23 April 2018
Update
| Sector:
Technology
Infosys
Buy
BSE SENSEX
34,451
S&P CNX
10,585
CMP: INR1,183
TP: INR1,330(+13%)
Stability (FY19)
Momentum
Accelerate (FY21)
Granular strategy articulated around Digital, Core, Sales and Talent
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val, INRm
Free float (%)
INFO IN
2,184
1220 / 862
-4/22/11
2,570.8
38.9
5446.0
87.1
On its Analyst Day, INFO’s new CEO Mr Salil Parekh shed more light on the four
pillars of its strategic plan: [1] scaling agile digital, [2] energizing the core, [3] re-
skilling people and [4] expanding localization of talent.
INFO’s well-articulated strategy in digital, sales, talent re-skilling and localization,
coupled with the USD2.79b base of digital revenues, provides a good base to kick-off
its next innings. With previous distractions behind, INFO’s focus is back on execution.
The company cited that FY19 will be a year of stabilization, FY20 a year of
momentum building, and FY21 a year of acceleration. It, however, refrained from
divulging any further details about the implications of this strategy on its
absolute/relative financial performance.
With the benefits from productivity levers such as automation becoming visible,
INFO indicated that pricing is not as big a concern and that the margin guidance cut is
a function of ~USD100m worth of investments made to build capabilities imperative
for the execution of its strategy.
INFO’s USD2.79b revenue base puts it in a strong position in the USD160b+ market,
which is growing at more than 15%. It cited that knowledge of clients’ core
technology environment is a huge advantage, which, combined with energizing the
core, means that firms such as INFO are best placed to drive Digital story.
Its investments in sales & marketing will focus on six imperatives: [1] branding, [2]
injecting digital specialists into accounts, [3] scaling large accounts, [4] shaping large
deals, [5] acquiring new accounts and [6] enabling sales via continuous anytime-
anywhere learning.
We maintain our Buy rating on INFO with a price target of INR1,330 (16x FY20E
earnings).
Financials Snapshot (INR b)
2018 2019E 2020E
Y/E Mar
705.2 779.6 861.4
Net Sales
190.1 202.6 220.7
EBITDA
161.0 151.0 162.7
PAT
64.8
70.1
77.7
EPS (INR)
3.1
8.3
10.8
Gr. (%)
286.5 319.3 303.9
BV/Sh (INR)
24.1
22.9
24.9
RoE (%)
24.1
22.9
24.9
RoCE (%)
17.4
16.0
14.5
P/E (x)
3.9
3.5
3.7
P/BV (x)
Shareholding pattern (%)
As On
Mar-18 Dec-17 Mar-17
Promoter
12.9
12.9
12.8
DII
21.6
21.7
20.3
FII
35.7
35.4
38.8
Others
29.8
30.0
28.1
FII Includes depository receipts
Stock Performance (1-year)
Infosys
Sensex - Rebased
1,240
1,120
1,000
880
760
1.
Articulates the granular execution focus of the strategy
INFO divulged further details about the four pillars of its execution, articulating
the focus areas of its strategy under the new leadership. Its five-dimensional
digital service architecture comprises: [1] Insights, [2] Innovate, [3] Accelerate,
[4] Assure and [5] Experience.
INSIGHT
– Data is one of the biggest opportunities in Digital. INFO is driving
this through both IP-led differentiation (Genome, Hawkeye) and bundled
solutions built with new-age partners.
ACCELERATE
– Transitioning Enterprise workloads. Digital workloads were
always on the cloud.
INNOVATE
- Value of Digital is in interface of Digital and Physical objects.
INFO is building platforms to drive that. It is co-creating IPs with clients
leveraging its NIA framework.
ASSURE
– New-age assurance capabilities, cyber defense centers, security
architecture capabilities are some of the aspects of Assure.
It showcased examples of some of the work done with its large accounts,
such as Telstra and Adecco, where one or many of these five tenets were
put to practice.
Ashish Chopra – Research Analyst
(Ashish.Chopra@MotilalOswal.com); +91 22 6129 1530
Sagar Lele – Research Analyst
(Sagar.Lele@MotilalOswal.com); +91 22 6129 1531
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Infosys
Exhibit 1: INFO’s 5five-pronged digital service architecture
Source: Company, MOSL
Three-year road-map: From Stabilizing to Accelerating
In terms of INFO’s outlook from a three-year perspective, it laid out that FY19
will be a year of stabilization after multiple distractions in the recent past. It will
build momentum on top of this in FY20 and seek to accelerate with greater
share of clients’ wallets in FY21.
The natural question followed – is it setting expectations for relatively subdued
growth for the next couple of years. However, the company refrained from
deducing or alluding to any financial implications of the same, citing this is more
in terms of the changes to the structure and the necessary investments to be
made to the team.
INFO’s investments in sales & marketing will focus on six imperatives: [1]
Branding, [2] Injecting digital specialists into accounts, [3] Scaling large accounts,
[4] Shaping large deals, [5] Acquiring new accounts and [6] Enabling sales via
continuous anytime-anywhere learning.
USD50m+ and USD100m+ were prime focus areas for the company. It is
selecting its team very carefully per client to drive this agenda.
Multi-pronged investments in sales: from Digital to Large deals
People: Re-skilling through Lex and localization
INFO’s COO Mr Pravin Rao cited that fresh hiring was being diversified to myriad
of areas encompassing traditional engineering campuses, selecting top
programmers from IITs, and also tying up with third-parties to source talent.
All said and done, the talent gap is real – this is why INFO is also looking at
adjacent skills and up-skilling talent for newer technologies.
INFO has also set up its anytime-anywhere learning platform Lex to facilitate
learning by its employees.
23 April 2018
2

Infosys
Exhibit 2: INFO’s reskilling model
On the localization front, INFO is building local innovation and tech hubs, which
are situated closer to its clients. Four US hubs will be operational in FY19.
Exhibit 3: Four US hubs to be operational in FY19
The issue of margins and demand: more of the same
INFO reiterated its commentary of four investment areas, which have dragged
margin guidance down by 1pp – sales, re-skilling, localization and digital.
INFO’s utilization as a lever has been used to the extent possible, and further
room in expanding the same is limited. However, its productivity drive
continues, whereby headcount growth will continue to be lesser than revenue
growth.
The per capita constant currency pricing has been stable at both onsite and
offshore in FY18, implying that if Digital growth continues its recent trend, there
might be some uptick in realization.
On the revenue front, FY19 should be a better year for BFS than FY18. The
traction in faster-growing segments such as E&U, Communications and
Insurance remains intact.
23 April 2018
3

Infosys
Exhibit 4:
Productivity improvements (including utilization) drove better revenue per employee
A foreword on the long-term industry view:
Growth for Indian IT should gradually
pick-up from current 6-7% as Digital services proliferate, which today are still small
to move the needle on the overall performance. India will remain the hotbed for
talent supply en masse, making a case for increasing shift of Digital business from
onsite. That said, with Automation the top priority of every Board, without
exceptions, delineation of revenue growth with headcount growth appears obvious
– and the only lever to stem the decline in profitability witnessed in recent years.
INFO against that industry backdrop
Inward focus will mean some catch-up play:
INFO has built capabilities to
match spend shifts over the past three years. Its portfolio is not very different
from the industry, but it has been investing in new services and solutions, and
currently 11% of revenues come from services/solutions that didn’t exist two
years ago. Digital contributes to north of 25% of overall revenue for the
company. Execution rigor is the mantra for the company going forward, having
boiled down the strategic imperatives. Its inward focus – thanks to the recent
distractions – mean that the company will be left playing catch up to the more
focused players in the market over the next year or so, at least.
Operational efficiency commendable:
On the profitability front, it has been
among the most disciplined companies in terms of operational efficiency in the
last couple of years. This has helped hold margins in a tight band while investing
aggressively in building capabilities and going through a price reset in
competitive traditional large deals. Going forward, despite the plan to invest
further to build capabilities and boost the sales function, onsite roll ratios
continue offering potential to improve efficiencies further, and productivity
from Automation will only keep inching up with greater maturity.
Considering this, we expect INFO to grow revenues in line with the industry due
to its heavy legacy exposure today. However, it should be able to hold on to its
margins, which will be a function of greater revenue per employee and lower
headcount growth v/s revenue growth. As a result, our roll forward earnings
CAGR over the next three years for INFO is aligned with the revenues at 8.8%,
which is slightly back-ended but at the median of the industry.
23 April 2018
4

Infosys
Exhibit 5: INFO – Business Construct
Y/E March
USD revenue growth (%)
Employee growth (%)
Revenue per employee (USDk per annum)
EBITDA margin (%)
EPS growth (%)
2013
5.8
4.5
48,245
28.6
13.3
2014
11.5
2.4
52,029
27.2
13.0
2015
5.6
9.8
51,760
27.9
15.8
2016
9.1
10.1
51,325
27.4
9.4
2017
7.4
3.3
51,764
27.2
6.4
2018
7.2
1.9
54,090
27.0
3.1
2019E
8.8
10.2
55,478
26.0
8.3
2020E
9.0
8.5
55,312
25.6
10.8
2021E
8.6
6.0
56,066
25.3
8.8
Source: Company, MOSL
Valuation and view
It had been about revenue growth:
Valuation multiples have historically
ascribed the highest valuation to revenue growth, which is not surprising as it is
also the single-largest lever for margins. Thus, as growth at INFO has come down
from 20%+ to single digits, the current forward P/E multiple is at 14x v/s the
long-term average of 17x.
Longevity may be the offsetting play:
As the industry shifts its gears to Digital,
there remains a tremendous need to up investments in technology across the
board. Companies participating in this wave may not be materially outgrowing
their peers, but will still enjoy significantly higher multiples for the other key
determinant of valuation – Longevity. Digital-ready vendors offer healthier
visibility of profits and cash flow generation today, while legacy businesses are
faced with the dual pressure of shrinking revenue pie.
Case for re-rating supported by examples of Accenture and CTSH:
The test for
Indian IT has now been stern than ever, and we see growth from newer
technologies as a strong case in point for accretion of valuation multiples, even
without acceleration in revenues. CTSH, which is growing lower than its
enamored history, and Accenture are case in points that drive our thesis.
What it means for the target price?
Three-year view:
This key premise drives our expectation of a target multiple
not very divergent from the historical average for INFO: 18x 1-year forward,
which on FY21E earnings works out to INR1,500. This implies a return CAGR of
15% at INFO.
One-year view:
INFO’s performance in recent years has been in line with peers.
The guidance on revenues was on expected lines. However, we believe that 22%
EBIT at the lower end of margin band is conservative, with pricing pressures
seemingly tailing off and the share of higher-margin Digital inching up. Our price
target of INR1,300 discounts forward earnings by 16x. Maintain
Buy.
Key triggers
Pick-up in growth led by strength in multiple areas
Better profitability performance
Unhindered operational performance despite changes at board/leadership
Key risk factors
Adverse regulatory developments around current visa regime
Additional instability in leadership and execution from multiple exits
Issues in certain pockets weighing on overall growth
23 April 2018
5

Infosys
Exhibit 6: INFO 1-year forward P/E
P/E (x)
Min (x)
Avg (x)
+1SD
Exhibit 7: INFO 1-year forward P/B
24.8
19.8
Max (x)
-1SD
8.0
6.0
4.0
P/B (x)
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
27.0
20.0
13.0
6.0
6.2
4.8
3.2
2.7
4.0
16.8
13.9
10.5
16.0
3.5
2.0
Exhibit 8: Comparative Valuation
Company Mkt cap Rating
(USD b)
Source:
Infosys
Wipro
HCL Tech
TechM
87.5
40.1
21.0
20.5
9.1
Neutral
Buy
Neutral
Neutral
Buy
TP
(INR)
2,700
1,300
300
950
700
EPS (INR)
FY18
FY19E FY20E
131.8
64.8
17.9
63.4
40.2
147.1
70.1
18.8
66.3
42.8
161.3
77.7
21.1
71.6
49.8
FY18
22.2
17.2
15.9
14.9
15.5
P/E (x)
FY19E
19.9
15.9
15.2
14.3
14.6
FY20E
18.2
14.3
13.5
13.2
12.5
FY18
30.7
24.1
17.2
25.7
20.9
RoE (%)
FY18-20E CAGR (%)
USD rev.
EPS
FY19E FY20E
32.8
22.9
17.0
24.4
20.1
31.3
24.9
16.9
24.0
20.2
8.9
8.9
6.9
8.9
10.5
10.6
9.5
8.6
6.3
11.3
Source: Company, MOSL
23 April 2018
6

Infosys
Operating metrics
Exhibit 9: Operating metrics
3QFY16
Verticals (%)
Banking and Financial Services
Insurance
Manufacturing
Retail & CPG
Transport & Logistics
Life Sciences
Healthcare
Energy & Utilities
Communication & Services
Others
Service Lines (%)
Development
Maintenance
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
27.6
5.9
22.8
14.7
1.9
5.8
1.9
5.1
8.0
6.3
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
62.5
23.2
2.8
11.5
3.5
13.9
22.6
10.4
8.7
77.4
75
1,045
4QFY16
27.4
5.4
22.7
15.0
2.0
5.7
2.0
5.2
8.6
6.2
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
61.9
23.4
3.0
11.7
3.6
13.7
21.8
10.1
8.1
78.2
89
1092
1QFY17
27.2
5.6
22.8
15.5
1.9
5.8
1.9
4.7
9.4
6.3
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
62.0
23.0
2.7
12.3
3.6
13.7
22.2
10.1
8.5
77.8
95
1126
2QFY17
27.4
5.7
22.5
14.9
1.9
4.7
2.1
4.8
9.4
6.1
15.6
18.1
8.4
9.2
4.9
3.7
2.7
62.6
32.1
3.0
2.1
0.4
5.5
61.5
22.5
3.4
12.6
3.5
13.1
21.8
9.6
8.7
78.2
78
1136
3QFY17
27.2
6.1
22.5
14.6
2.0
4.6
2.3
5.0
9.1
6.6
15.5
17.0
8.6
9.1
4.9
3.9
3.0
62.0
32.4
3.2
1.9
0.5
5.6
62.0
22.2
3.4
12.4
3.1
12.3
20.1
9.2
7.8
79.9
77
1152
4QFY17
27.4
6.1
22.4
14.1
2.0
4.6
2.0
5.0
9.9
6.5
15.3
16.8
8.5
9.0
5.1
4.0
3.0
61.7
32.6
3.2
1.9
0.5
5.6
62.3
22.1
3.2
12.4
3.3
12.2
20.2
8.9
8.0
79.8
71
1162
1QFY18
27.1
6.2
22.2
14.2
1.9
4.6
2.0
5.2
10.4
6.2
15.4
16.7
8.4
9.3
5.0
4.1
2.9
61.8
32.6
Nm
Nm
Nm
5.4
61.1
22.4
3.6
12.9
3.3
Nm
20.0
Nm
Nm
80.0
59
1164
2QFY18
27.0
6.4
22.0
13.8
2.0
4.6
2.1
5.5
10.4
6.5
15.6
16.0
9.0
9.4
5.1
4.1
3.1
62.3
32.5
Nm
Nm
Nm
5.2
60.6
23.2
3.3
12.9
3.4
Nm
19.5
Nm
Nm
80.5
72
1173
3QFY18
26.3
6.8
21.8
14.1
2.1
4.6
2.0
5.8
10.5
6.2
15.4
16.2
8.8
9.4
5.3
4.0
3.1
62.2
32.8
Nm
Nm
Nm
5.3
60.4
24.4
3.0
12.2
3.4
Nm
19.2
Nm
Nm
80.8
79
1191
4QFY18
26.2
6.8
21.9
13.3
2.5
4.8
2.0
5.9
10.8
6.1
15.5
15.6
9.3
9.8
5.4
4.0
2.8
62.4
32.4
Nm
Nm
Nm
4.9
59.4
24.8
2.8
13.0
3.6
Nm
19.5
Nm
Nm
80.5
73
1204
Source: MOSL, Company
23 April 2018
7

Infosys
Exhibit 10: 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
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18
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
4.4
5.6
5.3
2.1
7.4
-0.6
3.4
3.4
-0.8
2.7
5.5
-1.4
-0.7
-3.4
-4.5
3.8
1.3
0.7
0.7
0.3
-2.3
-2.7
9.6
0.7
2.6
7.3
4.9
2.3
0.8
3.9
8.4
-2.0
3.2
8.8
6.2
2.0
3.7
0.0
2.9
8.3
0.1
6.5
7.3
0.1
-1.4
3.2
2.0
6.0
1.5
3.6
1.8
2.3
1.8
-4.0
4.7
21.2
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
12.1
-4.0
4.7
3.4
4.6
9.3
3.4
11.1
-4.1
-2.0
-7.4
1.0
-0.5
-2.5
3.9
-1.4
2.0
8.3
-0.6
-0.5
-0.5
1.3
-0.4
3.3
4.8
7.4
-1.1
3.9
2.6
2.0
3.2
6.6
5.8
1.2
0.0
1.3
4.2
-1.4
10.3
2.6
4.0
2.9
5.0
2.9
-0.9
-0.3
2.3
-1.3
1.9
1.0
-1.5
5.0
-8.8
2.9
2.5
-2.0
7.6
0.6
6.1
1.8
3.7
12.7
-5.9
-0.6
1.9
22.5
0.6
0.6
2.5
8.9
3.4
2.4
0.5
-8.0
7.5
2.6
1.2
30.3
6.0
-0.6
-2.7
-1.4
-3.0
1.2
0.3
-5.2
0.7
1.2
4.6
16.1
7.4
2.1
6.6
-5.7
2.9
0.7
6.2
-8.2
-4.5
0.1
3.5
-5.0
8.5
-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
0.6
-1.1
1.6
4.0
-1.7
5.9
-12.7
-7.4
-9.1
0.8
-5.5
-11.6
7.2
-0.1
1.2
0.6
-2.6
3.3
3.2
Nm
2.2
3.5
Nm
Nm
6.0
Nm
0.3
3.5
Nm
Nm
1.0
Nm
-0.6
1.4
Nm
Nm
7.8
Nm
3.4
1.4
Nm
Nm
Source: MOSL, Company
23 April 2018
8

Infosys
Story in charts
Exhibit 11: Gradually getting past growth issues
Revenue (USDm)
6.9
1.5
3.9
2.6
-0.4
4.4
1.1 1.9 1.7
3.9
-0.3 0.0
2.7 2.2
0.8 0.6
3.9
1.5
2.6
1.1
-0.4
4.4
1.9 1.7
0.0
-0.3
Growth (CC, QoQ, %)
Exhibit 12: Resulting in expectations of improved
performance going forward
CC revenue growth (QoQ, %)
6.9
3.9
2.7 2.2
0.8 0.6
Source: Company, MOSL
Source: Company, MOSL
Exhibit 13: Encouraging execution on the profitability front;
utilization at an all-time high
Utilization Incl. Trainees
90
85
80
75
70
Utilization Excl. Trainees
Exhibit 14: Deal signings consistently better
Deal wins TCV (USDm)
1227
1207
983 962
688
809
664
806
731 779
905
85.1
84.585.185.4
83.4
83.182.482.6
83.0
81.4
80.982.081.480.881.1
79.3
82.382.5
81.3
80.8
78.478.578.8
76.376.276.6 76.676.3 75.577.2
75.1
73.8
657
Source: Company, MOSL
Source: Company, MOSL
Exhibit 15: Gap with industry growth has reduced
Revenue (USD m)
15.8
11.5
9.1
5.8
5.6
7.4
7.2
8.8
9.0
Growth (% YoY)
Exhibit 16: Attrition levels in control despite recent
upheaval
Voluntary Attrition rate (% LTM)
FY12
FY13
FY14
FY15
FY16
FY17 FY18E FY19E FY20E
Source: Company, MOSL
Source: Company, MOSL
23 April 2018
9

Infosys
Financials and Valuations
Key assumption
Y/E Mar
INR/USD Rate
Revenues (USD m)
Per Capita Rev. Productivity (USD)
Offshore Revenue (%)
Total Headcount
Net Addition
Gross Addition
Utilization Incl. trainees (%)
Utilization Excl. trainees (%)
2013
54.5
7,398
48,245
49.0
156,688
6,694
37,036
69.5
73.0
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
2014
60.8
8,249
52,029
48.0
160,405
3,717
39,985
73.6
77.4
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
2015
61.2
8,711
51,760
48.8
176,187
15,782
53,386
76.2
82.0
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
2016
65.7
9,501
51,325
47.3
194,044
17,857
52,545
76.5
81.7
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
2017
67.1
10,208
51,764
46.8
200,364
6,320
44,235
78.9
82.8
2017
684,850
9.7
186,050
27.2
17,030
169,020
30,790
0
199,810
55,980
28.0
0
143,830
143,830
6.6
2018
64.5
10,939
54,090
47.9
204,107
3,743
44,110
82.4
85.5
2018
705,220
3.0
190,100
27.0
18,580
171,520
31,930
-14,320
189,130
42,420
22.4
0
146,710
161,030
12.0
2019E
65.5
11,903
55,478
48.4
225,001
20,894
44,000
81.0
85.7
2019E
779,648
10.6
202,614
26.0
19,202
183,411
23,479
0
206,891
55,860
27.0
0
151,030
151,030
-6.2
2020E
66.4
12,976
55,312
48.7
244,190
19,189
44,250
82.0
85.9
2020E
861,359
10.5
220,659
25.6
19,534
201,126
21,795
0
222,920
60,188
27.0
0
162,732
162,732
7.7
Income Statement
Y/E Mar
Net Sales
Change (%)
EBITDA
EBITDA Margin (%)
Depreciation
EBIT
Other Income
Extraordinary items
PBT
Tax
Tax Rate (%)
Min. Int. & Assoc. Share
Reported PAT
Adjusted PAT
Change (%)
(INR Million)
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
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
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
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
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
2017
11,440
677,990
689,430
689,430
227,210
85,810
141,400
19,650
167,070
505,040
159,700
226,250
119,090
143,730
83,640
60,090
361,310
689,430
2018
10,880
638,350
649,230
649,230
241,820
97,020
144,800
21,320
121,790
510,500
174,030
198,180
138,290
149,180
101,490
47,690
361,320
649,230
2019E
10,875
658,096
668,971
668,971
(INR Million)
2020E
10,875
625,705
636,580
636,580
320,278
150,726
169,552
17,110
22,920
622,866
205,310
310,863
106,693
195,868
119,363
76,505
426,998
636,580
292,278
131,192
161,085
17,110
22,920
645,378
185,834
347,669
111,875
177,523
107,502
70,021
467,855
668,971
23 April 2018
10

Infosys
Financials and Valuations
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)
Leverage Ratios (%)
Net Debt/Equity (x)
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
24.7
41.9
2017
62.8
70.3
301.5
25.7
40.9
2018
64.8
79.3
286.5
32.3
45.4
2019E
70.1
81.3
319.3
44.8
62.1
2020E
77.7
87.0
303.9
38.0
48.9
19.0
17.2
4.2
3.6
13.0
2.2
17.9
16.0
3.7
3.2
11.7
2.3
17.4
14.2
3.9
3.2
11.7
2.9
16.0
13.8
3.5
2.5
9.8
4.0
14.5
12.9
3.7
2.3
9.2
3.4
25.7
25.7
6.5
86.1
-0.5
24.9
24.9
6.6
81.3
-0.5
24.1
24.1
5.7
86.0
-0.6
23.2
23.2
5.3
83.9
-0.5
22.0
22.0
5.2
85.1
-0.3
24.1
24.1
5.2
90.1
-0.3
22.9
22.9
5.3
87.0
-0.5
24.9
24.9
5.3
87.0
-0.5
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
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
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
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
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
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
2017
186,050
30,750
-18,040
-55,980
142,780
-25,290
117,490
-132,201
-157,491
0
0
-71,168
-71,168
-85,879
326,531
240,652
2018
204,420
10,190
-20,660
-56,740
137,210
-23,650
113,560
45,280
21,630
0
0
-88,491
-88,491
70,349
240,652
311,000
(INR Million)
2019E
202,614
31,459
34,974
-55,860
213,186
-31,278
181,909
98,870
67,592
0
0
-113,501
-113,501
167,278
311,000
478,278
2020E
220,659
21,795
4,051
-60,188
186,317
-28,000
158,317
0
-28,000
0
0
-96,185
-96,185
62,131
478,279
540,411
23 April 2018
11

Explanation of Investment Rating
Investment Rating
BUY
SELL
NEUTRAL
UNDER REVIEW
NOT RATED
Expected return (over 12-month)
>=15%
< - 10%
> - 10 % to 15%
Rating may undergo a change
We have forward looking estimates for the stock but we refrain from assigning recommendation
Infosys
*In case the recommendation given by the Research Analyst becomes inconsistent with the investment rating legend, the Research Analyst shall within 28 days of the inconsistency, take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures:
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Securities Ltd. (MOSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOSL, the Research Entity (RE) as defined in the Regulations, is engaged in the business of providing Stock broking services,
Investment Advisory Services, Depository participant services & distribution of various financial products. MOSL is a subsidiary company of Motilal Oswal Financial Service Ltd. (MOFSL). MOFSL is a listed public company, the details in respect of
which are available on
www.motilaloswal.com.
MOSL is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited
(BSE), Metropolitan Stock Exchange Of India Ltd. (MSE) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) & National Securities Depository Limited (NSDL) and is member of Association of
Mutual Funds of India (AMFI) for distribution of financial products. Details of associate entities of Motilal Oswal Securities Limited are available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/Associate%20Details.pdf
MOSL, it’s associates, Research Analyst or their relative may have any financial interest in the subject company. MOSL and/or its associates and/or Research Analyst may have beneficial ownership of 1% or more securities in the subject company at
the end of the month immediately preceding the date of publication of the Research Report.
MOSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act
as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial
instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.;
however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOSL even though there
might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
Research Analyst may have served as director/officer, etc. in the subject company in the last 12 month period. MOSL and/or its associates may have
received any compensation from the subject company in the past 12 months.
In the last 12 months period ending on the last day of the month immediately preceding the date of publication of this research report, MOSL or any of its associates may have:
a)
managed or co-managed public offering of securities from subject company of this research report,
b)
received compensation for investment banking or merchant banking or brokerage services from subject company of this research report,
c)
received compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company of this research report.
d)
Subject Company may have been a client of MOSL or its associates during twelve months preceding the date of distribution of the research report.
MOSL and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. To enhance transparency, MOSL has incorporated a Disclosure of Interest Statement in
this document. This should, however, not be treated as endorsement of the views expressed in the report. MOSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result,
the recipients of this report should be aware that MOSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment banking or
brokerage service transactions.
Terms & Conditions:
This report has been prepared by MOSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be altered in any way, transmitted to, copied or distributed, in part
or in whole, to any other person or to the media or reproduced in any form, without prior written consent of MOSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report
is not recommendatory in nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied,
is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to
buy or sell or subscribe for securities or other financial instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOSL will not treat recipients as customers by
virtue of their receiving this report.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the
specific recommendations and views expressed by research analyst(s) in this report.
Disclosure of Interest Statement
Analyst ownership of the stock
Infosys
No
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental research and Technical Research. Proprietary trading desk of MOSL or
its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOSL research activity and therefore it can have an independent view with regards to subject company for which Research Team have
expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject
MOSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to the Securities
and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong)
Private Limited for distribution of research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only
available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from
registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is not a registered
investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption
under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional
Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional
investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule
15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S.,
MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of
this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject
to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets services license and an exempt financial adviser in Singapore,
as per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore.
Persons in Singapore should contact MOCMSPL in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”, of which some of
whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such
Singapore Person must immediately discontinue any use of this Report and inform MOCMSPL.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced
in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in
this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of
independent judgment by any recipient. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document
(including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including
those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy,
completeness or fairness of the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the
views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval.
MOSL, its associates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform
investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and independent of each other. The recipient should take this
into account before interpreting the document. This report has been prepared on the basis of information that is already available in publicly accessible media or developed through analysis of MOSL. The views expressed are those of the analyst, and
the Company may or may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or
published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such
distribution, publication, availability or use would be contrary to law, regulation or which would subject MOSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all
jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or representatives shall
be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees
to exempt MOSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSL
or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-3980 4263; www.motilaloswal.com. Correspondence Address: Palm Spring Centre, 2nd Floor, Palm
Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 3080 1000. Compliance Officer: Neeraj Agarwal, Email Id:
na@motilaloswal.com,
Contact No.:022-38281085.
Registration details of group entities.: MOSL: SEBI Registration: INZ000158836 (BSE/NSE/MCX/NCDEX); CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment Adviser:
INA000007100.IRDA Corporate Agent-CA0541. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670) offers PMS and Mutual Funds products. Motilal Oswal Wealth Management Ltd. (MOWML): PMS
(Registration No.: INP000004409) offers wealth management solutions. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs, Insurance and IPO products. * Motilal Oswal Commodities Broker Pvt. Ltd. offers
Commodities Products. * Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. offers Real Estate products. * Motilal Oswal Private Equity Investment Advisors Pvt. Ltd. offers Private Equity products
23 April 2018
12