E72 f1fc5d01

1QFY2012 Result Update | IT
July 12, 2011

Infosys ACCUMULATE
CMP `2,794
Performance highlights Target Price `3,200
(` cr) 1QFY12 4QFY11 % chg (qoq) 1QFY11 % chg (yoy) Investment Period 12 Months
Net revenue 7,485 7,250 3.2 6,198 20.8
EBITDA 2,176 2,324 (6.4) 1,962 10.9
Stock Info
EBITDA margin (%) 29.1 32.1 (298)bp 31.7 (259)bp
Sector IT
PAT 1,722 1,818 (5.3) 1,488 15.7
Market Cap (` cr) 159,831
Source: Company, Angel Research
Beta 0.8
For 1QFY2012, Infosys reported results that were almost in-line with our as well 52 Week High / Low 3,494/2661
as street expectations. The company’s performance was modest with 4.0% qoq
Avg. Daily Volume 114,998
volume growth. The disappointment came from lower-than-expected 2QFY2012
guidance of 3.5–5.0% qoq growth in USD revenue, which is seasonally the Face Value (`) 5
strongest quarter. Also, revenue growth guidance for FY2012 was left unchanged BSE Sensex 18,412
at 18–20% yoy growth. We expect revenue growth (in USD terms) to record a Nifty 5,825
21% CAGR over FY2011–13E. We recommend Accumulate on the stock. Reuters Code INFY.BO
Modest results: For 1QFY2012, Infosys reported revenue of US$1,671mn, Bloomberg Code INFY@IN
up 4.3% qoq. In INR terms, revenue came in at `7,485cr, registering 3.2% qoq
growth due to INR appreciation of 1.0% qoq against USD. The company’s
EBITDA and EBIT margins declined by 298bp and 291bp qoq to 29.1% Shareholding Pattern (%)
and 26.1%, respectively, due to wage hikes given in 1QFY2012, effective from Promoters 16.0
April 1, 2011.
MF / Banks / Indian Fls 9.8
Outlook and valuation: Management has indicated 2QFY2012 revenue growth FII / NRIs / OCBs 36.9
to be 3.5–5.0% qoq only and has kept the annual revenue guidance unchanged Indian Public / Others 37.2
at 18–20% yoy. This implies an ask rate of 5.5% CQGR in revenue over
2HFY2012 to meet the upper end of the guidance. Also, in the midst of looming
macro concerns and subdued ramp-ups in discretionary spending, the Abs. (%) 3m 1yr 3yr
outperformance of 3–5% on management’s upper end of the guidance looks
Sensex (4.4) 2.6 36.7
limited as it implies an ask rate of 6.5–7.5% CQGR in revenue over 2HFY2012.
Being cognizant of the deteriorating macros, client-specific issues (BT account still Infosys (7.7) 3.2 78.3
being anaemic) and muted earnings guidance for FY2012, we have cut our EPS
estimates for FY2012 and FY2013 to `137 and `160, respectively. Thus, we
revise our one-year forward target PEx downwards to 20x from 21x and value
the stock at a target price of `3,200 (earlier `3,424) and recommend
Accumulate on the stock.

Key financials (Consolidated)
Y/E March (` cr) FY2009 FY2010 FY2011 FY2012E FY2013E
Net sales 21,693 22,742 27,501 32,497 39,017
% chg 30.0 4.8 20.9 18.2 20.1
Net profit 5,990 6,219 6,823 7,819 9,136
% chg 28.6 3.8 9.7 14.6 16.8
EBITDA margin (%) 33.2 34.5 32.6 30.9 30.6
EPS (`) 104.6 109.5 119.5 136.9 159.9
P/E (x) 26.7 25.5 23.4 20.4 17.5 Srishti Anand
P/BV (x) 8.3 6.6 5.9 4.8 4.0 022-39357800 Ext: 6820
RoE (%) 31.2 25.8 25.0 23.6 22.7 srishti.anand@angelbroking.com

RoCE (%) 29.0 25.0 25.9 24.6 24.7
Ankita Somani
EV/Sales (x) 6.9 6.3 5.2 4.3 3.4
022-39357800 Ext: 6819
EV/EBITDA (x) 20.7 18.3 16.0 13.9 11.2
ankita.somani@angelbrkoing.com

Please refer to important disclosures at the end of this report 1

Infosys | 1QFY2012 Result Update

Exhibit 1: 1QFY2012 performance (IFRS, consolidated)
(` cr) 1QFY12 4QFY11 % chg (qoq) 1QFY11 % chg (yoy) FY2011 FY2010 % chg (yoy)
Net revenue 7,485 7,250 3.2 6,198 20.8 27,501 22,742 20.9
Cost of revenue 4,353 4,012 8.5 3,441 26.5 15,054 12,078 24.6
Gross profit 3,132 3,238 (3.3) 2,757 13.6 12,447 10,664 16.7
SG&A expenses 956 914 4.6 795 20.3 3,483 2,812 23.9
EBITDA 2,176 2,324 (6.4) 1,962 10.9 8,964 7,852 14.2
Depreciation 224 222 0.9 207 8.2 862 942 (8.5)
EBIT 1,952 2,102 (7.1) 1,755 11.2 8,102 6,910 17.3
Other income 443 415 239 1,211 990
PBT 2,395 2,517 (4.8) 1,994 20.1 9,313 7,900 17.9
Income tax 673 699 (3.7) 506 33.0 2,490 1,681 48.1
PAT 1,722 1,818 (5.3) 1,488 15.7 6,823 6,219 9.7
EPS 30.2 31.8 (5.3) 26.1 15.7 119.5 109.5 9.2
Gross margin (%) 41.8 44.7 (282)bp 44.5 (264)bp 45.3 46.9 (163)bp
EBITDA margin (%) 29.1 32.1 (298)bp 31.7 (259)bp 32.6 34.5 (193)bp
EBIT margin (%) 26.1 29.0 (291)bp 28.3 (224)bp 29.5 30.4 (92)bp
PAT margin (%) 21.7 23.7 (200)bp 23.1 (140)bp 23.8 26.2 (244)bp

Exhibit 2: 1QFY2011 – Actual vs. Angel estimates
(` cr) Actual Estimate % Var.
Net revenue 7,485 7,435 0.7
EBITDA margin (%) 29.1 29.3 (22)bp
PAT 1,722 1,689 1.9

Modest show
For 1QFY2012, Infosys reported revenue of US$1,671mn, up 4.3% qoq, primarily
on the back of decent 4.0% qoq volume growth. The 4.0% qoq volume growth was
mainly driven by 6.8% qoq growth in onsite volumes; offshore volumes grew by
2.7% qoq. Pricing remained stable during the quarter.

The cross-currency movement benefited USD revenue by 1.2% qoq. Revenue in
constant currency (CC) terms came in at US$1,651mn, up 3.1% qoq. In INR terms,
revenue came in at `7,485cr, registering 3.2% qoq growth – lower growth as
against USD revenue due to INR appreciation of 1.0% qoq against the USD in
1QFY2012. During the quarter, the company signed three large deals and three
transformational deals.

July 12, 2011 2


Exhibit 3: Trend in volume growth (Effort wise)
15

12 11.4

9 7.9 7.6 7.2 6.8
7.0
5.5
6

(%)
3.5 4.0
3.1
3 2.3 2.7

0
(0.2)
(3) (1.4)
(2.0)
1QFY11 2QFY11 3QFY11 4QFY11 1QFY12

Offshore Onsite Total volume growth


Exhibit 4: Trend in volume and revenue growth (qoq)
10 9.3
7.6
8

6 7.2
4.7
(%)

4 6.0 4.0

3.1
2 3.1
0.8

0
(1.4)
(2)

Revenue growth (constant currency) Volume growth


Decent growth across industries (ex. telecom) and services

Infosys reclassified its service offerings in three categories – 1) business operations,
2) consulting and system integration and 3) products, platforms and solutions.
Business operations (contributed 60% to revenue) grew by 4.3% qoq, majorly led
by 7.2% qoq growth in testing services. Application development, application
maintenance and IMS posted 5.0%, 5.7% and 0.9% qoq growth in revenue,
respectively. Revenue from BPO stood almost flat qoq, with merely 0.6% qoq
growth. The company added eight new clients in the BPO space.

Consulting and system integration (contributed 31.7% to revenue) grew by 4.0%
qoq, majorly led by 7.7% qoq growth in revenue from system integration. Revenue
from consulting and package implementation grew by 3.5% qoq.

The major growth driver for the company was products, platforms and solutions
(contributed 8.3% to revenue), which grew by 5.6% qoq, led by whopping 39.1%
qoq growth in revenue from product engineering services. During the quarter,
the company signed five platform deals in this segment.

July 12, 2011 3


Exhibit 5: Growth trend in service verticals (Reported basis)
Particulars % to revenue % growth qoq % growth yoy
Business operations 60.0 4.3 16.6
Application development 16.1 5.0 17.2
Application maintenance 22.3 5.7 14.8
Infrastructure management services (IMS) 5.9 0.9 5.2
Testing services 7.5 7.2 26.4
Business process management (BPO) 5.4 0.6 16.6
Others 2.8 (2.6) 32.5
Consulting and systems integration 31.7 4.0 32.7
Consulting and package implementation 25.2 3.5 24.0
Systems integration 6.3 7.7 80.3
Others 0.2 (30.5) 146.1
Products, platforms and solutions 8.3 5.6 39.9
Products 4.8 (7.3) 25.7
Product engineering services 3.2 39.1 87.5
Others 0.3 (21.8) (26.2)

Industry wise, growth rates were modest. The company reclassified its industry
segments as: 1) financial services and insurance (FSI), 2) manufacturing, 3) retail,
logistics, CPG and lifesciences (RCL) and 4) energy and utilities and
communication and services (ECS).

The company’s anchor FSI vertical (contributed 35.4% to revenue) grew by 3.4%
qoq, led by 5.8% qoq growth in the insurance industry. Banking and financial
services grew by 2.9% qoq. In CC terms, revenue from FSI grew by 2.1% qoq.
Going ahead, the company is seeing traction in this vertical from risk compliance,
fraud prevention and regulatory kind of work.

Manufacturing (contributed 20.3% to revenue) registered 3.8% qoq growth,
extending its strong growth reported in 2HFY2011. In CC terms, revenue from this
vertical grew by 2.7% qoq. The company is seeing IT spending coming in the
manufacturing industry segment from clients in terms of work related to
harmonising processes and transformation to gain cost efficiency and simplicity.

The RCL segment (contributed 22.7% to revenue) emerged as the major growth
driver for the company, growing by whopping 10.7% qoq. This was majorly led by
15.8% qoq growth in retail and CPG. In CC terms, revenue from RCL grew
strongly by 9.3% qoq. In this industry segment, retail is gaining good traction on
account of spend related to digital commerce, digital marketing and clients
targeting to go global. Currently, the company is close to signing two deals in the
digital marketing space with two new deals in the pipeline. Also, CPG companies
are investing a lot in package implementation kind of services.

The ECS segment (contributed 21.6% to revenue) remained sluggish during the
quarter, with revenue inching up by merely 0.1% qoq. In CC terms, revenue from
this segment declined by 1.4% qoq. This was majorly due to a 7.1% qoq decline in
revenue from communication and media, which includes telecom, due to
client-specific issues (of the telecom industry) in Europe. Going ahead,
the company expects its deal pipeline to pick-up for the telecom industry segment

July 12, 2011 4


with more spend coming in from the wireless space. Infosys has just won two new
deals in the telecom industry segment. Revenue from energy and utilities, however,
grew by 2.5% qoq. The company is seeing traction coming in the energy and
utilities industry segment from smart grid and safety kind of work.

Exhibit 6: Growth trend in industry segments (Reported basis)
Particulars % to revenue % growth qoq % growth yoy
FSI 35.4 3.4 20.6
Banking and financial services 28.1 2.9 24.8
Insurance 7.3 5.8 6.9
Manufacturing 20.3 3.8 28.2
RCL 22.7 10.7 44.2
Retail and CPG 16.1 15.8 50.6
Transport and logistics 1.8 (10.6) 19.7
Life Sciences 3.7 4.3 35.1
Healthcare 1.1 4.3 36.5
ECS 21.6 0.1 6.1
Energy and utilities 5.7 2.5 16.0
Communication and services 10.6 (7.1) (7.8)
Others 5.3 15.2 34.1

In terms of geographies, revenue from North America and Rest of the World grew
by 5.1% and 2.4% qoq in CC terms, respectively. However, revenue from Europe
declined by 2.6% qoq in CC terms due to client-specific issues in this geography,
especially in the telecom industry.

Exhibit 7: Growth trend in geographies (CC basis)
16 15.6
13.3

12
9.7

6.9 7.5
8
4.7 5.1
4.2 3.7
(%)

4 2.4
1.6 2.1

0
(0.5)
(0.8)
(4) (2.6)

North America Europe Rest of the world


July 12, 2011 5


Hiring spree continues

Infosys added 9,922 gross employees in 1QFY2012, of which 4,044 were lateral
additions. The net addition number, however, stood a tad lower than expectations
at 2,740. Attrition, on LTM basis, declined to 15.8% in 1QFY2012 from 17.0% in
4QFY2011. However, attrition rate on a quarterly annualised basis increased to
~22% in 1QFY2012 from ~18.4% in 4QFY2011. Management plans to hire
~12,000 employees in 2QFY2012.

Exhibit 8: Employee metrics
Gross addition 8,859 14,264 11,067 8,930 9,922
Net addition 1,026 7,646 5,311 3,041 2,740
Lateral employees 2,942 4,138 5,212 3,591 4,044
Attrition – LTM basis (%) 15.8 17.1 17.5 17.0 15.8

Utilisation, including trainees, inched up by 120bp qoq to 69.6% as trainees hired
a couple of quarters back turned billable in this quarter. However, utilisation,
excluding trainees, dipped by 30bp qoq to 74.9%.

Exhibit 9: Trend in utilisation
85
81.2 80.7
78.7
80
75.2 74.9
75
(%)

74.3
70 73.0 72.6
69.6
68.4
65

60
Including trainees Excluding trainees


Margins decline

The company’s EBITDA and EBIT margins declined by 298bp and 291bp qoq to
29.1% and 26.1%, respectively, due to wage hikes given in 1QFY2012 (10–12%
for offshore employees and 2–3% for onsite employees) effective from April 1,
2011. Also, EBIT margin got negatively impacted by 40bp qoq due to INR
appreciation against USD.

July 12, 2011 6


Exhibit 10: Trend in EBITDA margin
200 33.3 33.3 34

167 33
100
31.7 32.1
32
0
31
(7)

(BP)
(100) (120) 30

(%)
29.1
(233) 29
(200)
(298) 28
(300)
27
(400) 26

Margin movement (qoq) EBITDA margin (%)


For FY2012, management had previously guided for a 300bp yoy decline in EBIT
margin, which now has been changed to 250bp yoy.

Client pyramid enhances
Infosys added 26 new clients during the quarter. In 1QFY2012, seven clients from
the US$10mn–20mn bracket moved to higher brackets – of which three shifted to
the US$20mn–50mn bracket and four shifted to the US$50mn–100mn
bracket. Also, 12 new clients came into the US$1mn–5mn bracket. However,
the US$5mn–10mn bracket saw a decline of three clients. The active client base of
the company increased to 628 in 1QFY2012 from 620 in 4QFY2011.

Exhibit 11: Client metrics
Particulars 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12
Top client (% of revenue) 4.9 4.7 4.6 4.7 4.5
Client addition 38 27 40 34 26
Active client 590 592 612 620 628
US$1mn–5mn 171 164 170 179 191
US$5mn–10mn 67 60 59 61 58
US$10mn–20mn 43 47 53 53 45
US$20mn–50mn 34 39 39 45 48
US$50mn–100mn 18 17 18 17 21
US$100mn–200mn 7 8 9 9 9
US$200mn plus 1 2 2 2 2

Guidance
The FY2012 USD revenue growth guidance was left unchanged at 18–20% yoy to
US$7.13bn–7.25bn. For 2QFY2012, Infosys has guided for 3.5–5.0% qoq growth
in USD revenue to US$1.730bn–1.755bn, which is lower than our expectations
and indicates that management is banking on back-ended growth (in 2HFY2012),
which makes us cautious as the second half of every fiscal year is typically slow.
EPS guidance for FY2012 increased to US$2.88–2.92, 10.0–11.5% yoy growth vs.
the previous guidance of 8–10% yoy growth.

July 12, 2011 7


On the margin front, Infosys expects a 250bp yoy decline in its margin because of
1) 80bp negative impact due to INR appreciation against USD, assuming average
rate of 44.50 for FY2012, 2) 100bp negative impact due to utilisation coming off
on account of hiring to maintain bench so as to map into any uptick in demand
coming in and 3) 70bp negative impact due to higher employee costs.

Exhibit 12: 2QFY2012 and FY2012 guidance
FY2012-Previous FY2012-Revised
Guidance (IFRS) 2QFY2012
(As on 4QFY2011) (As on 1QFY2012)
Revenue (` cr) 7,699-7,810 31,727-32,270 31,777-32,311
EPS (`) 29.64-30.15 126.05-128.21 128.20-130.08

Revenue (US$bn) 1.730-1.755 7.13-7.25 7.13-7.25
Basic EPADS (US$) 0.67-0.68 2.83-2.88 2.88-2.92

Outlook and valuation

Management has indicated 2QFY2012 revenue growth to be 3.5–5.0% qoq only
and has kept the annual revenue guidance unchanged at 18–20% yoy. This
implies an ask rate of 5.5% CQGR in revenue over 2HFY2012 to meet the upper
end of the guidance. Also in the midst of looming macro concerns and subdued
ramp-ups in discretionary spending, the outperformance of 3–5% on
management’s upper end of the guidance looks limited as it implies an ask rate of
6.5–7.5% CQGR in revenue over 2HFY2012. Typically, 2H is sluggish and risks
like 1) unanticipated higher days of closure in 3Q for the holiday season and
2) probability of clients delaying the outlay due to kick off in next-year budgeting
cycles prevail. Thus, the deviation from a normal year (i.e. front-ended growth) to
back-ended growth is worrisome and restricts the probable outperformance of
management’s guidance. Thus, we revise down our USD revenue CAGR estimate
over FY2011–13E to 21% from 23.5%. Margin headwinds such as 1) weak
utilisation (yoy) due to strong fresher hiring and 2) limited volume growth resulting
in non-absorption of the full impact of annual wage hikes and 3) INR appreciation
are expected to pull down the company’s EBITDA margin to 30.9% and 30.6% in
FY2012E and FY2013E, respectively, from 32.6% in FY2011. Thus, we expect
Infosys to report revenue (INR terms), EBITDA and PAT CAGR of 19.1%, 15.3% and
15.7%, respectively.

Being cognizant of the deteriorating macros, client-specific issues (BT account still
being anaemic) and muted earnings guidance for FY2012, we have cut our EPS
estimates for FY2012 and FY2013 to `137 and `160, respectively. Thus, we revise
our one-year forward target PEx downwards to 20x from 21x and value the
company at a target price of `3,200 (earlier `3,424) and recommend Accumulate
on the stock.

July 12, 2011 8


Exhibit 13: Key assumptions
Parameters FY2012 FY2013
Volume growth (%) 16.7 23.3
Revenue growth – USD terms (%) 20.9 21.3
USD–INR rate 44.5 44.0
Revenue growth – INR terms (%) 18.2 20.1
EBITDA margin (%) 30.9 30.6
Tax rate (%) 28.0 28.0
EPS growth (%) 14.6 16.8

Exhibit 14: Change in estimates
FY2012 FY2013
Parameter Earlier Revised Variation Earlier Revised Variation
(` cr) estimates estimates (%) estimates estimates (%)
Net revenue 32,999 32,497 (1.5) 40,203 39,017 (2.9)
EBITDA 10,255 10,028 (2.2) 12,104 11,924 (1.5)
Other income 1,625 1,800 10.7 1,848 1,924 4.1
PBT 10,899 10,863 (0.3) 12,757 12,688 (0.5)
Tax 2,943 3,044 3.4 3,444 3,553 3.1
PAT 7,956 7,819 (1.7) 9,313 9,136 (1.9)

Exhibit 15: One-year forward PE (x)
4,700
4,100
3,500
2,900
(`)

2,300
1,700
1,100
500
Oct-09
Sep-07

Feb-08

May-09
Dec-08

Jun-11
Jan-11
Apr-07

Jul-08

Mar-10

Aug-10

Price 26x 22x 18x 14x 10x


July 12, 2011 9


Exhibit 16: Recommendation summary
Company Reco CMP Tgt. price Upside FY2013E FY2013E FY2011-13E FY2013E FY2013E
(`) (`) (%) P/BV (x) P/E (x) EPS CAGR (%) RoCE (%) RoE (%)
3iInfotech Neutral 44 - - 0.6 3.7 (4.3) 12.0 15.1
Educomp Buy 385 522 35.5 1.3 7.4 17.7 16.4 17.0
Everonn Accumulate 524 602 14.9 2.5 12.4 27.7 15.5 16.7
HCL Tech Buy 492 591 20.2 3.1 11.6 30.8 18.9 26.9
Infosys Accumulate 2,794 3,200 14.5 4.0 17.5 15.7 24.7 22.7
Infotech Enterprises Neutral 139 - - 1.1 8.7 13.0 15.0 13.2
KPIT Cummins Buy 179 208 16.2 1.7 10.6 21.9 21.8 17.7
Mphasis Buy 431 499 15.8 1.6 9.7 9.2 16.8 16.8
NIIT Buy 54 68 26.3 1.3 7.8 10.9 12.4 16.6
TCS Buy 1,147 1,337 16.6 5.9 18.9 17.1 29.3 31.4
Tech Mahindra Accumulate 742 790 6.4 2.1 13.2 6.8 14.9 15.6
Wipro Buy 415 483 16.5 3.1 14.6 14.5 16.3 21.5

July 12, 2011 10


Profit and loss statement (IFRS, consolidated)
Net sales 21,693 22,742 27,501 32,497 39,017
Cost of revenue 11,765 12,078 15,054 18,578 22,638
Gross profit 9,928 10,664 12,447 13,919 16,379
% of net sales 45.8 46.9 45.3 42.8 42.0
Selling and marketing expenses 1,104 1,184 1,512 1,742 2,115
% of net sales 5.1 5.2 5.5 5.4 5.4
General and admin expenses 1,629 1,628 1,971 2,148 2,339
% of net sales 7.5 7.2 7.2 6.6 6.0
EBITDA 7,195 7,852 8,964 10,028 11,924
% of net sales 33.2 34.5 32.6 30.9 30.6
Dep. and amortization 761 942 862 965 1,160
% of net sales 3.5 4.1 3.1 3.0 3.0
EBIT 6,434 6,910 8,102 9,063 10,764
% of net sales 29.7 30.4 29.5 27.9 27.6
Other income 475 990 1,211 1,800 1,924
Profit before tax 6,909 7,900 9,313 10,863 12,688
Provision for tax 919 1,681 2,490 3,044 3,553
% of PBT 13.3 21.3 26.7 28.0 28.0
PAT 5,990 6,219 6,823 7,819 9,136
Minority interest - - - - -
Adj. PAT 5,990 6,219 6,823 7,819 9,136
Fully diluted EPS (`) 104.6 109.5 119.5 136.9 159.9

July 12, 2011 11


Balance sheet (IFRS, consolidated)
Current assets
Cash and cash equivalents 10,993 12,111 16,666 20,644 25,737
Available for sale financial assets - 2,556 21 30 30
Investment in certificates of deposit - 1,190 123 25 25
Trade receivables 3,672 3,494 4,653 5,520 6,628
Unbilled revenue 750 841 1,243 1,425 1,710
Derivative financial instruments - 95 66 85 100
Prepayments and other current assets 411 641 917 1,137 1,366
Total current assets 15,826 20,928 23,689 28,866 35,595
Non-current assets
Property, plant and equipment 4,665 4,439 4,844 5,079 5,119
Goodwill 692 829 825 830 835
Intangible assets 35 56 48 60 60
Available for sale financial assets - - 23 23 23
Deferred income tax assets 447 356 378 400 400
Income tax assets 274 667 993 1,000 1,000
Other non-current assets 262 347 463 613 495
Total non-current assets 6,375 6,694 7,574 8,005 7,932
Total assets 22,201 27,622 31,263 36,871 43,527
Current liabilities
Trade payables 27 10 44 20 20
Derivative financial instruments 114 - - - -
Current income tax liabilities 581 724 817 820 737
Client deposits 5 8 22 25 30
Unearned revenue 331 531 518 528 540
Employee benefit obligations 104 131 140 140 140
Provisions 92 82 88 90 80
Other liabilities 1,471 1,707 2,012 1,800 1,500
Total current liabilities 2,725 3,193 3,641 3,423 3,047
Non-current liabilities
Deferred income tax liabilities 39 124 - - -
Employee benefit obligations 187 171 259 260 260
Other liabilities 56 61 60 61 60
Total non-current liabilities 282 356 319 321 320
Total liabilities 3,007 3,549 3,960 3,744 3,367
Equity
Share capital 286 286 286 286 286
Share premium 2,944 3,047 3,082 3,100 3,100
Retained earnings 15,972 20,668 23,826 29,641 36,773
Other components of equity (8) 72 109 100 -
Total equity 19,194 24,073 27,303 33,127 40,159
Total liabilities and equity 22,201 27,622 31,263 36,871 43,527

July 12, 2011 12


Cash flow statement (IFRS, consolidated)
Pre-tax profit from operations 6,434 6,910 8,102 9,063 10,764
Depreciation 761 942 862 965 1,160
Pre tax cash from operations 7,195 7,852 8,964 10,028 11,924
Other income/prior period ad 475 990 1,211 1,800 1,924
Net cash from operations 7,670 8,842 10,175 11,828 13,848
Tax 919 1,681 2,490 3,044 3,553
Cash profits 6,751 7,161 7,685 8,784 10,296
(Inc)/dec in current assets (664) (238) (1,808) (1,288) (1,637)
(Inc)/dec in current liabilities 547 468 448 (218) (376)
(Inc)/dec in net trade WC (117) 230 (1,360) (1,506) (2,013)
Cashflow from operating activities 6,635 7,391 6,325 7,278 8,283
(Inc)/dec in fixed assets (1,372) (716) (1,267) (1,200) (1,200)
(Inc)/dec in investments 71 (3,746) 3,602 89 -
(inc)/dec in sale of financial assets - - (23) - -
(Inc)/dec in deferred tax assets (213) (302) (348) (29) -
(Inc)/dec in other non-current liab. 115 74 (37) 2 (1)
(Inc)/dec in other non-current ass. (77) (243) (104) (167) 113
Cashflow from investing activities (1,475) (4,933) 1,823 (1,305) (1,088)
Inc/(dec) in debt - - - - -
Inc/(dec) in equity/premium (758) 333 (1,256) 9 (100)
Dividends 1,574 1,673 2,337 2,004 2,004
Cashflow from financing activities (2,331) (1,340) (3,593) (1,995) (2,104)
Cash generated/(utilised) 2,829 1,118 4,555 3,979 5,092
Cash at start of the year 8,164 10,993 12,111 16,666 20,644
Cash at end of the year 10,993 12,111 16,666 20,644 25,736

July 12, 2011 13


Key ratios
Y/E March FY2009 FY2010 FY2011 FY2012E FY2013E
Valuation ratio (x)
P/E 26.7 25.5 23.4 20.4 17.5
P/CEPS 23.7 22.3 20.8 18.2 15.5
P/BVPS 8.3 6.6 5.9 4.8 4.0
Dividend yield (%) 0.8 0.9 1.2 1.1 1.1
EV/Sales 6.9 6.3 5.2 4.3 3.4
EV/EBITDA 20.7 18.3 16.0 13.9 11.2
EV/Total assets 6.7 5.2 4.6 3.8 3.1
Per share data (`)
EPS 105 109 119 137 160
Cash EPS 118 125 134 154 180
Dividend 23.5 25.0 34.9 29.9 29.9
Book value 336 421 477 579 702
DuPont analysis
Tax retention ratio (PAT/PBT) 0.9 0.8 0.7 0.7 0.7
Cost of debt (PBT/EBIT) 1.1 1.1 1.1 1.2 1.2
EBIT margin (EBIT/sales) 0.3 0.3 0.3 0.3 0.3
Asset turnover ratio (sales/assets) 1.0 0.8 0.9 0.9 0.9
Leverage ratio (assets/equity) 1.2 1.1 1.1 1.1 1.1
Operating ROE 31.2 25.8 25.0 23.6 22.7
Return ratios (%)
RoCE (pre-tax) 29.0 25.0 25.9 24.6 24.7
Angel RoIC 57.4 58.7 56.1 56.0 60.7
RoE 31.2 25.8 25.0 23.6 22.7
Turnover ratios (x)
Asset turnover (fixed assets) 3.4 3.4 3.6 4.1 4.9
Receivables days 74 70 78 78 78

July 12, 2011 14


Research Team Tel: 022 - 39357800 E-mail: research@angelbroking.com Website: www.angelbroking.com

DISCLAIMER

This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.

Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make
investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this
document are those of the analyst, and the company may or may not subscribe to all the views expressed within.

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies 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.
Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,
nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,
compliance, or other reasons that prevent us from doing so.

This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
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Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or
other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in
the past.

Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
connection with the use of this information.

Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the
latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have
investment positions in the stocks recommended in this report.

Disclosure of Interest Statement Infosys
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
Reduce (-5% to 15%) Sell (< -15%)

July 12, 2011 15

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