infosys final 8 september

7/29/2019 Infosys Final 8 September

1/27

Scenarios

Base case 1

management case 2

upside case 3

downside case 4

Base case 1

GROSS ADDS 2009A 2010A 2011E 2012E

Base case 40000 45000

management case 0 0

upside case 0 0

downside case 0 0

Base case 40000 45000

ATTRITION RATE 2009A 2010A 2011E 2012E

Base case 18% 19%

management case 0% 0%

upside case 0% 0%

downside case 0% 0%

Base case 18% 19%

Technical staff as % of total staff 2009A 2010A 2011E 2012E

Base case 93% 93%

management case 0% 0%upside case 0% 0%

downside case 0% 0%

Base case 93% 93%

Support staff as % of total staff 2009A 2010A 2011E 2012E

Base case 7% 7%


upside case 0% 0%

downside case 0% 0%

Base case 7% 7%

ON SITE EFFORT MIX 2009A 2010A 2011E 2012E

Base case 23% 23%


upside case 0% 0%

downside case 0% 0%

Base case 23% 23%


2/27

OFF SITE EFFORT MIX 2009A 2010A 2011E 2012E

Base case 77% 77%


upside case 0% 0%

downside case 0% 0%

Base case 77% 77%

UTILISTION RATE 2009A 2010A 2011E 2012E

Base case 74.0% 74.0%

management case 0.0% 0.0%

upside case 0.0% 0.0%

downside case 0.0% 0.0%

Base case 74.0% 74.0%

HOLIDAYS IN INDIA 2009A 2010A 2011E 2012E

Base case 25 25

management case 0 0

upside case 0 0

downside case 0 0

Base case 25 25

AVAILABLE HOURS PER DAY 2009A 2010A 2011E 2012E

Base case 8 8

management case 0 0upside case 0 0

downside case 0 0

Base case 8 8

AVAILABLE rate on site growth 2009A 2010A 2011E 2012E

Base case 1% 2%

management case

upside case

downside case

Base case 1% 2%

AVAILABLE rate offsite growth 2009A 2010A 2011E 2012E

Base case 1% 2%

management case

upside case

downside case


3/27

Base case 1% 2%

RS./$ 2009A 2010A 2011E 2012E

Base case 46 46

management case

upside casedownside case

Base case 46 46

Software & BP expenses as % of revenue 2009A 2010A 2011E 2012E

Base case 53.5% 53.5%

management case

upside case

downside case

Base case 53.5% 53.5%

Selling and marketing as % of revenue 2009A 2010A 2011E 2012E

Base case 5.1% 5.1%

management case

upside case

downside case

Base case 5.1% 5.1%

General and administration as % of revenue 2009A 2010A 2011E 2012EBase case 7.2% 7.2%

management case

upside case

downside case

Base case 7.2% 7.2%

Effective Tax rate as % of revenue 2009A 2010A 2011E 2012E

Base case 22.0% 23.0%

management caseupside case

downside case

Base case 22.0% 23.0%

Pay out ratio as % of revenue 2009A 2010A 2011E 2012E

Base case 23.0% 24.0%

management case


4/27

upside case

downside case

Base case 23.0% 24.0%

sundry debtors as % of revenue 2009A 2010A 2011E 2012E

Base case 15.0% 15.0%


downside case

Base case 15.0% 15.0%

current liabilities as % of opex 2009A 2010A 2011E 2012E

Base case 15.5% 15.5%

management case

upside case

downside case

Base case 15.5% 15.5%

CAPEX as % of revenue 2009A 2010A 2011E 2012E

Base case 5.0% 4.5%

management case

upside case

downside case

Base case 5.0% 4.5%

Depreciation % of opening fixed assets 2009A 2010A 2011E 2012E

Base case 23.0% 23.0%


downside case

Base case 23.0% 23.0%

Dividend received as % of investment 2009A 2010A 2011E 2012E

Base case 3.0% 3.0%

management case

upside case

downside caseBase case 3.0% 3.0%


5/27

2013E

50000

0

0

0

50000

2013E

19%

0%

0%

0%

19%

2013E

93%

0%0%

0%

93%

2013E

7%

0%

0%

0%

7%

2013E

23%

0%

0%

0%

23%


6/27

2013E

77%

0%

0%

0%

77%

2013E

74.0%

0.0%

0.0%

0.0%

74.0%

2013E

25

0

0

0

25

2013E

8

00

0

8

2013E

2%

2%

2013E

2%


7/27

2%

2013E

46

46

2013E

53.5%

53.5%

2013E

5.1%

5.1%

2013E7.2%

7.2%

2013E

23.0%

23.0%

2013E

25.0%


8/27

25.0%

2013E

15.0%

15.0%

2013E

15.5%

15.5%

2013E

4.0%

4.0%

2013E

23.0%

23.0%

2013E

3.0%

3.0%


9/27

MODEL

March y/e 2009A 2010A 2011E

Opening headcount 91,187 104,850 113,796

Gross adds 28,231 27,639 40,000

Attrition 14,568 18,693 22,095Attrition Rate 14.9% 17.1% 18%

Net adds 13,663 8,946 17,905

closing headcount 104,850 113,796 131,701

% growth

Average headcount 98,019 109,323 122,749

Of which

Technical staff 97349 106864 122482

% of total headcounts 92.8% 93.9% 93%

Support staff 7501 6932 9219

% of total headcounts 7.2% 6.1% 7%

Average technical staff 97349 102107 114673

Effort mix

onsite 23.60% 22.60% 23%

off site 76.40% 77.40% 77%

Utilisation - including trainees (not on payroll) 68.60% 68.10% 74.0%

Days in year 365 365 365sat/sun 104 104 104

Holidays in india 25 25 25

Available days in a year 236 236 236

Available hours per day 8 8 8

Available hours per year 1888 1888 1888

Avearge rate onsite $ hour 73.2 74.6 75.4

% growth 2.0% 1%

Avearge rate offsite $ hour 25.8 25.5 25.7

% growth -1.20% 1%

Onsite revenue (mn $) 2178 2215 2778

% of total revenue 46.70% 46.10% 46.67%

off site revenue ( $mn) 2485 2589 3175

% of total revenue 53.30% 53.90% 53.33%

Total revenue ( $mn) 4663 4804 5953

% growth 3.02% 23.92%

Total revenue ( rs .cr) 21693 22742 27384


10/27

% growth 4.84% 20.41%

INR / USD 46.52 47.34 46


11/27

2012E 2013E

131,701 149,945

45,000 50,000

26,756 30,35619% 19%

18,244 19,644

149,945 169,589

140,823 159,767

139449 157718

93% 93%

10496 11871

7% 7%

130965 148583

23% 23%

77% 77%

74.0% 74.0%

366 365104 104

25 25

237 236

8 8

1896 1888

76.9 78.4

2% 2%

26.3 26.8

2% 2%

3250 3745

46.67% 46.67%

3714 4280

53.33% 53.33%

6964 8025

16.99% 15.23%

32036 36916


12/27

16.99% 15.23%

46 46


13/27

Profit & Loss statement

March Y/E - Rs crores 2009A 2010A 2011E 2012E 2013E

Total Revenue 21693 22742 27384 32036 36916

% growth 4.8% 20.4% 17.0% 15.2%

software & BP expenses 11765 12071 14651 17139 19750

% of revenue 54.2% 53.1% 53.5% 53.5% 53.5%

Selling and Marketing expenses 1104 1184 1397 1634 1883

% of revenue 5.1% 5.2% 5.1% 5.1% 5.1%

General and administration expenses 1629 1626 1972 2307 2658

% of revenue 7.5% 7.1% 7.2% 7.2% 7.2%

Opex 14498 14881 18019 21079 24290

% margin 66.8% 65.4% 65.8% 65.8% 65.8%

% growth 2.6% 21.1% 17.0% 15.2%

EBITDA 7195 7861 9365 10956 12625

% margin 33.2% 34.6% 34.2% 34.2% 34.2%

% growth 9.3% 19.1% 17.0% 15.2%

D & A 761 905 927 1029 1124

EBIT 6434 6956 8439 9928 11502

% margin 29.7% 30.6% 30.8% 31.0% 31.2%

% growth 8.1% 21.3% 17.6% 15.9%

Interest income 871 775 783 1110 1496

Dividend Received 5 106 111 111 111% of investments 2.9% 3.0% 3.0% 3.0%

Other income 38 23 0 0 0

Gains/(losses) on Fx -439 30 0 0 0

Provision for investments -2 9 0 0 0

income from sale on investments 0 48 0 0 0

Profit before tax 6907 7947 9333 11149 13109

TAX expense 919 1681 2053 2564 3015

% tax rate 13.3% 21.2% 22.0% 23.0% 23.0%

net income 5988 6266 7280 8585 10094

% margin 27.6% 27.6% 26.6% 26.8% 27.3%

Basic weighted avg shares (cr) 57.2 57.2 57.2 57.2 57.2

Diluted weighted avg shares (cr) 57.3 57.1 57.1 57.1 57.1

Basic EPS 104.6 109.5 127.3 150.1 176.5

% growth 4.7% 16.2% 17.9% 17.6%

DILUTED EPS 104.5 109.7 127.5 150.3 176.8


14/27

% growth 5.0% 16.2% 17.9% 17.6%

Dividends 1345 1434 1674 2060 2523

Payout ratio 22.5% 22.9% 23.0% 24.0% 25.0%

Retained Earnings 4643 4832 5606 6524 7570


15/27

Benchmarking

2011E 2012E 2013E

Revenue (Rsm)

Consensus 272945 327649.7 385467

IRFM estimates 273842 320355 369155Difference 0.3% -2.2% -4.2%

EBITDA ( rs m)

Consensus 91615 108212 127080

IRFM estimates 93654 109562 126251

Difference 2.2% 1.2% -0.7%

EBIT

Consensus 82192.3 97220.7 113833

IRFM estimates 84385.02 99275.24 115015

Difference 2.7% 2.1% 1.0%

Net Income

Consensus 70024 83663.3 99695

IRFM estimates 72799.01 85846.18 100939

Difference 4.0% 2.6% 1.2%


16/27

TAKEN FROM BLOOMBERG

FACTSET

capitaline

thomson reuters

factiva


17/27

Balance sheet

March y/e Rs crores 2009A 2010A 2011E 2012E 2013E

fixed asstes (PP&E) 6,404 6,923 8,292 9,734 11,210

Acc Dep 2,416 2,893 3,820 4,849 5,972

Work in progress 677 409 409 409 409Tangible assets 4,665 4,439 4,881 5,294 5,647

Goodwill 689 916 916 916 916

Investments 0 3,712 3,712 3,712 3,712

Deferred tax Assets 163 432 432 432 432

Sundry Debtors 3,672 3,494 4,108 4,805 5,537

Cash balance 9,695 10,556 15,555 21,444 28,427

Loans and advances 3,279 4,187 4,187 4,187 4,187

Current Assets 16,646 18,237 23,850 30,436 38,151

Total Assets (A) 22,163 27,736 33,791 40,790 48,858

Current Liabilities 2,004 2,343 2,793 3,267 3,765

Provisions 1,868 2,112 2,112 2,112 2,112

Short term borrowings / Revolver 0 0 0

Toatl Current Liabilities 3,872 4,455 4,905 5,379 5,877

Deferred tax liability 37 232 232 232 232

Share capital 286 286 286 286 286

Reserves and surplus 17,968 22,763 28,369 34,893 42,463Shareholders equity 18,254 23,049 28,655 35,179 42,749

Total liabilities + capital (B) 22,163 27,736 33,791 40,790 48,858

Difference 0 0 0 0 0


18/27

Working Capital

March y/e Rs crores 2009A 2010A 2011E 2012E 2013E

Sundry debtors 3672 3494 4108 4805 5537

% of revenue 16.9% 15.4% 15.0% 15.0% 15.0%

Loans and Advances 3279 4187 4187 4187 4187Current liabilities 2004 2343 2793 3267 3765

% of OPEX 13.8% 15.7% 15.5% 15.5% 15.5%

Provisions 1868 2112 2112 2112 2112

Working capital (WC) 3079 3226 3390 3613 3847

Change in WC ( cash impact ) -147 -164 -223 -234


19/27

Cash Flow Statement

March y/e RS crores 2009A 2010A 2011E 2012E

EBIT 6434 6956 8439 9928

ADD : Depreciation 761 905 927 1029

Add/Less: changes in WC 0 -147 -164 -223Net cash flow from operating activities 7195 7714 9202 10733

Interest income 871 775 783 1110

Dividend income 5 106 111 111

Servicing of financing 876 881 895 1221

Capex ( capital exp.) 0 0 1369 1442

Taxes paid 919 1681 2053 2564

Dividend Paid 1345 1434 1674 2060

Free cash flow 5807 5480 4999 5888


20/27

2013E

11502

1124

-23412391

1496

111

1607

1477

3015

2523

6983


21/27

30-Aug-12

FIXED ASSETS & CAPEX

March Y/e Rs. Crores 2009A 2010A 2011E

Capex ( excluding WIP) 1974 943 1369

% of revenue 4.1% 5.0%

Opening net FA (excl goodwill and WIP) 3,988 4030

Additions 943 1369

Depreciation charge 761 905 927

Closing net FA (excl goodwill and WIP) 3,988 4,030 4472

Acc Dep 2,416 2,893 3820

Closing gross FA (excl goodwill and WIP) 6,404 6,923 8292

Depreciation charge WDV 905 927

Depreciation % of opening fixed assets 22.7% 23.0%


22/27

2012E 2013E

1442 1477

4.5% 4.0%

4472 4885

1442 1477

1029 1124

4885 5238

4849 5972

9734 11210

1029 1124

23.0% 23.0%


23/27

Debt Schedule

March Y/e Rs crores 2009A 2010A 2011E 2012E

Short term borrowings

Beginning balance

(repayment)New Borrowings

Closing balance

Average

Interest Expense

Cash Balance

Beginning balance 10,556 15,555

Free cash flow generated 4999 5888

Movement in bank Overdraft / revolver 0 0

Closing balance 10,556 15,555 21,444

Average 13,056 18,500

Interest income 6% 783 1110

Minimun cash requirement 0 0

bank Overdraft / revolver

Beginning balance 0 0

(repayment) 0 0

New Borrowings 0 0

Closing balance 0 0 0

Average 0 0

Interest Expense 0% 0 0


24/27

2013E

21,444

6983

0

28,427

24,935

1496

0

0

0

0

0

0

0


25/27

DCF

(In INR cr.)

Fiscal Year End 31 December 2011E 2012E

Net Income 7,280 8,585

Allowable D&A 927 1029

Capital Expenditures -1369 -1442Change in Working Capital -164 -223

Free Cash Flow to Equity 6,674 7,948

Growth

Years Discounted 1 2

Discount Factors 0.88 0.78

Discounted Cash Flows 5906.103848 6224.743355

Valuation Parameters

Cost Of Equity 13%

Terminal Growth Rate 6%

2016E Normalized Free Cash Flow 9,860

Terminal Value 149303.5

Discounted Terminal Value 103474.8

Dicounted Cash Flows 18719.43

Equity Value 122194.2

Implied Share Price(INR) 2129.561

Shares Outstanding 57.38


26/27

2013E norm assumption for normalized year:

10,094 10,094 capex and D&A are exactly same

1124 1477

-1477 -1477-234 -234

9,507 9,860

3 3

0.69 0.69

6588.583461

Implied Multiples Implied S

Growth Ra

EV/EBITDA 2129.561 4% 5% 6%

2011 2012 11% 2205.026 2537.078 3001.951

111,638 106,639 12% 1922.181 2166.793 2492.942

11.9x 9.7x 13% 1702.358 1889.26 2129.561

14% 1526.646 1673.555 1857.192

EV/EBIT 15% 1383.009 1501.126 1645.491

2011 2012

111,638 106,639

13.2x 10.7x

CostOfEquity


27/27

ith opposite signs

are Prices

es

7% 8%

3699.26 4861.443

2949.551 3634.464

2449.963 2898.526

2093.296 2408.102

1825.948 2057.964

infosys final 8 september

Documents