPS Growth (%)
Source: Company, MOSL
Takeaways from Management Commentary
1Q weakness:
Revenue growth during the quarter was soft for two main
reasons: [1] Delay in ramp ups of a couple of large deals won in earlier quarters
and [2] Decline in Consulting / Package Implementation revenues, impacted
particularly by discretionary spending in Life Sciences
Guidance:
The guidance bakes in the revenue miss in the first quarter, and factors like
delayed ramp up and healthy deal wins drive belief that the weakness
should not persist sequentially going forward.
Also, the normal seasonality of strong 2Q and weaker 2H is how growth
should pan out in bread-n-butter services, though that will not be the case
in newer services which are beginning to contribute to growth.
It may take another quarter to ascertain the kind of impact Brexit might
have.
Execution:
Shortfall in 1Q growth on account of decline in Consulting / Package
Implementation was a function INFO’s execution, with the company not
anticipating discontinuation of contract renewal. That said, growth in top
6
15 July 2016

Infosys
accounts remained healthy, with top-10 growing 3.9% QoQ and top-25 faring
even better. More work needs to be done in the next tier of clients which will be
the area of focus going forward.
Margins:
Levers of onsite mix, sub-contractor costs, utilization and onsite roll
ratios continue to offer scope for optimizing operational efficiencies to maintain
margin in 24-26% range
Attrition:
While the attrition rate spiked during the quarter, measures to retain
high performers are yielding results, with attrition in that category down 200bp
QoQ
BFSI:
[1] Spend in insurance is challenged. However, INFO has had a couple of
wins recently so confident on the sector from company’s perspective. [2] In BFS,
broker-dealer segment was weak. The company is hoping it will come back in
2H. That said, pressure on regulatory mandates remains high, and hence spend
should be stable. 3 out of 10 large deals during the quarter were in BFS (USD
50m+). Not seeing much impact in the form of client actions following Brexit,
barring one account.
15 July 2016
7

Infosys
Valuation view: Gunning to regain bellwether status
Journey to ‘Infosys of the future’ well and truly on:
INFO’s strategy ‘renew and
new’ – renewing the way of delivering existing services and also building new
services of the future - resonated with the changing landscape of technology
demand. Several senior personnel from SAP have been recruited to facilitate
this. Successful execution of the strategy will help INFO regain its bellwether
status with industry-leading growth at strong profitability.
Addressed various pain points under new management:
Over the past 4-5
quarters (before 1QFY17), INFO’s improving traction is demonstrated in multiple
areas:
1.
Volume growth has picked up gradually from 9.3% in FY15 to 14.5% YoY in
FY16.
2.
Improvement in client mining—top-10 accounts, which were flattish till
1QFY15 have turned around impressively. Top account has grown 17.1% in
FY16 (compared to -5.6% in FY15). Similarly, the top 2-5 accounts have
grown by 9.3% in FY16, compared to 0.7% in FY15.
3.
Deal wins have picked up, with TCV of USD2.8b in FY16 being 45% higher
than that in FY15. INFO hasn’t factored in an additional USD440m from
deals that have been framed but not concluded.
4.
Flux in the senior management has been addressed. Standalone attrition
declined from 18.9% in FY15 to 13.6% in FY16.
5.
Cost optimization levers have helped deliver on margins despite pricing
pressure—IT Services utilization excluding trainees is up to 81% in FY16 and
FY15, from 77% in FY14 and 73% in FY13.
After cost optimization, pricing aggression puts margins in limelight:
INFO’s
cost structures have stabilized, allowing it to balance investments and
profitability without having significant volatility on the margins. While there
remains room to improve utilization, optimizing onsite employee and sub-
contractor costs in the near to medium term, these may in the best case offset
the headwind from wage hikes and lower pricing. Velocity of benefits from new
initiatives like automation will be crucial, in the absence of which, execution on
the margins will get challenging. However, we see this as a sector-wide
phenomenon and believe outperformance on revenue growth will aid relatively
better show on profitability too.
Cut estimates following 1Q miss, but expect growth to revive in 2Q:
We have
cut our USD revenue estimates for FY17/18 by 2.4%/3.2% and earnings
estimates by 5.5%/4.3% respectively. INFO had steadily addressed the concerns
under new management over last 18 months around revenue growth, operating
margins and new age services. A soft start in the challenging macro pushes the
recovery back a few paces, and growth rebound in 2Q will be crucial for
industry-average growth in FY17. Momentum in top-25 accounts and deal wins
lend confidence towards that end.
Uncertainty limits triggers in the near term:
The stock trades at 17.1x / 14.7x on
our FY17E/18E earnings. We expect INFO to grow its revenue at a CAGR of
11.2% over FY16-18 and EPS at a CAGR of 11.3% during this period. We believe
that INFO is investing in all the right areas to regain and sustain its growth
leadership, compounded by industry leading margins. Our price target of
15 July 2016
8

Infosys
INR1,320 discounts two year forward earnings by 18x. Notwithstanding the
execution issues in 1QFY17, INFO’s gradual recovery to industry-matching /
industry-leading growth at a strong margin will command a premium to peers.
Maintain
Buy.
Key triggers
Strong rebound in revenue growth momentum in 2QFY17
Uptick in large deal TCV in traditional business
Uptick in discretionary spending
Key risk factors
Macroeconomic uncertainty translating into revenue pressure.
Margin fall due to accelerated investments and pricing aggression.
Industry-wide pricing concern following aggressive stance of select players
Exhibit 13: INFO 1-year forward PB chart
29.6
Min(x)
12.0
9.5
18.1
7.0
16.9
4.5
2.0
2.7
4.7
3.7
PB (x)
Peak(x)
Avg(x)
9.7
Min(x)
Exhibit 12: INFO 1 year forward PE chart
32
24
16
10.5
8
PE (x)
Peak(x)
Avg(x)
Exhibit 14: Comparative valuation
Company Mkt cap
(USD b)
TCS
71.1
Infosys
36.1
Wipro
20.2
HCL Tech 15.0
TechM
7.3
Cognizant 35.0
TP (INR) Upside
EPS (INR)
P/E (x)
RoE (%)
FY16-18E CAGR (%)
(%) FY16E FY17E FY18E FY16E FY17E FY18E FY16E FY17E FY18E USD rev.
EPS
Neutral
2,650 8.4
123.2 134.0 153.1
19.9
18.2
16.0 37.1 33.6 32.7
10.8 11.5
Buy
1,320 23.1
59.0
62.8
73.2
18.2
17.1
14.7 24.7 23.2 24.1
11.2 11.3
Neutral
600 8.1
36.1
37.8
44.2
15.4
14.7
12.5 20.3 19.3 20.2
9.7 10.7
Buy
900 25.3
40.1
54.9
60.9
17.9
13.1
11.8 21.5 25.7 24.6
11.7
6.7
Neutral
550 9.1
35.1
36.4
42.7
14.4
13.8
11.8 23.4 20.9 18.6
10.6 10.3
Not Rated
2.7
2.9
3.2
21.6
19.7
17.8 19.1 17.6 16.5
11.8 10.1
Source: MOSL, Company
Rating
15 July 2016
9

Infosys
Operating metrics
Exhibit 15: Operating metrics
4QFY14
Verticals (%)
Banking and Financial Services
Insurance
Manufacturing
Retail & CPG
Transport & Logistics
Life Sciences
Healthcare
Energy & Utilities
Communication & Services
Others
Service Lines (%)
Development
Maintainence
Infrastructure Management
Testing
Business process management
Engg Services
Others
BITS
CSI
Products
BPM Platforms
Others
PPS
Geography (%)
North America
Europe
India
RoW
Clients (%)
Revenues from top client
Revenues from top 5 clients
Revenues from top 10 clients
Revenues from 2-5 client
Revenues from 6-10 clients
Revenues from Non-Top 10 clients
Clients added during the quarter
Total active client
27.3
6.2
23.0
15.5
1.7
4.7
1.9
5.3
8.6
5.8
1QFY15
27.4
6.0
23.2
15.8
1.5
4.6
1.9
5.1
8.7
5.8
2QFY15
26.8
6.0
23.3
15.3
1.5
4.7
1.9
5.5
8.9
6.1
3QFY15
26.8
6.3
23.4
14.9
1.5
5.1
2.0
4.9
8.7
6.4
4QFY15
27.2
6.4
23.8
15.1
1.6
5.1
1.7
4.5
8.3
6.3
1QFY16
27.1
6.0
24.1
15.0
1.5
5.6
2.0
4.2
8.4
6.2
2QFY16
27.2
5.6
23.8
14.9
1.9
5.9
1.9
4.7
7.9
6.2
3QFY16
27.6
5.9
22.8
14.7
1.9
5.8
1.9
5.1
8.0
6.3
4QFY16
27.4
5.4
22.7
15.0
2.0
5.7
2.0
5.2
8.6
6.2
1QFY17
27.2
5.6
22.8
15.5
1.9
5.8
1.9
4.7
9.4
6.3
15.5
19.4
7.2
9.2
5.5
3.4
2.2
62.4
32.5
3.5
1.2
0.4
5.1
15.8
18.7
7.9
9.5
5.3
3.4
2.3
62.9
32.3
3.2
1.2
0.4
4.8
16.1
18.9
7.9
9.4
5.1
3.4
2.2
63.0
32.4
2.9
1.2
0.5
4.6
14.9
19.5
8.2
9.1
5.4
3.4
2.3
62.8
32.6
2.9
1.1
0.6
4.6
14.3
19.7
8.1
8.9
5.3
3.5
2.5
62.3
32.7
3.4
1.0
0.6
5.0
14.0
19.9
8.3
8.9
5.0
3.5
2.7
62.3
32.8
3.2
1.0
0.7
4.9
14.0
19.6
8.7
9.0
4.9
3.3
2.8
62.3
32.8
2.8
1.0
1.1
4.9
14.1
19.1
7.5
9.2
4.9
3.4
3.0
61.2
33.8
3.0
0.9
1.1
5.0
13.7
19.7
8.0
9.0
5.0
3.4
2.8
61.6
33.2
3.2
0.8
1.2
5.2
14.4
19.5
8.3
9.1
4.9
3.5
2.8
62.5
32.1
3.1
0.9
1.0
5.0
59.8
25.2
2.6
12.4
60.8
24.5
2.4
12.3
60.8
24.7
2.2
12.3
61.6
24.0
2.5
11.9
62.8
23.1
2.5
11.6
63.2
22.4
2.2
12.2
63.2
22.9
2.3
11.5
62.5
23.2
2.8
11.5
61.9
23.4
3.0
11.7
62.0
23.0
2.7
12.3
3.6
14.1
23.4
10.5
9.3
76.6
50
890
3.4
13.7
22.9
10.3
9.2
77.1
61
910
3.4
13.6
22.9
10.2
9.3
77.1
49
912
3.2
13.3
22.4
10.1
9.1
77.6
59
932
3.5
13.9
22.7
10.4
8.8
77.3
52
950
3.7
14.0
23.0
10.3
9.0
77.0
79
987
3.7
14.0
22.8
10.3
8.8
77.2
82
1,011
3.5
13.9
22.6
10.4
8.7
77.4
75
1,045
3.6
13.7
21.8
10.1
8.1
78.2
89
1092
3.6
13.7
22.2
10.1
8.5
77.8
95
1126
Source: MOSL, Company
15 July 2016
10

Infosys
Exhibit 16: Operating metrics
QoQ Growth (%)
Verticals
Banking and Financial Services
Energy & Utilities
Insurance
Manufacturing
Others
Retailing
Telecom
Transportation
Service Lines
Development
Maintenance
Infrastructure Management
Consulting & Package Implementation
Testing
Engg Services
Business process management
Others
Products
Geography
North America
Europe
India
RoW
Clients
Revenues from top client
Revenues from top 5 clients
Revenues from top 10 clients
Revenues from Non-Top 10 clients
Revenues from 2-5 client
Revenues from 6-10 clients
4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17
-0.4
1.5
-2.0
0.5
-5.0
-3.5
8.4
5.8
1.7
-1.9
-1.3
2.8
1.1
3.9
3.1
-10.0
1.3
11.3
3.2
3.6
6.5
-0.1
5.5
3.2
1.7
-10.2
5.8
1.2
7.1
-1.8
-1.5
0.8
-1.2
-10.6
-1.1
-1.0
-5.5
-1.4
-7.1
3.8
2.9
-2.5
-2.0
5.8
9.3
3.8
5.8
-2.0
5.1
18.7
-1.0
4.7
8.4
5.3
-0.3
34.3
2.8
9.2
6.0
-3.6
0.6
-0.7
1.9
0.6
-0.5
3.6
-7.0
1.2
-0.6
3.7
9.2
7.0
2.2
-7.6
6.0
2.7
-3.7
5.7
11.8
-2.9
-2.9
0.7
4.0
-3.1
5.3
5.8
3.4
4.4
-4.1
3.9
-1.7
11.9
1.3
5.3
2.0
-1.7
6.6
-4.0
5.1
4.3
3.2
3.5
2.1
3.2
-0.7
-1.3
-1.1
-6.7
4.0
4.6
1.4
-2.4
0.8
6.7
5.4
0.8
-6.6
-1.7
-3.8
-2.4
-4.8
0.2
-4.5
5.8
5.8
2.3
5.6
7.1
4.8
4.5
4.5
-1.4
12.9
2.4
6.0
4.4
11.1
6.0
7.2
0.0
3.9
10.0
6.0
1.3
-1.9
-13.3
3.7
2.9
3.7
0.6
7.8
2.7
-1.3
4.8
8.4
-0.2
-0.6
1.6
3.7
-5.2
5.7
7.5
1.2
6.1
-1.1
3.4
5.3
0.2
-1.4
8.1
-0.7
0.8
-0.4
-1.2
3.7
-0.9
-5.9
1.1
3.2
4.0
-5.4
3.2
2.1
-2.1
14.5
-2.5
-0.8
-6.3
-2.7
-5.1
5.2
1.3
-8.0
9.9
6.2
8.4
10.8
-0.1
-0.6
1.9
22.5
0.6
0.6
2.5
8.9
3.4
2.4
0.5
-8.0
7.5
-3.1
-0.4
-0.8
-0.3
0.6
-1.4
-3.7
-0.9
-0.2
2.6
0.0
0.9
3.2
2.4
3.2
3.2
2.2
4.3
-5.2
-1.5
-1.4
1.4
-0.2
-1.4
6.5
1.7
-1.4
-3.0
0.2
-5.9
10.5
5.2
5.9
4.1
3.5
6.9
6.0
6.0
5.1
6.3
6.0
3.7
-4.8
-0.1
-0.3
0.9
1.6
-0.5
4.5
0.2
-2.0
2.7
-1.3
-5.4
2.2
2.2
4.1
1.7
2.2
7.3
Source: MOSL, Company
15 July 2016
11

Infosys
Story in charts
Exhibit 17: Structural growth recovery playing out…
Revenue (USDm)
4.4
2.6
2,159
(0.4)
1.1
1.9
1.7
1.5
Growth (CC, QoQ, %)
6.9
3.9
1.5
3.9
4.4
2.6
1.1
(0.4)
1.9
1.7
Exhibit 18: …minus execution issues in 1Q
CC revenue growth (QoQ, %)
6.9
2,133 2,201 2,218
2,256 2,392 2,407 2,446 2,501
Source: Company, MOSL
Source: Company, MOSL
Exhibit 19: Expect a higher normal for utilization (including
products) with focus on increasing productivity
Utilization Incl. Trainees
81.4
83.0
83.4
79.3
76.2
76.6
80.9
76.6
73.8
Utilization Excl. Trainees
82.0
81.4
80.8
81.1
Exhibit 20: Deal signings steadily improving
Deal signings TCV (USD m)
76.3
76.3
75.1
75.5
77.2
600 450 500 700 700 600 230 440 688 983 360 757 809
Source: Company, MOSL
Source: Company, MOSL
Exhibit 21: Heading towards industry-leading growth
25.7
15.8
11.5
5.8
6,041
FY11
6,994
FY12
7,398
FY13
8,249
FY14
5.6
8,711
FY15
9.1
10.0
Revenue (USD m)
Growth (% YoY)
Exhibit 22: Pause after significant improvement in attrition
Voluntary Attrition rate (% LTM)
18.1 18.7
19.5 20.1
20.4
18.9
14.2 14.1
15.8
13.4
12.6
16.9 17.3
12.3
9,501 10,456 11,741
FY16E FY17E FY18E
Source: Company, MOSL
Source: Company, MOSL
15 July 2016
12

Infosys
Financials and Valuation
Key assumption
INR/USD Rate
Revenues (USD m)
Offshore Revenue (%)
Total Headcount
Net Addition
Gross Addition
Utilization Incl. trainees (%)
Utilization Excl. trainees (%)
Per Capita Revenue Productivity (USD)
2011
45.5
6,041
50.8
130,820
17,024
43,120
72.0
78.9
49,392
2011
275,010
20.9
89,560
32.6
8,540
81,020
12,110
0
93,130
24,900
26.7
0
68,230
68,230
11.2
2011
2,860
270,170
273,030
273,030
84,460
32,540
51,920
5,250
10,840
244,620
58,960
166,660
19,000
39,600
25,960
13,640
205,020
273,030
2012
48.2
6,994
50.1
149,994
19,174
45,605
69.2
75.6
49,812
2012
337,340
22.7
107,160
31.8
9,370
97,790
19,040
0
116,830
33,670
28.8
0
83,160
83,160
21.9
2012
2,860
331,750
334,610
334,610
91,740
36,210
55,530
10,340
3,770
313,840
77,550
205,910
30,380
48,870
30,810
18,060
264,970
334,610
2013
54.5
7,398
49.0
156,688
6,694
37,036
69.5
73.0
48,245
2013
403,520
19.6
115,570
28.6
11,284
104,286
23,590
0
127,876
33,670
26.3
0
94,206
94,206
13.3
2013
2,860
395,110
397,970
397,970
117,540
42,080
75,460
16,600
17,390
354,060
95,180
218,320
40,560
65,540
41,300
24,240
288,520
397,970
2014
60.8
8,249
48.0
160,405
3,717
39,985
73.6
77.4
52,029
2014
501,330
24.2
136,340
27.2
13,740
122,600
26,690
-2,190
147,100
40,620
27.6
0
106,480
108,670
15.4
2014
2,860
472,440
475,300
475,300
140,790
55,250
85,540
18,320
45,230
421,460
111,620
259,500
50,340
95,250
56,180
39,070
326,210
475,300
2015
61.2
8,711
48.8
176,187
15,782
53,386
76.2
82.0
51,760
2015
533,190
6.4
149,020
27.9
10,690
138,330
34,270
0
172,600
49,290
28.6
10
123,300
123,300
13.5
2015
5,720
541,910
547,630
547,630
178,360
64,220
114,140
14,400
24,130
510,850
125,580
303,670
81,600
115,890
70,180
45,710
394,960
547,630
2016
65.7
9,501
47.3
194,044
17,857
52,545
76.5
81.7
51,325
2016
624,410
17.1
170,790
27.4
14,590
156,200
31,250
0
187,450
52,520
28.0
0
134,930
134,930
9.4
2016
11,440
606,350
617,790
617,790
208,370
74,510
133,860
18,930
21,050
580,050
143,590
326,970
109,490
136,100
79,760
56,340
443,950
617,790
2017E
67.8
10,456
46.5
217,819
23,775
51,668
77.5
82.4
50,773
2017E
708,741
13.5
192,390
27.1
15,940
176,449
25,304
0
201,754
58,209
28.9
0
143,545
143,545
6.4
2017E
11,440
680,322
691,762
691,762
236,278
92,320
143,957
17,110
22,920
674,421
168,933
389,966
115,522
166,646
96,197
70,449
507,774
691,762
2018E
70.0
11,741
46.7
248,443
30,624
56,500
77.1
82.1
50,360
Income Statement
Y/E Mar
Net Sales
Change (%)
EBITDA
EBITDA Margin (%)
(INR Million)
2018E
821,836
16.0
224,068
27.3
Depreciation
EBIT
Other Income
Extraordinary items
PBT
Tax
Tax Rate (%)
Min. Int. & Assoc. Share
Reported PAT
Adjusted PAT
Change (%)
16,253
207,816
27,615
0
235,431
68,275
29.0
0
167,156
167,156
16.4
Balance Sheet
Y/E Mar
Share Capital
Reserves
Net Worth
Total Capital Employed
Gross Fixed Assets
Less: Acc Depreciation
Net Fixed Assets
Capital WIP
Investments
Current Assets
Debtors
Cash & Bank
Loans & Adv, Others
Curr Liabs & Provns
Curr. Liabilities
Provisions
Net Current Assets
Total Assets
(INR Million)
2018E
11,440
764,564
776,004
776,004
264,278
108,573
155,705
17,110
22,920
764,619
195,890
439,729
129,001
184,349
111,365
72,984
580,270
776,004
15 July 2016
13

Infosys
Financials and valuation
Ratios
Y/E Mar
Basic (INR)
EPS
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Cash P/E
Price / Book Value
EV/Sales
EV/EBITDA
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
Turnover Ratios (%)
Fixed Asset Turnover (x)
Debtors (No. of Days)
Net Debt/Equity (x)
2011
29.9
33.6
119.5
15.1
50.5
2012
36.4
40.5
146.4
11.7
32.3
2013
41.2
46.2
174.1
10.5
25.5
2014
46.6
53.6
208.0
15.8
33.1
2015
53.9
58.6
239.6
18.5
34.3
2016
59.0
65.4
270.3
24.8
41.9
2017E
62.8
69.8
302.7
30.0
47.8
2018E
73.2
80.3
339.6
30.0
41.0
23.0
20.0
5.2
4.3
15.7
1.5
19.9
18.3
4.5
4.0
14.2
1.7
18.2
16.4
4.0
3.4
12.3
2.3
17.1
15.4
3.5
2.9
10.6
2.8
14.7
13.4
3.2
2.4
8.9
2.8
26.6
26.6
5.7
78.3
-0.6
2011
89,560
11,790
-15,530
-24,900
60,920
-12,470
48,450
33,030
20,560
0
0
-35,930
-35,930
45,550
121,110
166,660
27.4
27.4
6.6
83.9
-0.6
2012
107,160
19,660
-21,320
-33,670
71,830
-18,070
53,760
7,070
-11,000
0
0
-21,580
-21,580
39,250
166,660
205,910
25.7
25.7
6.5
86.1
-0.5
2013
115,570
21,960
-9,580
-32,930
95,020
-32,470
62,550
-18,040
-50,510
0
-890
-31,210
-32,100
12,410
205,910
218,320
24.9
24.9
6.6
81.3
-0.5
2014
138,530
22,500
390
-38,780
122,640
-27,450
95,190
-22,580
-50,030
0
0
-31,430
-31,430
41,180
218,320
259,500
26.0
24.1
5.7
86.0
-0.6
2015
149,020
35,450
-25,770
-49,290
109,410
-35,370
74,040
21,100
-14,270
0
0
-50,970
-50,970
44,170
259,500
303,670
24.7
23.2
5.3
83.9
-0.5
2016
170,790
31,260
-24,275
-52,520
125,255
-37,278
87,977
3,287
-33,991
0
0
-68,403
-68,403
22,861
303,670
326,531
23.2
21.9
5.3
87.0
-0.6
2017E
192,390
25,824
-1,348
-58,209
158,657
-24,218
134,440
11,949
-12,269
0
0
-82,913
-82,913
63,475
326,531
390,006
24.1
22.8
5.7
87.0
-0.6
Cash Flow Statement
Y/E Mar
Adjusted EBITDA
Non cash opr. exp (inc)
(Inc)/Dec in Wkg. Cap.
Tax Paid
CF from Op. Activity
(Inc)/Dec in FA & CWIP
Free cash flows
(Pur)/Sale of Invt
CF from Inv. Activity
(INR Million)
2018E
224,068
27,615
-22,733
-68,275
160,676
-28,000
132,676
0
-28,000
Inc/(Dec) in Net Worth
Inc / (Dec) in Debt
Divd Paid (incl Tax) & Others
CF from Fin. Activity
Inc/(Dec) in Cash
Add: Opening Balance
Closing Balance
0
0
-82,913
-82,913
49,763
390,006
439,768
15 July 2016
14

Infosys
Corporate profile
Company description
Exhibit 1: Sensex rebased
Infosys is the second-largest IT services company in India
with revenue of USD9.5b (LTM) and employing over
194,000+ people. It defines designs and delivers IT-
enabled business solutions that help many Global 2000
companies win in a flat world. INFY has a global footprint
in over 30 countries and development centers in India,
China, Australia, the UK, Canada and Japan. Company's
service offerings span business and technology consulting,
ADM, SI, product engineering, IT infrastructure services
and BPO.
Source: MOSL/Bloomberg
Exhibit 2: Shareholding pattern (%)
Promoter
DII
FII
Others
Mar-16
12.8
17.5
40.7
29.1
Dec-15
13.1
17.6
56.8
12.5
Mar-15
13.1
15.1
54.2
17.7
Exhibit 3: Top holders
Holder Name
LIC of India
GOVERNMENT OF SINGAPORE - E
ABU DHABI INVESTMENT AUTHORITY
OPPENHEIMER DEVELOPING MARKETS FUND
HDFC TRUSTEE COMPANY LIMITED
% Holding
5.8
2.4
2.4
2.0
1.4
Source: Capitaline
Note: FII Includes depository receipts
Source: Capitaline
Exhibit 4: Top management
Name
R Seshasayee
Vishal Sikka
U B Pravin Rao
Manikantha A G S
Designation
Chairman (Non-Executive)
Managing Director & CEO
Whole Time Director & COO
Company Secretary
Exhibit 5: Directors
Name
Jeffrey S Lehman
Ravi Venkatesan
John Etchemendy
Name
Kiran Mazumdar Shaw
Roopa Kudva
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
BSR & Co LLP
KPMG
Parameshwar G Hegde
Singhvi Dev & Unni
Type
Statutory
Independent
Secretarial Audit
Internal
Source: Capitaline
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY17
FY18
MOSL
forecast
62.8
73.2
Consensus
forecast
66.0
74.9
Variation (%)
-4.8
-2.3
Source: Bloomberg
15 July 2016
15

Disclosures
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Infosys
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objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek
professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for
future performance, future returns are not guaranteed and a loss of original capital may occur.
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