1QFY2014 Result Update | IT

July 12, 2013

Infosys
Performance highlights
(` cr) Net revenue EBITDA EBITDA margin (%) PAT 1QFY14 11,267 2,983 26.5 2,374 4QFY13 10,454 2,770 26.5 2,394 % chg (qoq) 7.8 7.7 (2)bp (0.8) 1QFY13 9,616 2,943 30.6 2,289 % chg (yoy) 17.2 1.4 (413)bp 3.7

NEUTRAL
CMP Target Price
Investment Period

`2,803 12 Months

Stock Info Sector Market Cap (` cr) Net debt (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code IT 160,934 (24,078) 0.8 3010/2,102 119,293 5 19,958 6,009 INFY.BO INFY@IN

Source: Company, Angel Research

Infosys reported healthy set of results for 1QFY2014. The companys dollar revenues grew by 2.7% qoq, aided by 4.1% qoq volume growth led by recovery in application development and consulting revenues. Infosys maintained its FY2014 USD revenue growth guidance at 6-10% as against our expectation of reducing it down to 6-8%, which is encouraging. We believe a healthy 1QFY2014 performance increases the probability of achieving/beating the top end of the guidance. Owing to the recent sharp run up in the companys stock price, we maintain our Neutral rating. Quarterly highlights: For 1QFY2014, Infosys reported revenue of US$1,991mn, up 2.7% qoq. Revenue in constant currency (CC) terms came in at US$2,005mn, up 3.4% qoq. In INR terms, revenue came in at `11,267cr, up 7.8% qoq. The companys EBITDA and EBIT margin inched up slightly by 2bp and 9bp qoq to 26.5% and 23.6%, respectively as the gains from rupee depreciation got absorbed due to negative impact of wage hike given to sales team from May 2013 and onsite wage hikes given in February 2013. The PAT was held up at `2,374, down 0.8% qoq. Outlook and valuation: The Management commentary indicates that the environment remains challenging and the company continues to see pricing pressure in large deals coming in re-bid market space because of competitive intensity. Management indicated that these deals are margin dilutive in the beginning but become margin neutral going ahead. Over FY2013-15E, we expect USD and INR revenue CAGR of 9.2% and 12.6%, respectively. Management indicated that the company has given ~8% offshore and ~3% onsite wage hike from 1 July, 2013 which will impact the operating margin negatively by ~300bp in 2QFY2014. The stock has ran up significantly today on the back of better than expected 1QFY2014 performance and at the CMP of `2,803, the stock is trading at 16.4x and 14.8x its FY2014E and FY2015E EPS, respectively. We value the stock at 15x FY2015E EPS of `189.4, which gives us a target price of `2820. We maintain our Neutral rating on the stock. Key financials (Consolidated, IFRS)
Y/E March (` cr) Net sales % chg Net profit % chg EBITDA margin (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x) FY2011 27,501 20.9 6,823 9.7 32.6 119.5 23.5 5.9 25.0 25.9 5.2 16.0 FY2012 33,733 22.7 8,315 21.9 31.7 145.5 19.3 4.8 24.9 25.5 4.1 13.0 FY2013 40,352 19.6 9,421 13.3 28.6 164.9 17.0 4.0 23.7 22.5 3.4 11.8 FY2014E 47,001 16.5 9,785 3.9 26.2 171.3 16.4 3.3 20.4 20.0 2.8 10.5 FY2015E 51,196 8.9 10,816 10.5 26.4 189.4 14.8 2.9 19.3 19.0 2.4 9.1

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 16.0 18.3 39.6 26.1

Abs. (%) Sensex Infosys

3m 9.4 22.1

1yr 15.8 23.7

3yr 11.3 (3.2)

Ankita Somani
+91 22-39357800 Ext: 6819 ankita.somani@angelbroking.com

Source: Company, Angel Research

Please refer to important disclosures at the end of this report

Infosys | 1QFY2014 Result Update

Exhibit 1: 1QFY2014 performance (IFRS, consolidated)

(` cr) Net revenue Cost of revenue Gross profit SG&A expenses EBITDA Depreciation EBIT Other income PBT Income tax PAT EPS Gross margin (%) EBITDA margin (%) EBIT margin (%) PAT margin (%)
Source: Company, Angel Research

1QFY14 11,267 7,000 4,267 1,284 2,983 319 2,664 577 3,241 867 2,374 41.5 37.9 26.5 23.6 20.0

4QFY13 10,454 6,494 3,960 1,190 2,770 308 2,462 674 3,136 742 2,394 41.9 37.9 26.5 23.6 21.5

% chg (qoq) 7.8 7.8 7.8 7.9 7.7 3.6 8.2 3.3 16.8 (0.8) (0.8) (2)bp 9bp (147)bp

1QFY13 9,616 5,560 4,056 1,113 2,943 250 2,693 476 3,169 880 2,289 40.1 42.2 30.6 28.0 22.7

% chg (yoy) 17.2 25.9 5.2 15.4 1.4 27.6 (1.1) 2.3 (1.5) 3.7 3.7 (431)bp (413)bp (436)bp (264)bp

FY2013 40,352 24,158 16,194 4,643 11,551 1,122 10,429 2,359 12,788 3,367 9,421 164.9 40.1 28.6 25.8 22.1

FY2012 33,733 18,877 14,856 4,147 10,709 931 9,778 1,904 11,683 3,368 8,315 145.5 44.0 31.7 29.0 23.3

% chg (yoy) 19.6 28.0 9.0 12.0 7.9 20.5 6.6 9.5 (0.0) 13.3 13.3 (391)bp (312)bp (314)bp (128)bp

Exhibit 2: 1QFY2014 Actual vs Angel estimates

(` cr) Net revenue EBITDA margin (%) PAT
Source: Company, Angel Research

Actual 11,267 26.5 2,374

Estimate 11,217 27.6 2,403

% Var. 0.4 (112)bp (1.2)

Topline provides a pleasant surprise

Infosys reported healthy set of results for 1QFY2014. Its dollar revenues grew by 2.7% qoq (against an estimate of 1.5% qoq) to US$1,991mn, aided by 4.1% qoq volume growth led by recovery in application development and consulting revenues. Pricing went down by 0.7% qoq due to negative cross currency movement. Cross currency movement impacted the companys USD revenue negatively by US137mn. Revenue in constant currency (CC) terms came in at US$2,005mn, up 3.4% qoq. The overall volume growth was robust at 4.1% qoq 5.8% onsite volume growth and 3.3% offshore volume growth. Reported pricing went down by 0.5% qoq for onsite and 2.3% qoq for offshore projects. In INR terms, revenue came in at `11,267cr, up 7.8% qoq.

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Infosys | 1QFY2014 Result Update

Exhibit 3: Trend in volume growth (Effort wise)

6 4.8 3.8 4.1 3.7 3.3 2.0 1.3 0.5 0 1QFY13 2QFY13 Offshore
Source: Company, Angel Research

5.8 4.4

3.6 2.9 2.3 2.7

(%)

1.8

3QFY13 Onsite

4QFY13 Total volume growth

1QFY14

Exhibit 4: Trend in volume and revenue growth (qoq)

8 6 4 2 0 (0.4) (2) 1QFY13 2QFY13 3QFY13 Revenue growth (constant currency) 4QFY13 1QFY14 Volume growth 3.8 2.7 2.0 2.4 1.8 1.7 3.4 5.8 4.1

Source: Company, Angel Research

Service wise, revenue growth was led by consulting and systems integration, the revenue from which grew by 5.6% qoq. Revenue from one of the companys anchor service verticals - application development grew by 4.1% qoq, while revenues from application maintenance declined by 0.4% qoq. The company is again regaining focus on traditional bread and butter IT services which are a part of business operations. IMS, which has been showing robust traction in the past three quarters, posted negligible growth during 1QFY2014. Revenues from BPO and PES services grew by 0.8% and 2.7% qoq, respectively. Infosys BPO has been performing considerably well since the past few quarters and the Management has indicated at trying to draw ~US$1bn of revenue from it in the next two years from ~US$400mn currently.

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(%)

Infosys | 1QFY2014 Result Update

Exhibit 5: Growth trend in service verticals (Reported basis)

Particulars Business operations Application development Application maintenance Infrastructure management services (IMS) Testing services Business process management (BPO) Product engineering services (PES) Others Consulting and systems integration Products, platforms and solutions Products Others
Source: Company, Angel Research

% to revenue % growth qoq % growth yoy 61.0 15.7 19.3 7.0 8.4 5.1 3.2 2.3 33.6 5.4 3.7 0.5 1.7 4.1 (0.4) (0.1) 4.0 0.8 2.7 2.7 5.6 (2.7) (5.0) 28.4 8.3 4.3 4.9 20.5 15.0 18.3 3.9 (3.2) 27.7 0.6 (6.6) 89.4

Industry-wise, the revenue from financial services and insurance (FSI), the companys anchor industry vertical contributing 33.7% to revenue, grew by 2. 1% qoq, led by a 2.7% qoq growth in revenue from insurance. Revenues from banking and financial services vertical grew by 2.0%, qoq. In CC terms, revenue from FSI grew by 2.9% qoq. The Management indicated that business prospects will remain muted in the near term for discretionary spend in the FSI vertical. The spending from banks and financial institutions is coming from work related to risk compliance, cost cutting, customer centric applications, cloud and risk management. Also, the company is witnessing pricing challenges in this industry vertical in some of the large deals coming in. Manufacturing (contributed 22.5% to revenue) posted a 4.1% qoq revenue growth. In CC terms, revenue from this vertical grew by 4.5% qoq. The company is seeing IT spending coming in the manufacturing industry segment from clients in terms of work related to harmonizing processes and transformation to gain cost efficiency and simplicity. The Management indicated that budgets in manufacturing subsegments such as aerospace, auto and hi-tech are flat to marginally down. The company expects revenues from manufacturing to pick up in H2FY2014, as the large inventory pile up finishes off at the clients ends and production picks up. The retail, CPG and logistics (RCL) segment (contributed 24.7% to revenue) reported 6.2% qoq revenue growth and emerged as the primary growth driver for the company. Revenues from retail & CPG and transport & logistics grew by 5.4% and 2.7% qoq, respectively. In CC terms, the revenue from RCL grew by 6.7% qoq. In this industry segment, retail is gaining traction on account of spends related to digital commerce, digital marketing and clients targeting to go global. Modest growth from products and platforms is being seen from this industry. The energy utilities, communications & services (ECS) segment (contributed 19.1% to revenue) reported a 1.9% qoq decline in its revenues due to 3.2% and 6.1% qoq decline in revenues from energy & utilities and communication & services industries respectively. In energy and utilities, the Management indicated that barring oil and few utility companies, growth will remain subdued in the near-term. In CC terms, revenue from this segment declined by 0.6% qoq.
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Infosys | 1QFY2014 Result Update

Exhibit 6: Growth trend in industry segments (Reported basis)

Particulars FSI Banking and financial services Insurance Manufacturing RCL Retail and CPG Transport and logistics Life Sciences Healthcare ECS Energy and utilities Communication and services Others
Source: Company, Angel Research

% to revenue 33.7 27.0 6.7 22.5 24.7 15.8 1.8 4.7 2.4 19.1 4.9 8.5 5.7

% growth qoq 2.1 2.0 2.7 4.1 6.2 5.4 2.7 0.6 29.8 (1.9) (3.2) (6.1) 6.5

% growth yoy 11.7 10.8 15.4 16.2 18.4 6.2 20.3 44.4 94.8 8.5 21.1 (4.4) 22.2

In terms of geographies, revenue growth was primarily led by emerging geographies (rest of the world), revenues from which grew by 6.5% in CC terms. Revenues from North America also grew at a decent rate of 5.0% qoq in CC terms. Revenue from Europe declined by 2.4% (CC terms) as Infosys closed few projects in that geography during the quarter.

Exhibit 7: Growth trend in geographies (CC basis)

20 15 10 14.4 7.4 1.7 2.2 2.2 5.1 1.8 1.6 0.1 (1.5) (5) (10) (7.2) 1QFY13 2QFY13 North America
Source: Company, Angel Research

6.5

(%)

5 0

5.0

6.5

(2.4)

3QFY13 Europe

4QFY13 Rest of the world

1QFY14

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Infosys | 1QFY2014 Result Update

Hiring and utilization

Infosys added 10,138 gross employees in 1QFY2014, of which 3,008 were lateral additions. The net addition number for the quarter stood at 575. Attrition, on last twelve month (LTM) basis, grew to 16.9% in 1QFY2014 from 16.3% in 4QFY2013. The Management indicated that hiring going ahead will be based on business needs and is currently more focused towards improving the utilization level. The company is trying to inch up its utilization level going forward, which could act as one of the margin levers.

Exhibit 8: Employee metrics

1QFY13 Gross addition Net addition Gross lateral emp. addition Attrition LTM basis (%)
Source: Company, Angel Research

2QFY13 10,420 2,610 3,656 15.0

3QFY13 8,390 1,868 4,351 15.1

4QFY13 8,990 1,059 3,545 16.3

1QFY14 10,138 575 3,008 16.9

9,236 1,157 5,233 14.9

With companys focus on improving the utilization level, utilization rate, including as well as excluding trainees, grew by 150bp and 200bp qoq to 72.4% and 75.9%, respectively.

Exhibit 9: Trend in utilization

77 75 73 71.6 72.4 70.1 70.9 73.3 73.9 75.9 73.2

(%)

71 69 67 67.2 65 1QFY13 2QFY13 Including trainees 3QFY13 4QFY13 Excluding trainees 69.6

1QFY14

Source: Company, Angel Research

Margin stable
The companys EBITDA and EBIT margin inched up slightly by 2bp and 9bp qoq to 26.5% and 23.6%, respectively. The gains from rupee depreciation in margin got absorbed due to negative impact of wage hike given to sales team from May 2013 of ~8% and onsite wage hikes given in February 2013. The Management indicated that the company has given ~8% offshore and ~3% onsite wage hike from 1 July, 2013 which will again impact the operating margin negatively by ~300bp in 2QFY2014.

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Infosys | 1QFY2014 Result Update

Exhibit 10: Trend in EBITDA margin

0 (50) (100) (201) (150) (200) (250) 1QFY13 2QFY13 3QFY13 Margin movement (qoq) 4QFY13 1QFY14 EBITDA margin (%) (151) 26.5 (199) 26.5 30.6 (60) 29.1 28.5 (2) 31 30 29 28 27 26 25 24

(BP)

Source: Company, Angel Research

Client pyramid
Infosys added 66 new clients during the quarter, taking its total active client base to 836. The company witnessed addition of three clients in US$100mn-200mn revenue bracket. The company growth during the quarter was led by revenue growth from its top clients. Revenues from the top 1/5/10 clients grew by 11.3%/ 4.1%/ 2.7% qoq, respectively.

Exhibit 11: Client metrics

Particulars Top client (% of revenue) Client addition Active client US$1mn5mn US$5mn10mn US$10mn20mn US$20mn50mn US$50mn100mn US$100mn200mn US$200mn-300mn 1QFY13 4.1 51 711 204 67 49 42 29 9 2 1 2QFY13 4.0 39 715 208 71 52 42 29 8 3 3QFY13 3.6 89 776 210 73 55 41 28 9 3 4QFY13 3.6 56 798 235 76 57 40 28 9 3 1QFY14 3.9 66 836 251 76 57 41 26 12 3 -

US$300mn plus
Source: Company, Angel Research

Investment arguments
Guidance maintained: Infosys has maintained its FY2014 USD revenue growth guidance at 6-10%. The guidance range continues to remain wide due to economic uncertainty and is lower than the software industry body Nasscoms estimate of 12-14%. In INR terms, the company has given revenue guidance of 13-17% (assuming USD/INR rate at 59.39). The management opined that they are cautiously optimistic for the rest of the year. We believe a healthy 1QFY2014 performance increases the probability of achieving/beating the top end of the guidance. Post 1QFY2014 results, Infosys requires ~1.4% CQGR for the remaining quarters to meet its upper end of the guidance which we believe the company can possibly achieve.
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(%)

Infosys | 1QFY2014 Result Update

Pricing pressure foreseen in near term: The Management commentary indicates that the environment remains challenging and the company continues to see pricing pressure in large deals coming in re-bid market space because of competitive intensity. Management indicated that these deals are margin dilutive in the beginning but become margin neutral going ahead. Over FY2013-15E, we expect USD and INR revenue CAGR of 9.2% and 12.6%, respectively. Operating margins to be under pressure: The company is now highly focused on growth and this may lead to sacrifice margins in the near term. The operating margin has got tailwind of rupee depreciation but it currently faces headwinds because of the following reasons 1) offshore as well as onsite wage hike effective from July 2013, 2) single digit margin profile of Lodestone, 3) pick up in onsite hiring and 4) pricing pressure seen for traditional IT services. Infosys posted stable margins during 1QFY2014 after five quarters of consecutive decline seen in the margins. In 2QFY2014, management indicated that wage hikes will impact the companys operating margin by ~300 on a sequential basis. Going ahead, we expect EBIT margin of Infosys to decline to 23.4% and 23.6% for FY2014 and FY2015, respectively from 25.8% in FY2013. Over FY201315E, we expect EBIT CAGR of 7.5%.

Outlook and valuation

The companys Management continues to remain cautiously optimistic on the business environment. The fact that there is nothing really incrementally negative in terms of their numbers is encouraging. With the current set of results, clearly the stock has got rewarded but this performance cannot be perceived as a breakthrough performance unless it is consistent for one more quarter. The company signed seven large deals during the quarter with TCV exceeding US$600mn. Considering Infosys current quarter results as well as management commentary, it seems that some parts of Infosys' new strategy are working, although numbers could remain volatile in the near term. The companys stock price has corrected by ~22% today, which is its highest ever fall in a single trading session in the last decade. The stock has ran up significantly today on the back of better than expected 1QFY2014 performance and at the CMP of `2,803, the stock is trading at 16.4x and 14.8x its FY2014E and FY2015E EPS, respectively. We value the stock at 15x FY2015E EPS of `189.4, which gives us a target price of `2820. We maintain our Neutral rating on the stock.

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Infosys | 1QFY2014 Result Update

Exhibit 12: Key assumptions

Parameters Revenue growth USD terms (%) USDINR rate Revenue growth INR terms (%) EBITDA margin (%) Tax rate (%) EPS growth (%)
Source: Company, Angel Research

FY2014 9.5 58.0 16.5 26.2 27.7 3.9

FY2015 9.0 58.0 8.9 26.4 28.5 10.5

Exhibit 13: Change in estimates

FY2014 Parameter (` cr) Net revenue EBITDA PBT Tax PAT Earlier estimates 45,153 12,456 2,420 13,611 3,862 Revised estimates 47,001 12,295 2,558 13,534 3,749 Variation (%) 4.1 (1.3) 5.7 (0.6) (2.9) Earlier estimates 48,993 13,145 3,103 14,876 4,165 FY2015 Revised estimates 51,196 13,492 3,069 15,127 4,311 Variation (%) 4.5 2.6 (1.1) 1.7 3.5

Source: Company, Angel Research

Exhibit 14: One-year forward PE (x)

4,700 4,100 3,500

(`)

2,900 2,300 1,700 1,100 500

Oct-07

Oct-08

Oct-09

Oct-10

Oct-11

Oct-12
10x

Apr-07

Apr-08

Apr-09

Apr-10

Apr-11

Apr-12

Price
Source: Company, Angel Research

26x

22x

18x

14x

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Apr-13

Infosys | 1QFY2014 Result Update

Exhibit 15: Recommendation summary

Company HCL Tech Hexaware Infosys Infotech Enterprises KPIT Cummins Mindtree Mphasis NIIT Persistent TCS Tech Mahindra Wipro Reco Neutral Accumulate Neutral Neutral Accumulate Neutral Neutral Buy Buy Neutral Accumulate Neutral CMP (`) 860 97 2,803 183 127 911 413 19 510 1,606 1,122 376 Tgt. price (`) 105 144 30 595 1,250 Upside (%) 8.6 13.3 58.3 16.6 11.4 FY2015E EBITDA (%) 22.0 19.8 26.4 17.7 16.7 20.2 18.2 9.1 26.2 28.7 19.1 21.4 FY2015E P/E (x) 13.6 8.2 14.8 8.1 8.8 9.4 9.5 3.5 8.6 17.6 9.6 12.5 FY2012-15E EPS CAGR (%) 20.7 9.6 9.2 15.9 21.6 21.8 4.9 (7.1) 19.0 18.9 11.4 9.7 FY2015E EV/Sales (x) 1.6 1.0 2.4 0.5 0.7 0.9 0.7 (0.0) 0.7 3.4 1.6 1.4 FY2015E RoE (%) 21.7 22.3 19.3 14.0 16.7 19.5 14.2 11.9 16.7 28.1 18.9 19.0

Source: Company, Angel Research

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Infosys | 1QFY2014 Result Update

Company Background
Infosys is the second largest IT company in India, employing over 1,55,000 professionals. The company services more than 800 clients across various verticals, such as financial services, manufacturing, telecom, retail and healthcare. Infosys has the widest portfolio of service offerings amongst Indian IT companies, spanning across the entire IT service value chain - from traditional application development and maintenance to consulting and package implementation to products and platforms.

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Infosys | 1QFY2014 Result Update

Profit and loss statement (IFRS, consolidated)

Y/E March (` cr) Net sales Cost of revenue Gross profit % of net sales Selling and mktg exp % of net sales General and admin exp. % of net sales EBITDA % of net sales Dep. and amortization % of net sales EBIT % of net sales Other income Profit before tax Provision for tax % of PBT PAT Minority interest Adj. PAT EPS (`) FY2011 27,501 15,054 12,447 45.3 1,512 5.5 1,971 7.2 8,964 32.6 862 3.1 8,102 29.5 1,211 9,313 2,490 26.7 6,823 6,823 119.5 FY2012 33,733 18,877 14,856 44.0 1,757 5.2 2,390 7.1 10,709 31.7 931 2.8 9,778 29.0 1,904 11,683 3,368 28.8 8,315 8,315 145.5 FY2013 40,352 24,158 16,194 40.1 2,034 5.0 2,609 6.5 11,551 28.6 1,122 2.8 10,429 25.8 2,359 12,788 3,367 26.3 9,421 9,421 164.9 FY2014E 47,001 29,337 17,665 37.6 2,418 5.1 2,951 6.3 12,295 26.2 1,320 2.8 10,976 23.4 2,558 13,534 3,749 27.7 9,785 9,785 171.3 FY2015E 51,196 31,970 19,226 37.6 2,560 5.0 3,174 6.2 13,492 26.4 1,433 2.8 12,059 23.6 3,069 15,127 4,311 28.5 10,816 10,816 189.4

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12

Infosys | 1QFY2014 Result Update

Balance sheet (IFRS, consolidated)

Y/E March (` cr) Current assets Cash and cash equivalents Available for sale financial assets Investment in certificates of deposit Trade receivables Unbilled revenue Derivative financial instruments Other current assets Total current assets Non-current assets Property, plant and equipment Goodwill Intangible assets Available for sale financial assets Deferred income tax assets Income tax assets Other non-current assets Total non-current assets Total assets Current liabilities Trade payables Derivative financial instruments Current income tax liabilities Client deposits Unearned revenue Employee benefit obligations Provisions Other liabilities Total current liabilities Non-current liabilities Deferred income tax liabilities Employee benefit obligations Other liabilities Total non-current liabilities Total liabilities Equity Share capital Share premium Retained earnings Other components of equity Total equity Total liabilities and equity 286 3,082 23,826 109 27,303 31,263 286 3,089 29,816 270 33,461 38,348 286 3,090 36,114 307 39,797 46,351 286 3,090 44,263 307 47,946 55,000 286 3,090 52,406 307 56,089 63,587 259 60 319 3,960 12 109 121 4,887 119 149 268 6,554 119 149 268 7,054 119 149 268 7,498 44 817 22 518 140 88 2,012 3,641 23 42 1,054 15 545 498 133 2,456 4,766 189 1,329 36 823 614 213 3,082 6,286 189 1,329 36 823 614 213 3,582 6,786 189 1,329 36 823 614 213 4,026 7,230 4,844 825 48 23 378 993 463 7,574 31,263 5,409 993 173 12 316 1,037 162 8,102 38,348 6,468 1,976 368 394 503 1,092 237 11,038 46,351 6,648 1,976 368 394 503 1,192 456 11,537 55,000 6,715 1,976 368 394 503 1,292 1,381 12,629 63,587 16,666 21 123 4,653 1,243 66 917 23,689 20,591 32 345 5,882 1,873 1,523 30,246 21,832 1,739 7,083 2,435 101 2,123 35,313 29,087 1,739 7,597 2,447 101 2,491 43,463 35,465 1,739 8,276 2,665 101 2,713 50,959 FY2011 FY2012 FY2013 FY2014E FY2015E

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Infosys | 1QFY2014 Result Update

Cash flow statement (IFRS, consolidated)

Y/E March (` cr) Pre-tax profit from operations Depreciation Pre tax cash from ops. Other income/prior period ad Net cash from operations Tax Cash profits (Inc)/dec in current assets Inc/(dec) in current liab. (Inc)/dec in net trade WC Cashflow from operating activities (Inc)/dec in fixed assets (Inc)/dec in investments (inc)/dec in sale of financial assets (Inc)/dec in deferred tax assets Inc/(dec) in other non-current liab. (Inc)/dec in other non-current ass. Cashflow from investing activities Inc/(dec) in debt Inc/(dec) in eq./premium Dividends Cashflow from financing activities Cash generated/(utilized) Cash at start of the year Cash at end of the year FY2011 8,102 862 8,964 1,211 10,175 2,490 7,685 (1,808) 448 (1,360) 6,325 (1,267) 3,602 (23) (348) (37) (104) 1,823 (1,256) 2,337 (3,593) 4,555 12,111 16,666 FY2012 9,778 931 10,709 1,904 12,614 3,368 9,246 (2,399) 1,125 (1,274) 7,972 (1,496) (233) 11 18 (198) 8 (1,890) (1,155) 1,002 (2,157) 3,925 16,666 20,591 FY2013 10,429 1,122 11,551 2,359 13,910 3,367 10,543 (2,464) 1,520 (944) 9,599 (2,181) (1,362) (382) (242) 147 (1,253) (5,273) (280) 2,805 (3,085) 1,241 20,591 21,832 FY2014E 10,976 1,320 12,295 2,558 14,853 3,749 11,104 (894) 500 (394) 10,710 (1,500) (100) (219) (1,819) 1,036 2,672 (1,636) 7,255 21,832 29,087 FY2015E 12,059 1,433 13,492 3,069 16,561 4,311 12,249 (1,119) 444 (675) 11,575 (1,500) (100) (925) (2,525) (0) 2,672 (2,672) 6,377 29,087 35,465

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Infosys | 1QFY2014 Result Update

Key ratios
Y/E March Valuation ratio (x) P/E P/CEPS P/BVPS Dividend yield (%) EV/Sales EV/EBITDA EV/Total assets Per share data (`) EPS Cash EPS Dividend Book value DuPont analysis Tax retention ratio (PAT/PBT) Cost of debt (PBT/EBIT) EBIT margin (EBIT/sales) Asset turnover ratio (sales/assets) Leverage ratio (assets/equity) Operating ROE Return ratios (%) RoCE (pre-tax) Angel RoIC RoE Turnover ratios (x) Asset turnover (fixed assets) Receivables days 3.6 78 4.2 84 3.7 86 4.1 78 4.1 78 25.9 56.1 25.0 25.5 56.3 24.9 22.5 45.8 23.7 20.0 45.4 20.4 19.0 45.7 19.3 0.7 1.1 0.3 0.9 1.1 25.0 0.7 1.2 0.3 0.9 1.1 24.9 0.7 1.2 0.3 0.9 1.2 23.7 0.7 1.2 0.2 0.9 1.1 20.4 0.7 1.3 0.2 0.8 1.1 19.3 119 134 35 477 146 162 15 585 165 184 42 696 171 194 40 838 189 214 40 981 23.5 20.9 5.9 1.2 5.2 16.0 4.6 19.3 17.3 4.8 0.5 4.1 13.0 3.6 17.0 15.2 4.0 1.5 3.4 11.8 3.0 16.4 14.4 3.3 1.4 2.8 10.5 2.4 14.8 13.1 2.9 1.4 2.4 9.1 1.9 FY2011 FY2012 FY2013 FY2014E FY2015E

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Infosys | 1QFY2014 Result Update

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 Pvt. 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 Pvt. 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 Pvt. 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 Pvt. 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, redistributed or passed on, directly or indirectly. Angel Broking Pvt. 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 Pvt. 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 Pvt. Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Infosys No No No No

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

Ratings (Returns):

Buy (> 15%) Reduce (-5% to -15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

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