Group 6Samir ParikhSanam Seth

Saurabh AryaShalaka Kaprekar

Shubham Bharkarh

Journey Of Infosys Ltd.

In Capital Markets

Established – 1981 by 7 software master minds

Type - Public, traded under BSE, NSE, NASDAQ, BSE SENSEX Constituent

Headquarters - Bengaluru, Karnataka, India

Market Capitalization - Rs. 144,054 Cr. Beta - 0.58

Introduction

Going Back To The Start

July 02 1981 - Incorporated as Infosys Consultants Pvt. Ltd. (Mumbai)

Founders and Promoters - Mr. S. Gopalakrishnan, Mr. K. Dinesh, Nandan M Nilekani, Mr. S.D. Shibulal, Mr. Ashok Arora, Mr. N.R. Narayana Murthy & Mr. N S Raghavan.

Initial Capital Outlay - USD $250(Rs. 10000) by Mrs. Sudha Murthy.

With the start, Infosys Consultants Pvt. Ltd in Model Colony Pune - changed to Infosys Technologies Pvt. Ltd. - headquartered to Bengaluru.

The Business Base

Global leader in Consulting, technology and Outsourcing with

revenues of USD 7.075 billion

Strong relationships with multiple technology

vendors worldwide in Financial services

Banking- Retail banking, commercial banking, Treasury and Cash Management, credit cards,

private banking

Capital markets-investment banking, brokerage, advisory

services, depository and exchanges.

Clients- 6 US banks, 6 securities firms, 4 European banks, 3

Australian banks, and many more

Shareholding In Infosys Ltd

Holder’s Name No. Of. Shares % of Share Holding

Promoters 92085078 16.04%

Foreign Institutions 217586887 37.89%

Financial Institutions 76229237 13.28%

General Public 73785834 12.85%

Foreign NRI 5162103 0.90%

Promoters: N R Narayana Murthy, S. Gopalakrishnan, Sudha N Murthy, Akshata Murthy, Rohan Murthy, Nandan M Nilekani, Rohini Nilekani and many more

Foreign Institutes and Financial institutes: Life Insurance Corporation of India, Oppenheimer Developing Markets Fund, Abu Dhabi Investment Authority, Franklin Templeton Investment Funds, ICICI Prudential Life Insurance Company Ltd and many more

The Bad Start.

Infosys - KSA joint venture almost

collapsed in 1989.

Two options - Winding up, make an IPO.

It wanted to issue at premium, CCI decided

Infosys make an issue at premium of Re. 1 (Price:

Rs.11)

Infosys IPO was undersubscribed but

Morgan Stanley bailed it by picking up 13% of

equity at the offer price.

IPO- February 1993

Listed on Indian stock exchanges in June 1993

Undersubscribed- Morgan Stanley bailout (at 60%

premium purchase of 13% shares)

IPO price- Rs. 95 per share

Traded at- Rs. 145 per share

How Did Infosys Ltd Go Public?

INFOSYS AND JOURNEY TO NASDAQ

October 1994- Infosys made private placement to FIIs, FIs and Corporate.

Infosys issued 20,70,000 ADS at $34 per ADS under American Depositary Shares Program- March 1999.

Successful secondary ADR issues of US $294 million, US $ 1.07 billion and US $ 1.605 billion as under the above stated.

Size of issue/No. of equity shares

1.8 million ADR/0.9 million equity shares

Number of ADR per equity share

2

Offer Price $27.88 per ADS- $55.76 per share

Actual price obtained $34 per ADS - $68 per share

Premium on the Offer Price

22% or $6.12 per ADS

Issue Amount $61.2 million

Total amount raised $70.38 million

First Sponsore

d Secondar

y ADSSize of issue/ No. of Equity shares

6 million ADSs/ 3 million equity shares

Number of ADS per equity share

2- before issue of bonus shares then the ADS ratio became 1:1

Actual Price Obtained

At $49 per share( 26% premium over BSE closing price)

Total received= $294 million

No proceeds received by Infosys

Size of issue/ No. of Equity shares

16 million shares/ 6% of BSE/NSE listed shares

Number of ADS per equity share

1

Actual Price Obtained

$67 per ADS (34% premium over NSE price)

Total received= $294 million-Indian shareholders

No proceeds received by InfosysTotal issue increased size of US float to about 14% of its capital

Size of issue/ No. of Equity shares

30 million local shares into ADS

Number of ADS per equity share

1

Actual Price Obtained

$53.50 per ADS

Total received= $1.6 billion-Indian shareholders

No proceeds received by Infosys of this offeringTotal issue increased US market cap of Infosys to $5.91 billion

SecondSponsore

d Secondary Issue

Third Sponsore

d Secondary Issue

Official barriers prevent foreign investors from

buying the shares trading in India

Few opportunities in the US to invest in companies

that are growing at 20-30% growth rate

Returns are negatively correlated with assets held

by Infosys

ADRs provides a value addition in terms of

transparency, liquidity and greater coverage than the

existing Indian stock.

Excess demand with limited supply of the ADRs.

Why Were Infosys ADS Overpriced?

Return Behavior: INFY ADS v/s Nasdaq v/s Infosystch

(1999-2010)

Infosys Became A NASDAQ 100

The total outstanding ADRs of Infosys on the NASDAQ was 55,36,86,352, with a

company valued at $25.46 billion (average of $46 per

ADR).

1999- INFY crossed $100 million- listed by NASDAQ, coming at level of elite like

Amazon.com, Google, Cisco, Red Hat, Autodesk, eBay, Juniper Networks, Yahoo,

Netscape, Oracle and many more

In July 2006, Infosys qualified to enter the NASDAQ's

Global Select Market tier and gets a place in the NASDAQ 100 index companies list.

The effect of subprime crisis 2007 on Infosys: net profit grew 9.2 per cent to Rs12.5bn ($314m) on March 2007, which had a growth rate of 20% the prior year.

Market Capitalization downgraded from 27.64B to 2007 to 14.05b-15b in 2008-09.

Few customers cancelled outsourcing orders but many had delayed decisions on IT spending considering the global economic situation of crisis.

Infosys BPO prime client, Green-Point Mortgage lost as it declared bankruptcy on August 20,2007 in the US. GreenPoint Mortgage, a mortgage arm of Capital One (a

financial services company) declared its bankruptcy on August 20 in the US.

Coming up and getting back right- Shifting client base from USA to Europe.

The Downfall Due To U.S. Subprime Crisis

Effect Of The Sub-prime Crisis on Infosys Ltd.

Reasons For Infosys Downgrading

Rigidity on pricing and margins

Conservative and sitting on cash pile

Missing Guidance And Decrease in predictability of Business Model

Original promoters too attached- lack of new blood to meet challenges

Visa Fraud case- resulting in nervous clients

PIGS Situation-Sacking Out Of Italy and Spain

Risks from the worsening sovereign-debt crisis outweigh a goal of doubling the share

of sales from Europe.

With the euro area registering no growth in the first quarter and India’s expansion the

slowest in nine years, Infosys is betting it can do without a slice of the combined 58 billion

euros that (FORR) estimates governments and businesses in Italy and Spain will spend

on information technology goods and services in 2012.

Speculated: European IT market could shrink by as much as 10 percent in 2012 if a

country exits the euro.

Infosys and other IT firms

Acquisition strategy- Infosys has been stringent criteria- risk free but missed out on some new attractive opportunities- which it has started to focus on now, yet shareholder’s perspective keeps a hold onto it.

Delay in focus on Indian markets.

Saturation point due too excessive focus on foreign markets

Fifty Two Week High and Low

Exchange Name High (Rs.) High Date Low (Rs.) Low Date

NSE 2,994.00 22/02/2012 2,101.25 26/07/2012

BSE 2,990.00 22/02/2012 2,101.65 26/07/2012

Yearly High Low: NSE

Year Ending High (Rs.) High Date Low (Rs.) Low Date27/08/2012 2,994.00 22/02/2012 2,101.25 26/07/2012

30/12/2011 3,499.00 04/01/2011 2,161.50 25/08/2011

31/12/2010 3,454.00 30/12/2010 2,329.00 05/02/2010

31/12/2009 2,614.00 31/12/2009 1,111.75 01/01/2009

31/12/2008 2,046.50 06/06/2008 1,040.00 10/10/2008

31/12/2007 2,415.00 15/02/2007 1,517.25 22/11/2007

29/12/2006 3,449.00 07/04/2006 1,572.00 24/07/2006

30/12/2005 3,035.00 19/12/2005 1,875.15 12/01/2005

31/12/2004 6,100.00 09/01/2004 1,285.00 09/07/2004

31/12/2003 5,985.00 30/12/2003 2,300.00 11/04/2003

Infosys is going through company specific problem and not the industry specific.

The share is currently down 8 percent from its 52-week high of Rs 3,020 – underlining the concerns.

Employee dissatisfaction is at its highest.

Infosys shifting base to India through Cloud computing expecting rise in investor interest.

Increase in prices of stock due to win in visa fraud case. (highest in weeks)

Planning to change management.

CURRENT NEWS

Infosys an underperformer

Another Disappointing Quarter; Guidance Missed Again

Margin Erosion In Favorable Currency Regime Unsatisfactory

Baring Manufacturing & Retail, Weakness Visible Across Vertical

Discretionary spending in huge pressure

Hiring Disappointing; Attrition High

Client Addition Strong; But a Right Balance of Hunting and Farming required

Poor Performance as compared to Global and Domestic Peers

NO POSSIBILITY OF SHORT TERM BOUNCE BACK

ACCUMULATE UNDERPERFORMER

Still Top Stock Pick

Infosys is the only Indian stock still on the list of Goldman

Sachs stock picks from Asia

Infosys Long Term Strategy

We cannot ignore core and vast

spread of Infosys

INVESTOR’S APPROACH TO INFOSYS SHARES

• If you have Infosys shares

• Investors looking to buy Infosys shares

"Infosys has hit Rs 2170 in the last 10 days. That’s a major 50 month moving average so I assume that it should hold here because the next target is all the way at Rs 1974 that’s another 200 points away. So I think Infosys may be at these levels would be a trading bet“

- Anil Manghnani

Conclusion

Focus on domestic markets: Compared to other Indian IT services companies, Infosys started focusing on the domestic market quite late, when it launched a separate business unit in 2008. (revenue goal: $100 million to $1 billion.)

The company's management hinted on a slowdown in the IT industry on account of the troubles in the Euro zone as well as the slower growth in the developed markets. The stock has opened the day deep in the red.

Curiosity arising amongst investors- lack of appropriate communications- whether to hold or sell- two different sides to the story. (Bank of America-Merrill Lynch)

THANK YOU