1. business and industrial
2. company
3. earnings

RESULT UPDATE
INFOSYS
Good all-round show; bonus a pleasant surprise
India Equity Research| IT
Infosys’ Q2FY15 revenue of USD2.2bn (up 3.2% QoQ) and EBITDA margin
of 28.3% (up 140bps QoQ) came in line with our expectations. The
company has maintained its FY15 revenue guidance of 7-9%. It has also
announced bonus issue in 1:1 ratio. Dr. Vishal Sikka, CEO, stressed the
importance of automation and innovation (using technologies like
artificial intelligence (AI), machine learning data science, etc.) and the
need for acquisitions to augment organic growth. We cut our FY15E USD
revenue growth to 9% from 10% earlier (cross currency impact), but
maintain FY16E of 12.5%. Revision of USD/INR assumption from
INR58/56 to INR60/59 for FY15/16 leads to 2.7% /9.3% upward revision
in our FY15/16E EPS, respectively. Maintain ‘BUY’ with a TP of INR4,569.
Broad-based growth across segments
EDELWEISS 4D RATINGS
Absolute Rating
BUY
Rating Relative to Sector
Outperformer
Risk Rating Relative to Sector
Low
Sector Relative to Market
Underweight
MARKET DATA (R: INFY.BO, B: INFO IN)
CMP
: INR 3,889
Target Price
: INR 4,569
52-week range (INR)
: 3,909 / 2,880
Share in issue (mn)
: 574.2
M cap (INR bn/USD mn)
: 2,233/ 36,439
Avg. Daily Vol.BSE/NSE(‘000) : 1,195.6
Growth was driven by key geographies and services—while Europe and America grew
4.2% and 3.1%, ADM, IMS and Consulting and system integration grew 4.7%, 3.2% and
3.5%, respectively. The pipeline has also improved significantly QoQ. The company won
7 large deals with TCV of USD600mn during the quarter.
SHARE HOLDING PATTERN (%)
Current Q4FY14
Q3FY14
Promoters *
15.9
15.9
15.9
MF's, FI's & BK’s
14.1
13.7
15.4
Automation and innovation: Foundation of future growth
FII's
41.6
42.1
40.6
Dr. Sikka articulated his strategy in brief, wherein he mentioned automation,
innovation and training as key focus areas. He stressed that new technologies like AI,
machine learning, data science, etc., need to be incorporated in existing services to
make them relevant to clients. He mentioned ‘do more-with less-for more’ will be
Infosys’ new mantra. The use of these technologies, particularly AI, will significantly
reduce dependence on manpower (thereby improving efficiencies) and at the same
time will be relevant for clients in gaining insights based on certain automated
triggers. Hence, clients across verticals are increasingly using these technologies to
renew and reshape their existing businesses as well as to enter new ones, build new
models and systems.
Others
28.4
28.3
28.1
:
* Promoters pledged shares
(% of share in issue)
NIL
PRICE PERFORMANCE (%)
Stock
Nifty
EW
Technology
Index
1 month
6.0
(2.8)
3.4
3 months
18.1
3.6
15.5
12 months
26.8
29.7
29.4
Outlook and valuations: In the right direction; maintain ‘BUY’
We cut our FY15E USD revenue growth to 9% from 10%, but maintain our FY16
estimate of 12.5%. Revised USD/INR assumption of INR60/59 (INR58/56 earlier) for
FY15/16, respectively leads to 2.7% /9.3% upward revision in our FY15/16E EPS. We
maintain ‘BUY/SO’ with target price of INR4,569 (18x FY16E EPS, INR4,180 earlier).
Financials
FY14
FY15E
(INR mn)
FY16E
2.9
501,330
540,037
596,404
Sandip Agarwal
19.0
134,150
106,480
152,653
129,053
161,706
145,054
+91 22 6623 3474
[email protected]
186.3
20.9
225.9
17.2
253.9
15.3
14.3
3.8
12.1
3.4
10.9
3.0
Year to March
Q2FY15
Q1FY15 Growth (%)
Q2FY14 Growth (%)
Revenue
133,420
127,700
4.5
129,650
EBITDA
37,730
34,410
9.6
31,710
Net profit
31,000
28,860
7.4
24,070
28.8
54.3
50.5
7.4
42.1
28.8
Dil. EPS (INR)
Dil. P/E (x)
EV/EBITDA (x)
EV/Revenues (x)
Edelweiss Research is also available on www.edelresearch.com,
Bloomberg EDEL <GO>, Thomson First Call, Reuters and Factset.
Omkar Hadkar
+91 22 6620 3147
[email protected]
October 10, 2014
Edelweiss Securities Limited
IT
Infosys concall highlights
Dr. Vishal Sikka’s comments
•
Focus will be on driving a culture of automation and innovation within the company.
•
Driving higher productivity through usage of automation technologies and innovation.
‘Do more-with less-for more’ will be the mantra.
•
Will invest in training employees in new technologies like artificial intelligence, data
science, machine learning so that the organisation will cater to the needs of clients.
•
Businesses have a dual focus of renewing existing systems at the same time enter new
businesses, develop new models. Hence, Infosys’ focus will be on renewing and
rethinking the way in which services are being rendered and how automation and
innovation technologies can be incorporated in the services being offered and at the
same time build new skills and capabilities.
•
Career mobility and learning for employees will be focus areas.
•
Embark on acquisition, but not for growth but to achieve automation, collaboration
which would amplify skill set or expand presence in key geographies.
•
Allainces with partners (recently with Microsoft, Hitachi, etc) and also with start ups to
augment growth.
•
Any good next gen technology service company can grow at 15-18% with 25-28%
margin and hence our endevour will be to achieve that (no timeline given).
•
Focus will be on achieving disproportionate growth, expand and deepen relationship
with clients, achieve operational efficiencies and win large annuity related deals.
Financial services
•
Budget challenges, clients restricting spend; however, the company expects to grow in
balance quarters.
•
Spend in the sector driven by risk and regulatory projects, digital and infra
modernisation.
•
Capital market is driven by mid and back office cost optimisation.
•
Decision cycles are faster.
Insurance
•
Spends continue to remain robust.
•
Spends related to regulatory, security, cards and payments.
•
Better pipeline than Q1FY15.
•
Spend in areas like testing, IMS and digital.
Retail & CPG
2
•
Retail environment remains challenging.
•
Spend in areas of e-commerce , analytics, enhancing customer experience.
•
Deal pipeline healthy.
•
Cost cutting and vendor consolidation key trends.
•
CPG industry top line struggling and bottom line shrinking.
Edelweiss Securities Limited
Infosys
Manufacturing
• Hitech traction strong driven by ISVs, telcos and OEMS.
•
Auto is flat while aero is seeing reduction in spend.
•
Demand driven by ERP implementation, analytics, enhance customer experience.
•
US: Both discretionary and non-discretionary is improving.
•
Expect Q3 to be slow due to holidays.
Telecom
• Although Q2 was healthy, budget cuts seen across clients.
•
Seeing consolidation in the vertical which could create opportunities.
Energy and utilities
• Energy: Spend seen in areas of oilfields and improvement of efficiencies.
•
Increased focus on infra and app rationalisation and cost optimization.
Healthcare & life science
• Divestment and M&A activities leading to slower decision making.
•
Deal pipeline improving.
•
Cost reduction, ERP transformation and digital solutions key areas of spend.
BPO
• Clients focusing on transformation of processes.
•
3
Clients expect vendors to take ownership of end-to-end systems.
Edelweiss Securities Limited
IT
Key highlights
•
Reported revenue of USD2,201mn (up 3.2% QoQ) versus our estimate
of USD2,199mn. While IT services’ volume grew 3.0%, pricing was up 0.6% QoQ.
•
EBITDA margin expanded 140bps QoQ to 28.3% owing to better utilisation and currency
benefit.
•
Net profit, at INR31.0bn, grew 7.4% QoQ, primarily due to higher operating profit. Net
margin for the quarter stood at 23.2%, up 60bps QoQ.
Chart 1: QoQ volume growth
6.0
Chart 2: QoQ change in pricing
4.0
2.4
2.8
0.8
(%)
(%)
4.4
(0.8)
1.2
(2.4)
(0.4)
Offshore rate
Q215
Q115
Q414
Q314
Q214
Q114
Q413
Q313
Q215
Q115
Q414
Q314
Q214
Q114
Q413
Q313
Q213
Q213
(4.0)
(2.0)
Onsite rate
Source: Company
•
FY15 guidance: Infosys has maintained its annual guidance of 7-9% USD revenue
growth for FY15. This guidance implies CQGR of 1.4% at lower end and growth of 3.8%
at the higher end in the balance 2 quarters of FY15.
Table 1: FY15 revenue guidance
Guidance (USD mn)
Lower band
Upper band
FY15
8,826
8,991
FY14
8,249
8,249
Y-o-Y growth (%)
7.0
9.0
Source: Company, Edelweiss research
4
•
The company secured 7 large deals with TCV of USD600mn.
•
Performance across client categories: Infosys’ top client and top-5 clients grew 3.2%
and 2.4% QoQ; top-10 surged 3.2% QoQ. Beyond top-10 clients too posted 3.2% QoQ
growth (in USD).
•
Pricing: In constant currency, onsite pricing inched up 3.4% QoQ, while offshore pricing
grew 0.4% QoQ. On blended basis, pricing was up 1.3% QoQ.
•
Horizontals: CSl (32.4% of revenue) and ADM (35.0% of revenue) grew 3.5% and 4.7%
QoQ, respectively. IMS and testing grew 3.2% and 2.1% QoQ, while products and
platforms fell 1.1% QoQ.
Edelweiss Securities Limited
Infosys
Client addition: New client addition continued to be decent with 49 additions during the
quarter (61 in Q1FY15). Total active clientele now stands at 912 (910 in Q1FY15).
•
Table 2: Trend in client brackets
More than 1 mn USD
More than 5 mn USD
More than 10 mn USD
More than 25 mn USD
More than 50 mn USD
More than 75 mn USD
More than 100 mn USD
More than 200 mn USD
More than 300 mn USD
Q214
469
221
146
77
40
24
15
3
Q314
495
226
148
77
41
25
15
4
1
Q414
501
232
148
78
42
24
13
3
1
Q115
520
235
148
78
43
24
12
3
1
Q215
526
237
150
83
43
27
13
3
-
Source: Company, Edelweiss research
Vertical-wise performance: Retail and CPG (RCL) and manufacturing grew 1.5% and
3.6% QoQ, respectively. While telecom grew 5.6%, FSI, the largest vertical, grew 1.2%
QoQ. Energy, utilities and communication (ECS) moved up 7.8% QoQ.
•
Chart 3: Vertical-wise QoQ revenue growth on reported basis
10.0
8.0
(%)
6.0
4.0
2.0
0.0
FSI
RCL
Q2FY15
Total revenues Manufacturing
ECS
Q1FY15
Source: Company, Edelweiss research
Table 3: Vertical-wise QoQ revenue growth in constant currency
Constant currency growth (%)
Q2FY15
FSI
2.0
MFG
4.5
RCL
2.0
ECS
8.8
Q1FY15
1.8
2.6
2.1
1.6
Source: Company, Edelweiss research
•
5
Geo-split: North America (60.8% of revenue) was up 3.1% QoQ, Europe grew a robust
4.2% QoQ. RoW grew 2.8% and India dipped 5.1% QoQ.
Edelweiss Securities Limited
IT
Chart 4: Geography-wise QoQ revenue growth in reported currency
5.0
2.6
(%)
0.2
(2.2)
(4.6)
(7.0)
Europe
North America
ROW
Q2FY15
India
Q1FY15
Table 4: Geography-wise QoQ revenue growth in constant currency
Constant currency growth (%)
North America
Europe
ROW
Q2FY15
Q1FY15
3.2
3.7
6.5
(1.1)
2.8
(0.8)
Source: Company, Edelweiss research
Utilisation: Including trainees, utilisation increased 40bps QoQ to 75.2%; utilisation (extrainees) at 82.3% improved 220bps QoQ. Attrition stood at 20.1% (19.5% in Q1FY15).
•
Chart 5: Utilisation sees an uptick QoQ
85.0
80.0
(%)
75.0
70.0
65.0
60.0
Q213
Q313
Q413
Q114
Including trainees
Q214
Q314
Q414
Q115
Q215
Excluding trainees
Source: Company
6
Edelweiss Securities Limited
Infosys
Financial snapshot
Year to March
Net revenues
Software development exp.
Gross profit
Selling & marketing exp
General & admin exp
Overhead expenditure
EBITDA
Depreciation
EBIT
Other income
Profit before tax
Tax
Core profit
Diluted EPS (INR)
As % of net revenues
Gross profit
Selling & marketing exp
Admin exp
EBITDA
Adjusted net profit
Reported net profit
Tax rate
Q2FY15
133,420
79,110
54,310
7,690
8,890
16,580
37,730
2,900
34,830
8,770
43,600
12,600
31,000
54.3
Q1FY15
127,700
78,160
49,540
6,660
8,470
15,130
34,410
2,300
32,110
8,290
40,400
11,540
28,860
50.5
40.7
5.8
6.7
28.3
23.2
23.2
28.9
38.8
5.2
6.6
26.9
22.6
22.6
28.6
% Change
4.5
1.2
9.6
15.5
5.0
9.6
9.6
26.1
8.5
5.8
7.9
9.2
7.4
7.4
Q2FY14
129,650
80,500
49,150
7,570
9,870
17,440
31,710
3,340
28,370
5,100
33,470
9,400
24,070
42.1
% Change
2.9
(1.7)
10.5
1.6
(9.9)
(4.9)
19.0
(13.2)
22.8
72.0
30.3
34.0
28.8
28.8
37.9
5.8
7.6
24.5
18.6
18.6
28.1
YTD15
261,120
157,270
103,850
14,350
17,360
31,710
72,140
5,200
66,940
17,060
84,000
24,140
59,860
104.8
FY15E
540,037
325,133
214,903
29,550
32,700
62,250
152,653
11,143
141,510
34,748
176,258
47,204
129,053
225.9
(INR mn)
FY16E
596,404
369,542
226,862
32,354
32,802
65,156
161,706
10,598
151,108
42,298
193,406
48,351
145,054
253.9
39.8
5.5
6.6
27.6
22.9
22.9
28.7
39.8
5.5
6.1
28.3
23.9
23.9
26.8
38.0
5.4
5.5
27.1
24.3
24.3
25.0
Change in estimates
FY15E
FY16E
Net revenue
New
540,037
Old % change
530,307
1.8
New
596,404
Old
571,894
% change
4.3
EBITDA
152,653
150,741
1.3
161,706
152,452
6.1
27.1
26.7
2.7
145,054
132,682
24.3
23.2
18,405
16,381
EBDITA margin (%)
PAT
PAT margin (%)
Capex
28.3
28.4
129,053
125,693
23.9
23.7
19,992
14,249
7
40.3
Comments
Revision of USD/INR rate from INR58/56 to INR
60/59 for FY15/16 respectively leads to revsion
in INR growth.
Revision of currency assumptions and better
margin profile in H1FY15 and expected
improvement in operational metrics lead to
higher EBITDA
9.3
12.4
Edelweiss Securities Limited
IT
Company Description
Infosys is the second-largest IT services company in India providing consulting and IT
services to clients globally. It is also among the fastest growing IT services organization in
the world and a leader in the offshore services space with a pioneer in Global delivery
model. Infosys provides business consulting, application development and maintenance and
engineering services to 910 active clients spread across Banking, Financial Services,
Insurance, Retail, Manufacturing, and Utilities verticals and 50 countries. The company has
also its own proprietary core banking software - Finacle used by some of the leading banks
in India, Middle East, Africa and Europe. Infosys’ total employee force stands at 165,411 and
the company’s TTM revenues stood at INR520.1bn (USD8.5bn).
Investment Theme
Infosys, in the recent past, lost market share to peers like TCS and HCL Technologies due to
lack of strong presence in Infrastructure management services, lack of presence in emerging
geographies and its aversion to provide flexibility in structuring contracts and offer
discounted pricing to clients. The restructuring exercise also led to some distractions which
led to slower growth compared to peers. We believe, on the back of the investments made
it is likely to reduce the gap in revenue growth with peers and is best placed to expand its
margins due to current low level of utilization and possibility of increase in offshore
execution coupled with higher contribution from non-linear business.
Key Risks
Key risks to our investment theme include – slower pick up in IT spend particularly on the
discretionary side, appreciation of INR against USD, Euro and GBP.
8
Edelweiss Securities Limited
Infosys
Financial Statements
Key Assumptions
Year to March
Income statement
FY13
FY14 FY15E FY16E
Macro
GDP(Y-o-Y %)
Inflation (Avg)
5.0
7.4
4.7
6.2
5.4
5.5
6.3
6.0
Repo rate (exit rate)
7.5
8.0
8.0
7.3
54.5
60.5
60.0
59.0
Year to March
(INR mn)
FY13
FY14
FY15E
FY16E
Net revenue
Cost of revenues
403,520
241,580
501,330
307,670
540,037
325,133
596,404
369,542
Gross profit
161,940
193,660
214,903
226,862
Total SG&A expenses
46,430
59,510
62,250
65,156
S&M expenses
20,340
26,250
29,550
32,354
Company
G&A expenses
26,090
33,260
32,700
32,802
Employee Addition (nos)
EBITDA
115,510
134,150
152,653
161,706
USD/INR (Avg)
Gross additions
Freshers Added (BPO -Trainees)
37,036 39,985 40,000 40,000
7,737 7,596 6,500 5,000
Employees Added (BPO - Sales and Support)
Employees Added (Banking Product group)
Average attrition
440
438
750
750
3,783 4,125 3,800 3,500
19.4
22.6
16.8
10.5
Efforts
Depreciation & Amortization
EBIT
Other income
11,220
13,740
11,143
10,598
104,290
120,410
141,510
151,108
23,554
26,690
34,748
42,298
Profit before tax
127,844
147,100
176,258
193,406
Provision for tax
33,660
40,620
47,204
48,351
Net profit
94,184
106,480
129,053
145,054
IT Services - Onsite efforts
23.4
25.9
25.9
25.5
Profit After Tax
94,184
106,480
129,053
145,054
IT Services - Offshore efforts
76.6
74.1
74.1
74.5
Profit after minority interest
94,184
106,480
129,053
145,054
5.1
6.4
7.4
7.3
164.8
186.4
225.9
253.9
94.9
93.6
92.6
92.7
571
571
571
571
164.8
186.3
225.9
253.9
Products + BPO - Onsite efforts
Products + BPO - Offshore efforts
Utilisation
Basic EPS (INR)
Shares outstanding (mn)
Diluted EPS (INR)
IT Services - Onsite utilization
93.0
93.0
93.0
94.0
Dividend per share (INR)
50.0
63.0
70.0
78.2
IT Services - Offshore utilization
64.7
73.8
79.1
79.5
Dividend payout (%)
30.3
33.8
31.0
30.8
Products + BPO - Onsite utilization
93.0
93.0
93.0
93.0
Products + BPO - Offshore utilization
80.5
83.1
88.6
87.0
Year to March
FY13
FY14
FY15E
FY16E
Services-onsite
(1.6)
2.1
3.6
2.6
Services-offshore
(4.8)
(0.4)
0.5
(0.3)
Cost of revenues
Gross margin
59.9
40.1
61.4
38.6
60.2
39.8
62.0
38.0
6.5
6.6
6.1
5.5
Pricing change
Cost assumptions
Common size metrics
G&A expenses
Salary hike - Onsite
6.7
4.9
5.5
(1.0)
S&M expenses
5.0
5.2
5.5
5.4
Salary hike - Offshore
1.8
11.8
14.5
0.5
SG&A expenses
11.5
11.9
11.5
10.9
Travelling cost
2.9
2.7
2.5
2.4
EBITDA margins
28.6
26.8
28.3
27.1
Other costs
3.4
0.6
2.9
5.1
EBIT margins
25.8
24.0
26.2
25.3
S&M expenses (% of revenue)
5.0
5.2
5.5
5.4
Net profit margins
23.3
21.2
23.9
24.3
G&A expenses (% of revenue)
6.5
6.6
6.1
5.5
8.5
8.5
9.5
10.5
Year to March
FY13
FY14
FY15E
FY16E
26.3
27.6
26.8
25.0
Revenues
EBITDA
19.6
7.8
24.2
16.1
7.7
13.8
10.4
5.9
6.8
Growth ratios (%)
Financial assumptions
Yield on cash & cash equivalents (%)
Tax rate as % of PBT
Capex (INR mn)
21,810 27,930 19,992 18,405
Debtor days
59
56
60
60
EBIT
6.6
15.5
17.5
Payable days
43
48
60
62
PBT
9.4
15.1
19.8
9.7
Cash conversion cycle (days)
15
8
1
(2)
Net profit
13.3
13.1
21.2
12.4
EPS
13.3
13.1
21.2
12.4
9
Edelweiss Securities Limited
IT
Balance sheet
(INR mn)
Cash flow metrics
FY13
FY14
FY15E
FY16E
FY13
FY14
FY15E
FY16E
2,860
30,900
2,860
30,900
2,860
30,910
2,860
30,910
Operating cash flow
Investing cash flow
94,780
(50,510)
121,870
(50,030)
147,255
(26,492)
155,270
(17,575)
Reserves & surplus
364,210
441,540
514,502
608,107
Financing cash flow
(31,860)
(30,660)
(55,641)
(52,279)
Shareholders funds
397,970
475,300
548,272
641,877
Net cash flow
12,410
41,180
64,992
85,415
Deferred tax liability
(14,760)
(21,140)
(21,400)
(21,400)
Capex
(32,470)
(27,450)
(19,812)
(17,575)
Other term liabilities
1,490
3,230
3,910
3,910
Dividends paid
(32,120)
(31,430)
(55,511)
(52,279)
384,700
457,390
530,782
624,387
23,440
64,680
24,990
78,870
23,980
87,719
23,980
95,526
Profitability & efficiency ratios
Year to March
FY13
FY14
FY15E
FY16E
Investments
3,940
12,520
13,160
13,160
Other non current assets
2,370
2,200
2,720
2,720
ROAE (%)
ROACE (%)
25.7
29.7
24.4
29.2
25.2
29.4
24.4
26.8
60
As on 31st March
Equity capital
Share premium account
Sources of funds
Goodwill
Total net fixed assets
Year to March
235,710
290,060
363,362
448,777
Debtors days
59
56
60
Sundry debtors
70,830
83,510
95,409
100,302
Payable days
43
48
60
62
Unbilled revenue
24,350
28,110
29,480
29,480
Cash conversion cycle (days)
15
8
1
(2)
Current ratio
5.6
4.7
4.6
5.2
Cash and equivalents
Loans and advances
22,240
28,510
28,060
28,060
Total current assets
353,130
430,190
516,310
606,619
54,590
78,050
98,847
103,358
8,270
13,330
14,260
14,260
62,860
91,380
113,107
117,618
Net current assets
290,270
338,810
403,203
Uses of funds
384,700
457,390
696.5
831.8
Sundry creditors and others
Provisions
Total current liabilities &
Book value per share (INR)
Operating ratios
Year to March
FY13
FY14
FY15E
FY16E
489,001
Total asset turnover
Fixed asset turnover
1.1
6.8
1.2
7.0
1.1
6.5
1.0
6.5
530,782
624,387
Equity turnover
1.1
1.2
1.1
1.0
959.5
1,123.3
Valuation parameters
Free cash flow
Year to March
(INR mn)
FY13
FY14
FY15E
FY16E
Net profit
Depreciation
94,184
11,220
106,480
13,740
129,053
11,143
145,054
10,598
Others
(1,184)
(4,160)
(1,850)
(1)
104,220
116,060
138,346
155,652
Less: Changes in WC
9,440
(5,810)
(8,909)
383
Operating cash flow
94,780
121,870
147,255
155,270
Less: Capex
21,810
27,930
19,992
18,405
Free cash flow
72,970
93,940
127,263
136,865
Gross cash flow
Year to March
FY13
FY14
FY15E
FY16E
Diluted EPS (INR)
Y-o-Y growth (%)
164.8
13.3
186.3
13.1
225.9
21.2
253.9
12.4
CEPS (INR)
184.5
210.4
245.4
272.4
23.6
20.9
17.2
15.3
Price/BV (x)
5.6
4.7
4.1
3.5
EV/Sales (x)
4.9
3.8
3.4
3.0
EV/EBITDA (x)
17.2
14.3
12.1
10.9
EV/EBITDA (x)+1 yr forward
Dividend yield (%)
14.8
1.3
12.6
1.6
11.4
1.8
2.0
Diluted PE (x)
Peer comparison valuation
Market cap
(USD mn)
Name
Diluted PE (X)
FY15E
FY16E
Infosys
CMC
36,439
1,103
17.2
19.2
15.3
16.2
Cyient
819
13.6
ECLERX SERVICES
681
15.3
HCL Technologies
19,884
Hexaware Technologies
Info Edge
Persistent Systems
Tata Consultancy Services
Tech Mahindra
Wipro
EV/EBITDA (X)
FY15E
FY16E
ROAE (%)
FY15E
FY16E
12.1
14.1
10.9
11.3
25.2
26.2
24.4
27.2
11.3
9.7
7.9
21.3
21.5
13.1
10.3
9.2
42.5
42.1
17.9
15.8
12.5
10.8
30.0
27.0
936
17.7
14.5
11.8
10.2
24.7
26.3
1,734
54.2
42.9
40.6
29.9
23.8
24.1
942
17.5
15.3
10.5
8.1
24.3
23.2
85,613
24.3
20.2
18.0
15.7
35.6
34.7
8,987
18.2
15.8
11.4
9.7
28.5
25.2
23,546
17.4
15.6
12.7
11.3
22.2
21.0
Source: Edelweiss research
10
Edelweiss Securities Limited
Infosys
Additional Data
Directors Data
Prof Jeffrey S Lehman
Ravi Venkatesan
B G Srinivas
K V Kamath
S D Shibulal
Narayana Murthy
Kiran Mazumdar-Shaw
Independent Director
Independent Director
President and Whole-time Director
Lead Independent Director
CEO and MD
Executive Chairman
Independent Director
Dr Omkar Goswami
Srinath Batni
R Seshasayee
S Gopalkrishnan
Ann M Fudge
Carol M. Browner
U. B. Pravin Rao
Independent Director
Whole-time Director
Independent Director
Executive Vice Chairman
Independent Director
Independent Director
President and Whole-time Director
Auditors - BSR & Co., Chartered Accountants
*as per last annual report
Holding – Top10
Perc. Holding
Perc. Holding
Aberdeen Asset Management Plc
4.07
Life Insurance Corp Of India
3.82
Oppenheimerfunds Incorporated
2.87
Abu Dhabi Investment Authority
2.51
Vanguard Group Inc
2.21
GIC Private Ltd
2.07
Prudential Plc
1.97
Capital Group
1.69
Blackrock
1.69
HDFC Asset Management Co Ltd
1.56
*as per last available data
Bulk Deals
Data
Acquired / Seller
B/S
Qty Traded
Price
No Data Available
*in last one year
Insider Trades
Reporting Data
14 Mar 2014
21 Feb 2014
21 Jan 2014
11 Nov 2013
Acquired / Seller
K. Muralikrishna
Aberdeen Asset Management Asia Limited
Srinath Batni
Ms. Shweta Balakrishnan
B/S
Sell
Sell
Sell
Sell
Qty Traded
15000.00
110000.00
20000.00
50000.00
*in last one year
11
Edelweiss Securities Limited
RATING & INTERPRETATION
Company
Absolute
Relative
Relative
reco
reco
risk
BUY
SO
L
ECLERX SERVICES
HOLD
SP
Hexaware Technologies
CMC
Company
Absolute
Relative
Relative
reco
reco
Risk
Cyient
BUY
SP
H
M
HCL Technologies
BUY
SO
H
M
HOLD
SP
M
Info Edge
BUY
SP
Infosys
BUY
SO
L
Persistent Systems
BUY
SO
L
Tata Consultancy Services
BUY
SP
L
Tech Mahindra
BUY
SO
M
HOLD
SP
L
Wipro
ABSOLUTE RATING
Ratings
Expected absolute returns over 12 months
Buy
More than 15%
Hold
Between 15% and - 5%
Reduce
Less than -5%
RELATIVE RETURNS RATING
Ratings
Criteria
Sector Outperformer (SO)
Stock return > 1.25 x Sector return
Sector Performer (SP)
Stock return > 0.75 x Sector return
Stock return < 1.25 x Sector return
Sector Underperformer (SU)
Stock return < 0.75 x Sector return
Sector return is market cap weighted average return for the coverage universe
within the sector
RELATIVE RISK RATING
Ratings
Criteria
Low (L)
Bottom 1/3rd percentile in the sector
Medium (M)
Middle 1/3rd percentile in the sector
High (H)
Top 1/3rd percentile in the sector
Risk ratings are based on Edelweiss risk model
SECTOR RATING
Ratings
Criteria
Overweight (OW)
Sector return > 1.25 x Nifty return
Equalweight (EW)
Sector return > 0.75 x Nifty return
Sector return < 1.25 x Nifty return
Underweight (UW)
Sector return < 0.75 x Nifty return
12
Edelweiss Securities Limited
Infosys
Edelweiss Securities Limited, Edelweiss House, off C.S.T. Road, Kalina, Mumbai – 400 098.
Board: (91-22) 4009 4400, Email: [email protected]
Vikas Khemani
Head Institutional Equities
[email protected]
+91 22 2286 4206
Nischal Maheshwari
Co-Head Institutional Equities & Head Research
[email protected]
+91 22 4063 5476
Nirav Sheth
Head Sales & Strategy
[email protected]
+91 22 4040 7499
Coverage group(s) of stocks by primary analyst(s): IT
CMC, Cyient, ECLERX SERVICES, HCL Technologies, Hexaware Technologies, Infosys, Info Edge, Persistent Systems, Tata Consultancy Services, Tech
Mahindra, Wipro
Recent Research
Date
Company
Title
Price (INR)
01-Oct-14
IT
24-Sep-14
Accenture
Inline quarter; demand uptick
in key geographies;
Global Pulse
15-Sep-14
IT
Cognizant acquires TriZetto for
USD2.7bn; Sector Update
Recos
Growth momentum to
continue;
Q2FY15 result preview
Distribution of Ratings / Market Cap
Rating Interpretation
Edelweiss Research Coverage Universe
Rating Distribution*
* 1 stocks under review
> 50bn
Market Cap (INR)
144
Buy
Hold
151
44
Reduce
Total
9
205
Between 10bn and 50 bn
< 10bn
56
Rating
Expected to
Buy
appreciate more than 15% over a 12-month period
Hold
appreciate up to 15% over a 12-month period
Reduce
depreciate more than 5% over a 12-month period
5
13
Edelweiss Securities Limited
IT
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Infosys
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