Upload
ledan
View
226
Download
1
Embed Size (px)
Citation preview
CMP 2808.00
Target Price 3145.00
ISIN: INE009A01021
JULY 12th
, 2013
INFOSYS LIMITED Consolidated Result Update: Q1 FY14
BUYBUYBUYBUY
Stock Data
Sector IT
BSE Code 500209
Face Value 5.00
52wk. High / Low (Rs.) 3010.00/2101.65
Volume (2wk. Avg ) 73000.00
Market Cap ( Rs in mn ) 1526210.40
Annual Estimated Results (A*: Actual / E*: Estimated)
Years FY13A FY14E FY15E
Net Sales 403520.00 464048.00 515093.28
EBITDA 127880.00 138264.12 150382.61
Net Profit 94210.00 102315.45 110080.07
EPS 164.70 178.87 192.45
P/E 16.20 14.92 13.86
Shareholding Pattern (%)
1 Year Comparative Graph
BSE SENSEX INFOSYS LTD
SYNOPSIS
Infosys Ltd. is a global leader company in the
"next generation" of IT and consulting Services &
is recognized for its world-class management
practices and work ethics.
During the quarter, the robust growth of Net Sales
is increased by 17.17% to Rs. 112670.00 million.
During the quarter, 66 new clients were added by
Infosys and its subsidiaries.
During the first quarter, Infosys applied for 18
unique patent applications in India and the U.S.
Robinsons Bank has selected Infosys Finacle as its
transformation partner to support its branch
network expansion and business growth.
Infosys announced a partnership with IPsoft to
offer autonomics-based managed IT service to
clients.
Union National Bank (UNB), Abu Dhabi has
implemented Infosys Finacle to power its
Treasury and Capital Markets business.
Infosys won the IBM Smarter Commerce Business
Partner of the Year Award for Australia and New
Zealand.
Infosys is collaborating with SAP on development
of mobile applications for the retail industry.
Golomt Bank, Mongolia has selected Infosys
Finacle to power its technology transformation.
Net Sales and PAT of the company are expected to
grow at a CAGR of 15% and 10% over 2012 to
2015E respectively.
Peer Groups CMP Market Cap EPS P/E (x) P/BV(x) Dividend
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Infosys Ltd 2808.00 1526210.40 164.70 16.20 3.83 840.00
TCS Ltd 1604.00 3143296.90 65.15 24.65 12.70 2200.00
HCL Technologies Ltd 857.60 596573.20 41.89 20.46 9.03 600.00
Wipro Ltd 369.20 913254.60 23.72 15.63 3.75 350.00
Investment Highlights CONSOLIDATED
Results updates- Q1 FY14,
Infosys Ltd. is a global leader company in the "next
generation" of IT and Consulting Services & is
recognized for its world-class management practices
and work ethics, reported its consolidated financial
results for the quarter ended 30th June, 2013.
Months Jun-13 Jun-12 % Change
Net Sales 112670.00 96160.00 17.17
PAT 23740.00 22890.00 3.71
EPS 41.50 40.02 3.71
EBITDA 118440.00 100920.00 17.36
The company’s net profit increased to Rs.23740.00 million against Rs.22890.00 million in the corresponding
quarter ending of previous year, an increase of 3.71%. Revenue for the quarter rose 17.17% to Rs.112670.00
million from Rs.96160.00 million, when compared with the prior year period. Reported earnings per share of the
company stood at Rs.41.50 a share during the quarter, registering 3.71% decrease over previous year period.
EBITDA is Rs.118440.00 millions as against Rs.100920.00 millions in the corresponding period of the previous
year.
Segment Revenue
Particulars (Value in Rs. Millions) Q1 FY14 Q1 FY13
Financial Services & Insurance (FSI) 37980.00 33020.00
Retail, Logistics, Consumer Product Group, Life Sciences & Health Care Enterprises (RCL)
27830.00 22790.00
Energy, Utilities & Telecommunication Services (ECS) 21470.00 19150.00
Manufacturing enterprises (MFG) 25390.00 21200.00
Latest Updates
CareFirst BlueCross BlueShield awarded the Company a three-year managed services contract to create a
cost-effective delivery model and drive efficiencies in application support. Infosys Public Services will set up
a secure facility within its newly established delivery center in Rockville, Maryland to service the contract
and help CareFirst to consolidate IT support services currently managed by multiple vendors.
Infosys announced a partnership with IPsoft to offer autonomics-based managed IT service to clients. IPsoft
and Infosys will set up an Autonomics Center of Excellence and an Autonomics Lab at the Infosys Global
Education Center in Mysore.
The Cloud and Big Data business has executed over 100 engagements. Over the last quarter, Infosys won over
15 engagements across Cloud services and Big Data. Infosys was also invited to join the global Open Data
Center Alliance (ODCA) as a contributing member to help define and strengthen worldwide industry
standards to support enterprise cloud and big data requirements.
The US District of Columbia awarded Infosys Public Services, a one-year contract valued at $49.5 million to
develop its new health benefit exchange, a crucial component of the Affordable Care Act.
Infosys won the IBM Smarter Commerce Business Partner of the Year Award for Australia and New Zealand.
British Telecom’s Seamless Desktop program powered by the Infosys AssistEdge was awarded the
prestigious Global Telecoms Business Innovation Award for 2013 in the Consumer Service Innovation
category.
Infosys has been recognized as a winner in the 2013 Simulating Reality contest, organized by MSC Software.
Union National Bank (UNB), Abu Dhabi has implemented Infosys Finacle to power its Treasury and Capital
Markets business. Finacle Treasury will help integrate the bank’s trading, risk management and back office
operations.
Infosys announced that Robinsons Bank, a commercial bank in the Philippines, has selected Infosys Finacle as
its transformation partner to support its branch network expansion and business growth. With the new
technology transformation program, Robinsons Bank will consolidate and connect the multiple existing
systems in use at the bank, and aim to reduce cost of operations across all its branches. Robinsons Bank plans
to expand its network to over 100 branches in three years and integrate recent acquisitions. This requires its
technology infrastructure to scale efficiently and cost effectively.
Infosys has been named a ‘2013 Environmental Tracking (ET) Carbon Ranking Leader’ for its greenhouse gas
emissions and disclosure practices.
Finacle™ sustained its business momentum in the last quarter with 15 new wins and 14 banks going live on
Finacle™ across the Middle East, Africa, Asia and Central America. This includes the first Finacle™ customer in
Mongolia and the first successful core banking implementation in recent times in Turkey.
During the first quarter, Infosys applied for 18 unique patent applications in India and the U.S. With this, it
has 528 patent applications undergoing various stages in the patent approval process in India, the U.S. and
other jurisdictions, has been granted 106 patents by the United States Patent and Trademark Office and three
patents by the Luxembourg patent office.
Infosys is collaborating with SAP on development of mobile applications for the retail industry. These efforts
are focused on giving consumer packaged goods (CPG) companies anytime, anywhere access to sales
representatives and merchandisers, enabling them to capture information from the field to make them more
competitive and agile.
Golomt Bank, Mongolia’s largest private banking and financial services provider, has selected Infosys Finacle
to power its technology transformation. The bank is looking to adapt to a rapidly changing business
environment in Central Asia and manage their expanding customer base.
The Metro Atlanta Chamber presented the 2013 Global Impact Award to Infosys BPO in the Foreign Direct
Investment category for its plans to invest in education and training.
Graphical Representation
Revenue by Service Offering (Q1 FY14)
Revenue Mix (Q1 FY14)
Geography Revenue Concentration (Q1 FY14)
Client Contribution to Revenue (Q1 FY14)
Utilization (Q1 FY14)
Revenue by Industry (Q1 FY14)
Company Profile
Infosys Limited, formerly known as Infosys Technologies Limited is a global technology Services Company
headquartered in Bangalore, India. It is the second largest IT exporter in India.
Today, Infosys is a global leader in the "next generation" of IT and consulting with revenues of US$ 7.4 billion.
Infosys takes pride in building strategic long-term client relationships. 98% of revenues come from existing
customers (FY13). Infosys defines designs and delivers technology-enabled business solutions for Global 2000
companies. Infosys provides a complete range of services by leveraging its domain and business expertise
and strategic alliances with leading technology providers.
Infosys pioneered the Global Delivery Model (GDM), which emerged as a disruptive force in the industry leading
to the rise of offshore outsourcing. The GDM is based on the principle of taking work to the location where the
best talent is available, where it makes the best economic sense, with the least amount of acceptable risk.
Global presence
Infosys has a global footprint with 67 offices and 69 development centers in US, India, China, Australia, Japan,
Middle East, UK, Germany, France, Switzerland, Poland, Netherlands, Canada and many other countries. Infosys
and its subsidiaries have 1,57,263 employees as on June 30, 2013.
Products and Services offered by the company:
The Company’s offerings span business & technology consulting, services, systems, product engineering, custom
software development, maintenance, re-engineering, independent testing & validation services, IT infrastructure
services & BPO.
IT Services
� Application Services
� Architecture Services
� Enterprise Quality Services
� Independent Validation Services
� Information Mgt. Services
� Infrastructure Services
� Packaged Application Services
� SOA Services
� Systems Integration Services
Engineering Services
� Mechanical Product Development
� Electronics/ Hardware Development
� Software Product Development
� Embedded Systems
� Value Analysis/ Engineering & Benchmarking
� Manufacturing Engineering & Digital Manufacturing
� Industrial Automation & Controls
� Tooling & Commodity Management
� Professional Services
� Product Ownership & End of Life
� Product Lifecycle Management (PLM)
� Knowledge-based Engineering
� Manufacturing Execution Systems
� Contact Center & Unified Communications
� Engineering Consulting
Engineering Segments
� Aerospace
� Automotive
� Industrial Manufacturing
� High-Tech
� Software
� Energy
� Utilities
� Communication Services
� Retail
� Consumer Packaged Goods
� Life Sciences
� Financial Services
BPO Services
� Business Platforms
� Customer Service Outsourcing
� Finance and Accounting
� Human Resource Outsourcing
� Knowledge Services
� Legal Services
� Order Management
� Sourcing and Procurement Outsourcing
Product and Platforms
� Finacle
� Flypp
� Infosys Edge
• Infosys CommerceEdge
• Infosys SocialEdge
• Infosys TalentEdge
� Infosys HIMI
� Infosys iProwe
� Infosys MaskIT
� Infosys mConnect
� Infosys Research on Demand
� iTransform
� Supply Chain Visibility
� Infosys Unified Communications and Collaboration (UC)
Subsidiaries of the company:
� Infosys BPO Limited
� Infosys Technologies (Australia) Pty Limited
� Infosys Consulting Inc.
� Infosys Technologies (China) Company Limited
� Infosys Technologies S. De R.L. De C V., Mexico
� Infosys Technologies (Sweden)
� Infosys Tecnologia Do Brazil
� Infosys Public Services Inc.
� Infosys Technologies (Shanghai) Co Ltd
Alliances
• Global Alliance Partners
The partnership focuses on developing solutions that incorporate Infosys IP and the alliance partners'
technology and services. We jointly deliver and market Infosys' solutions to clients across multiple industries
and geographies.
� Microsoft
� Oracle
� SAP
Alliance Partners
� CA Technologies
� Hewlett-Packard (HP)
� IBM
� Informatica
� Salesforce.com
� Schlumberger
� Siemens
� TIBCO Software Inc.
� Autonomy Corporation
� Sterling Commerce
� Pegasystems
� Xerox
� OSIsoft
Cloud
Cloud adoption is a complex process and the multiplicity of available options has led to confusion over how to
embark on a viable Cloud Journey. IT and business teams follow different approaches to Cloud adoption. It
continues to strengthen Cloud ecosystem, with over 30 partners delivering a trusted system for our clients. A
large hi-tech client has selected Infosys to develop a Cloud-based monitoring solution, using technologies such as
Hadoop and Exadata, to manage and meter its enterprise infrastructure. The company is working with a large
railroad client in North America on its strategy to move mainframe-based legacy applications to the Cloud. A
leading healthcare provider has selected Infosys as a partner to migrate its existing workload to Microsoft Office
365 as its primary messaging and collaboration platform. This provides the client productivity improvement and
high asset optimization.
Finacle™
Finacle from Infosys partners with banks to power-up their innovation agenda, enabling them to differentiate
their products & service, enhance customer experience and achieve greater operational efficiency. Finacle
solutions address the core banking, wealth management, CRM, Islamic banking & treasury requirements of retail,
corporate and universal banks worldwide. Finacle solutions also empower banks with multiple sales, service &
marketing channels including e-banking, mobile banking and call centers. Finacle is the chosen solution in over
154 banks across 75 countries. Other offerings in the Finacle™ universal banking solution include:
• Finacle™ Core banking solution for regional rural banks.
• Finacle™ Alerts solution, which enables banks to alert end-users on events recorded by diverse business
systems.
• Finacle™ WatchWiz, a comprehensive new-generation monitoring solution that allows banks to monitor
diagnose and resolve issues.
• Finacle™ Advizor, which combines the convenience of human intervention with banking self-service channels
through the interplay of video, audio & data communication.
Financial Highlight CONSOLIDATED
Annual Profit & Loss Statement for the period of 2012 to 2015E
Value(Rs.in.mn) FY12A FY13A FY14E FY15E
Description 12m 12m 12m 12m
Net Sales 337340.00 403520.00 464048.00 515093.28
Other Income 19040.00 23590.00 26892.60 29850.79
Total Income 356380.00 427110.00 490940.60 544944.07
Expenditure -239550.00 -299230.00 -352676.48 -394561.45
Operating Profit 116830.00 127880.00 138264.12 150382.61
Interest 0.00 0.00 0.00 0.00
Gross profit 116830.00 127880.00 138264.12 150382.61
Depreciation 0.00 0.00 0.00 0.00
Profit Before Tax 116830.00 127880.00 138264.12 150382.61
Tax -33670.00 -33670.00 -35948.67 -40302.54
Profit After Tax 83160.00 94210.00 102315.45 110080.07
Minority Interest 0.00 0.00 0.00 0.00
Share of Profit & Loss of Asso 0.00 0.00 0.00 0.00
Net Profit 83160.00 94210.00 102315.45 110080.07
Equity capital 2860.00 2860.00 2860.00 2860.00
Reserves 310460.00 395110.00 497425.45 607505.52
Face value 5.00 5.00 5.00 5.00
EPS 145.38 164.70 178.87 192.45
Quarterly Profit & Loss Statement for the period of 31st Dec, 2012 to 30th Sep, 2013E
Value(Rs.in.mn) 31-Dec-12 31-Mar-13 30-Jun-13 30-Sep-13E
Description 3m 3m 3m 3m
Net sales 104240.00 104540.00 112670.00 117176.80
Other income 5030.00 6740.00 5770.00 6231.60
Total Income 109270.00 111280.00 118440.00 123408.40
Expenditure -77470.00 -79920.00 -86030.00 -89054.37
Operating profit 31800.00 31360.00 32410.00 34354.03
Interest 0.00 0.00 0.00 0.00
Gross profit 31800.00 31360.00 32410.00 34354.03
Depreciation 0.00 0.00 0.00 0.00
Profit Before Tax 31800.00 31360.00 32410.00 34354.03
Tax -8110.00 -7420.00 -8670.00 -9413.00
Profit After Tax 23690.00 23940.00 23740.00 24941.03
Minority Interest 0.00 0.00 0.00 0.00
Share of Profit & Loss of Asso 0.00 0.00 0.00 0.00
Net Profit 23690.00 23940.00 23740.00 24941.03
Equity capital 2860.00 2860.00 2860.00 2860.00
Face value 5.00 5.00 5.00 5.00
EPS 41.42 41.85 41.50 43.60
Ratio Analysis
Particulars FY12A FY13A FY14E FY15E
No. of Shares (in mn) 572.00 572.00 572.00 572.00
EBITDA Margin (%) 34.63% 31.69% 29.80% 29.20%
PBT Margin (%) 34.63% 31.69% 29.80% 29.20%
PAT Margin (%) 24.65% 23.35% 22.05% 21.37%
P/E Ratio (x) 18.35 16.20 14.92 13.86
ROE (%) 26.54% 23.67% 20.45% 18.04%
ROCE (%) 37.29% 32.13% 27.64% 24.64%
EV/EBITDA (x) 13.06 11.93 11.04 10.15
Book Value (Rs.) 547.76 695.75 874.62 1067.07
P/BV 4.87 3.83 3.05 2.50
Charts
Outlook and Conclusion
� At the current market price of Rs.2808.00, the stock P/E ratio is at 14.92 x FY14E and 13.86 x FY15E
respectively.
� Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs.178.87 and
Rs.192.45 respectively.
� Net Sales and PAT of the company are expected to grow at a CAGR of 15% and 10% over 2012 to 2015E
respectively.
� On the basis of EV/EBITDA, the stock trades at 11.04 x for FY14E and 10.15 x for FY15E.
� Price to Book Value of the stock is expected to be at 3.05 x and 2.50 x respectively for FY14E and FY15E.
� We expect that the company surplus scenario is likely to continue for the next three years, will keep its
growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of
Rs.3145.00 for Medium to Long term investment.
Industry Overview
The information technology (IT) and information technology enabled services (ITeS) industry has been one of
the key driving forces fuelling India’s economic growth.
India is one of the fastest-growing IT services markets in the world, with three-quarters of large Indian
enterprises planning to increase IT spending in 2013, with an average IT budget of US$ 12.2 million, according to
a survey by Gartner.
The Indian IT-business process outsourcing (BPO) sector including the domestic and exports segments continue
to grow from strength to strength, witnessing high levels of activity both onshore as well as offshore. The
companies continue to move up the value-chain to offer higher end research and analytics services to their
clients. India's leadership position in the global IT and BPO industries are based primarily on the following
advantages.
Market Size
The Indian IT and ITES industry has continued to perform its role as the most consistent growth driver for the
economy. Service, software exports and BPO remain the mainstay of the sector. Over the last five years, the IT
and ITES industry has grown at a remarkable pace. A majority of the Fortune 500 and Global 2000 corporations
are sourcing IT and ITES from India and it is the premier destination for the global sourcing of IT and ITES
accounting for 55 per cent of the global market in offshore IT services and garnering 35 per cent of the ITES/BPO
market.
India's IT and BPO sector exports are expected to grow by 12-14 per cent in FY14 to touch US$ 84 billion - US$ 87
billion, according to Nasscom.
The Indian IT infrastructure market is projected to grow by 9.7 per cent y-o-y to reach US$ 2.1 billion in 2013.
Nasscom has created a separate unit to drive its newfound enthusiasm for software products, and has set a target
of US$ 10 billion in revenues from software products by 2020.
Investments
EMC Corporation's investment in India is expected to reach US$ 1.5 billion by 2014. The company started its
journey in India with a modest investment of US$ 100 million in 2005.
Some of the major investments in the sector are as follows:
• D-Link plans to set up a testing lab in India in the second half of this year to ensure better localisation,
said Mr A P Chen, Chairman, D-Link
• Hexaware Technologies has set up an onshore delivery centre in Texas, US. The centre is its third onshore
delivery centre in the US
• NIIT Technologies has won a multi-year contract from the Airports Authority of India (AAI) worth Rs 344
crore (US$ 61.84 million) for the implementation of Airport Operations Control Centres (AOCC)
• The Software Technology Parks of India (STPI) plans to set up a data centre in Hyderabad. The centre will
address the storage and cloud needs of small and medium enterprises (SME)
• Wipro has signed an agreement to acquire a minority stake in Opera Solutions, a global big data and
analytics company, for about US$ 30 million
Government Initiatives
FDI up to 100 per cent under the automatic route is allowed in Data processing, software development and
computer consultancy services; Software supply services; Business and management consultancy services,
Market Research Services, Technical testing & Analysis services.
The Government of India's move to do away with the mandatory requirement of 10 hectares of minimum land
area for setting up an IT and ITeS special economic zones (SEZ) is expected to provide a major boost to the real
estate and IT sector.
Some of the major initiatives taken by the Government to promote IT and ITeS sector in India are:
• The Government of West Bengal plans to spend Rs 41 crore (US$ 7.37 million) to roll out citizen-centric
services electronically across 19 districts including Kolkata
• Kerala has set an ambitious target of becoming a cent per cent digital state in governance, said Mr P K
Kunhalikutty, Minister for Industries and Information Technology, Government of Kerala. The State has
around 600 small, medium and large IT firms employing over 80,000 professionals directly and nearly
three times the number indirectly
• The Cabinet has recently approved the National Policy on Information Technology 2012. The policy aims
to increase revenues of IT and ITES industry from US$ 100 billion to US$ 300 billion by 2020 and expand
exports from US$ 69 billion to US$ 200 billion by 2020
• The Government of India plans to set up 15 new laboratories for testing hardware and software products
under public-private partnership (PPP) model
• The Ministry of Finance has issued a circular to chairmen of public sector banks and regional rural banks,
that all payments to customers, staff, vendors and suppliers as well as disbursement of loans and
payments towards investments should be made only through the electronic mode
Road Ahead
Globalisation has a profound impact in shaping the Indian IT industry over the years with India capturing a
sizeable chunk of the global market for technology sourcing and business services. Over the years the growth
drivers for this sector have been the verticals of manufacturing, telecommunication, insurance, banking, finance
and of late the fledgling retail revolution. As the new scenario unfolds it is getting clear that the future growth of
IT and ITeS will be fuelled by the verticals of climate change, mobile applications, healthcare, energy efficiency
and sustainable energy. Traditional business strongholds would make way for new geographies, there would be
new customers and more and more of SMEs will go for IT application and services.
Demand from emerging countries is expected to show strong growth going forward. Tax holidays are also
extended to IT sector for STPI and SEZs. Further, the country is providing procedural ease and single window
clearance for setting up facilities.
Growth in offshoring is expected to outclass the growth in overall IT spend across the various verticals.
Offshoring as a per cent of total spend is also expected to rise across the various verticals. India has the
opportunity to tap the growing offshoring market with its cost advantage, expertise and huge talent pool.
Disclaimer:
This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale
of any financial instrument or as an official confirmation of any transaction. The information contained herein is
from publicly available data or other sources believed to be reliable but do not represent that it is accurate or
complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall
not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. This document is provide for assistance only and is not intended to be and must
not alone be taken as the basis for an investment decision.
Firstcall India Equity Research: Email – [email protected]
C.V.S.L.Kameswari Pharma
U. Janaki Rao Capital Goods
A.Nagaraju Cement, Reality & Infra, Oil & Gas
Ashish.Kushwaha IT, Consumer Durable & Banking
Anil Kumar Diversified
Firstcall India also provides
Firstcall India Equity Advisors Pvt.Ltd focuses on, IPO’s, QIP’s, F.P.O’s,Takeover
Offers, Offer for Sale and Buy Back Offerings.
Corporate Finance Offerings include Foreign Currency Loan Syndications,
Placement of Equity / Debt with multilateral organizations, Short Term Funds
Management Debt & Equity, Working Capital Limits, Equity & Debt
Syndications and Structured Deals.
Corporate Advisory Offerings include Mergers & Acquisitions(domestic and
cross-border), divestitures, spin-offs, valuation of business, corporate
restructuring-Capital and Debt, Turnkey Corporate Revival – Planning &
Execution, Project Financing, Venture capital, Private Equity and Financial
Joint Ventures
Firstcall India also provides Financial Advisory services with respect to raising
of capital through FCCBs, GDRs, ADRs and listing of the same on International
Stock Exchanges namely AIMs, Luxembourg, Singapore Stock Exchanges and
other international stock exchanges.
For Further Details Contact:
3rd Floor,Sankalp,The Bureau,Dr.R.C.Marg,Chembur,Mumbai 400 071
Tel. : 022-2527 2510/2527 6077/25276089 Telefax : 022-25276089
E-mail: [email protected]
www.firstcallindiaequity.com