4QFY2013 Result Update | IT

April 12, 2013

Infosys
Performance highlights
(` cr) Net revenue EBITDA EBITDA margin (%) PAT 4QFY13 10,454 2,770 26.5 2,394 3QFY13 10,424 2,970 28.5 2,369 % chg (qoq) 0.3 (6.7) (199)bp 1.1 4QFY12 8,852 2,887 32.6 2,316 % chg (yoy) 18.1 (4.0) (612)bp 3.4

ACCUMULATE
CMP Target Price
Investment Period
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 131,805 (21,832) 0.9 3010/2,102 125,399 5 18,243 5,529 INFY.BO INFY@IN

`2,297 `2,465
12 Months

Source: Company, Angel Research

4QFY2013 was yet another disappointing quarter for Infosys. The most disappointing thing in the quarters results is USD revenue growth being guided at 6-10% for FY2014, which is way below the streets expectation of 12-13%. The range of the guidance is wide which indicates the volatility foreseen by the Management. Also, the company has not put out any EPS guidance for FY2014, which could signify that there is risk towards the operating margin profile going ahead. Owing to the recent steep correction in the companys stock price, we maintain our Accumulate rating. Quarterly highlights: For 4QFY2013, Infosys reported a revenue of US$1,938mn, up just 1.4% qoq. Excluding Lodestone, the USD revenue grew by just 0.8% qoq. The overall volume growth came in at 1.8% qoq while overall pricing declined by 0.7% qoq. The companys EBITDA and EBIT margin declined by 199bp and 213bp qoq to 26.5% and 23.6%, respectively, due to impact of onsite wage hikes and Lodestone integration charges. The PAT was held up at `2,394cr, aided by other income of `674cr (vs `503cr in 3QFY2013). Outlook and valuation: The Management commentary indicates that the environment remains challenging and the company continues to see delays in decision making at clients ends. It indicated at the company witnessing pricing pressure even for typical IT operations kind of services, which are mostly non-discretionary in nature. Over FY2012-14E, we expect USD and INR revenue CAGR of 8.7% and 8.2%, respectively. The company is now highly focused on growth and this may lead to sacrifice in margins in the near term. Infosys stock price has corrected by ~22% today, which is its highest ever fall in a single trading session in the last decade. At the CMP of `2,297, the stock is trading at 13.6x and 12.6x its FY2014E and F2015E EPS, respectively, which appears to be attractive compared to its historical valuation. However, huge volatility in quarterly performance is unlikely to fetch Infosys a higher multiple in the near term. We value the company at 13.5x FY2015E EPS of `183 and maintain our Accumulate rating on the stock with a target price of `2,465. 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 19.2 4.8 25.0 25.9 4.2 12.8 FY2012 33,733 22.7 8,315 21.9 31.7 145.5 15.8 3.9 24.9 25.5 3.3 10.3 FY2013E 40,352 19.6 9,421 13.3 28.6 164.9 13.9 3.3 23.7 22.5 2.7 9.3 FY2014E 43,338 7.4 9,675 2.7 27.5 169.4 13.6 2.8 20.8 19.9 2.4 8.6 FY2015E 47,244 9.0 10,431 7.8 27.7 182.6 12.6 2.4 19.3 19.1 2.1 7.4

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 16.0 17.5 40.5 25.9

Abs. (%) Sensex Infosys

3m (7.2)

1yr 5.2

3yr 2.2 (14.5)

(15.4) (16.5)

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 | 4QFY2013 Result Update

Exhibit 1: 4QFY2013 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

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

3QFY13 10,424 6,273 4,151 1,181 2,970 293 2,677 503 3,180 811 2,369 41.5 39.8 28.5 25.7 21.7

% chg (qoq) 0.3 3.5 (4.6) 0.8 (6.7) 5.1 (8.0) (1.4) (8.5) 1.1 1.0 (194)bp (199)bp (213)bp (17)bp

4QFY12 8,852 4,959 3,893 1,006 2,887 240 2,647 652 3,299 984 2,316 40.5 44.0 32.6 29.9 24.4

% chg (yoy) 18.1 31.0 1.7 18.3 (4.0) 28.3 (7.0) (4.9) (24.6) 3.4 3.3 (610)bp (612)bp (635)bp (285)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: 4QFY2013 Actual vs Angel estimates

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

Actual 10,454 26.5 2,394

Estimate 10,788 27.6 2,283

% Var. (3.1) (109)bp 4.9

Poor streak continues

4QFY2013 was yet another disappointing quarter for Infosys. Its dollar revenues grew by just 1.4% qoq (against an estimated ~4% qoq) to US$1,938mn, much lower than our as well as street expectations. Excluding Lodestone, the USD revenue grew by just 0.8% qoq. Cross currency movement also impacted the companys USD revenue negatively by 0.4% qoq. Revenue in constant currency (CC) terms came in at US$1,944mn, up 1.7% qoq. The overall volume growth came in at 1.8% qoq (4.8% onsite volume growth and 0.5% offshore volume growth). The overall pricing declined by 0.7% qoq, impacted by lower billing days qoq and revenue mix shift towards lower bill rate services. The Management indicated at the company witnessing pricing pressure even for typical IT operations related services, which are almost non-discretionary in nature. In INR terms, revenue came in at `10,454cr, up merely 0.3% qoq.

April 12, 2013

Infosys | 4QFY2013 Result Update

Exhibit 3: Trend in volume growth (Effort wise)

6 4.4 4 2.9 2
(%)

4.8 3.8 3.7 2.0 1.3 0.5 1.8

3.6 2.3 2.7

0 (2) (4) 4QFY12 1QFY13 Offshore

Source: Company, Angel Research

(1.2)

(1.5) (2.1) 2QFY13 Onsite 3QFY13 Total volume growth 4QFY13

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

8 6 4
(%)

5.8 3.8 2.7 2.4 1.7 (1.5) (2.1) (0.4) 2.0 1.8

2 0 (2) (4) 4QFY12 1QFY13

2QFY13

3QFY13

4QFY13

Revenue growth (constant currency)

Source: Company, Angel Research

Volume growth

Service wise, revenue growth was led by products, platforms and solutions, the revenue from which grew by 5.1% qoq. Finacle, Infosys banking platform, reported a 6.5% revenue growth during the quarter. The TCV of products and platforms currently stands at ~US$645mn from US$603mn in 3QFY2013. IMS, which has been showing robust traction in the past couple of quarters, posted a revenue growth of 5.8% qoq in 4QFY2013. Revenues from BPO and PES services grew by 1.4% qoq, each. 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$470mn currently. Revenue from the companys anchor service verticals, application development and application maintenance, declined by 0.5% and grew by 0.9% qoq, respectively.

April 12, 2013

Infosys | 4QFY2013 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 61.6 15.5 19.9 7.2 8.3 5.2 3.2 2.3 32.7 5.7 4.0 0.4 0.9 (0.5) 0.9 5.8 0.2 1.4 1.4 (2.8) 1.7 5.1 4.0 35.2 7.5 0.4 4.2 27.1 16.4 18.5 3.0 (6.8) 15.1 0.6 (0.5) 9.4

Industry-wise, the revenue from financial services and insurance (FSI), the companys anchor industry vertical contributing 33.9% to revenue, grew by 2.0% qoq, led by a 2.9% qoq growth in revenue from banking and financial services vertical. Revenue from the insurance vertical declined by 1.5% qoq. In CC terms, revenue from FSI grew by 2.7% qoq. The Management indicated that business prospects will remain muted for the next couple of years 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, fraud prevention and risk management. Manufacturing (contributed 22.2% to revenue) posted a 3.8% qoq revenue growth and emerged as the primary growth driver for the company. In CC terms, revenue from this vertical grew by 3.9% 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 sub-segments 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 23.9% to revenue), which has been the primary growth driver for the company since last few quarters, reported a subdued 0.6% qoq revenue growth during 3QFY2013, led by 2.4% qoq decline in revenues from retail and CPG segment. Revenues from transport & logistics and lifesciences grew by 1.4% qoq each. In CC terms, the revenue from RCL grew by 0.8% 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. But the Management expects discretionary spend in retail to pick up in H2FY2014. Modest growth from products and platforms is being seen from this industry. The energy utilities, communications & services (ECS) segment (contributed 20.0% to revenue) reported a 1.0% qoq decline in its revenues due to 2.3% and 1.7% qoq decline in revenues from energy & utilities and communication & services industries
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Infosys | 4QFY2013 Result Update

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 grew by 1.0% qoq.

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 33.9 27.2 6.7 22.2 23.9 15.4 1.8 4.8 1.9 20.0 5.2 9.3 5.5

% growth qoq 2.0 2.9 (1.5) 3.8 0.6 (2.4) 1.4 1.4 28.5 (1.0) (2.3) (1.7) 1.4

% growth yoy 8.2 8.6 6.3 14.1 14.2 6.7 23.1 34.7 29.9 1.8 (6.7) 0.8 13.6

In terms of geographies, revenue growth was primarily led by Europe, which posted a 6.5% qoq increase in revenues in CC terms, majorly led by revenue from Lodestone. Revenue from North America remained almost flat qoq despite signs of stability emerging out of the US economy. Revenue from rest of the world declined by 1.5% qoq in CC terms while that from India grew by 10% qoq.

Exhibit 7: Growth trend in geographies (CC basis)

20 15 10
(%)

14.4

5 0 (5) 0.8

2.5

5.1 1.7 2.2 2.2 1.8 1.6

7.4

6.5

0.1 (1.5)

(4.1) (7.2) 4QFY12 1QFY13 North America 2QFY13 Europe 3QFY13 Rest of the world 4QFY13

(10)

Source: Company, Angel Research

April 12, 2013

Infosys | 4QFY2013 Result Update

Hiring momentum slowing down

Infosys added 8,990 gross employees in 4QFY2013, of which 3,545 were lateral additions. The net addition number for the quarter stood at 1,059. Attrition, on last twelve month (LTM) basis, grew considerably to 16.3% in 4QFY2013 from 15.1% in 3QFY2013. The Management indicated that of the total hiring done last year, the company is yet to give offers to ~10,000 people. They are expected to join the company in the next quarter. From here on the companys hiring will be demand based as the current utilization level is very low. 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

4QFY12 Gross addition Net addition Lateral employees Attrition LTM basis (%)
Source: Company, Angel Research

1QFY13 9,236 1,157 5,233 14.9

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

10,676 4,906 4,727 14.7

Utilization rate, including as well as excluding trainees, grew by 80bp and 70bp qoq to 70.9% and 73.9%, respectively.

Exhibit 9: Trend in utilization

75 74 73 72 71 70 69 68 67 66 65 4QFY12 1QFY13 Including trainees
Source: Company, Angel Research

73.0 71.6

73.3

73.2

73.9

(%)

70.9 69.6 70.1

67.2

67.2 2QFY13 3QFY13 Excluding trainees 4QFY13

Margin pressure continued

The companys EBITDA and EBIT margin declined by 199bp and 213bp qoq to 26.5% and 23.6%, respectively, due to negative impact of onsite wage hikes given during the quarter. Pricing pressure witnessed by the company also weighed on margins during the quarter by ~2%. The Management indicated that pressure on the operating margin might continue further in the near term as the companys current focus is on growth and is investing significantly to achieve it.

April 12, 2013

Infosys | 4QFY2013 Result Update

Exhibit 10: Trend in EBITDA margin

300 200 100 33.7 32.6 35 34 33 32 30.6 (108) (201) 29.1 (151) (60) 28.5 31 29 28 27 26 25 3QFY12 4QFY12 1QFY13 Margin movement (qoq) 2QFY13 3QFY13 EBITDA margin (%)

265

(BP)

(100) (200) (300)

Source: Company, Angel Research

Client pyramid
Infosys added 56 new clients during the quarter, taking its total active client base to 798. The company witnessed addition of two clients in US$10mn-20mn revenue bracket and three in US$5mn-10mn revenue bracket. Revenues from the top 5 clients grew by 2.1% and 1.9% 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 4QFY12 4.1 52 694 209 58 53 39 27 11 1 1 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 -

US$300mn plus
Source: Company, Angel Research

Investment arguments
Guidance a negative surprise: Infosys has given FY2014 USD revenue growth guidance of 6-10%, which is way below street expectation of 12-13% and also lower than the software industry body Nasscoms estimate of 12-14%. The company is expected to grow in single digits in US dollar terms for FY2014 which is not good. The range of the guidance is wide, which indicates the volatility foreseen by the Management. Also, the company has refrained from putting out any EPS guidance for FY2014, which could be some sign of there being risk towards the operating margin profile going ahead. Pricing pressure foreseen in near term: The Management commentary indicates that the environment remains challenging and the company continues to see delays in decision making at clients ends. It indicated that pricing pressure is
April 12, 2013

(%)

30

Infosys | 4QFY2013 Result Update

being seen even for typical IT operations kind of services which are mostly nondiscretionary in nature. Early comments from the Management indicate that IT budgets are flat to marginally negative for CY2013. Over FY2012-14E, we expect USD and INR revenue CAGR of 8.7% and 8.2%, 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 of the company currently faces headwinds because of the following reasons 1) onsite wage hike given in February 2013 will impact 1QFY2014 margins to an extent, 2) single digit margin profile of Lodestone, 3) pick up in onsite hiring, 4) subcontracting cost going up due to less number of visas and 5) pricing pressure seen for traditional IT services. The Management expects EBIT margin to remain flat on a yoy basis in FY2014 in the best case scenario (ie if INR remains range bound). Infosys has been posting a qoq margin decline since the past four quarters. Going ahead also we expect its operating margins to decline on account of the factors mentioned above. We expect EBIT margin to decline by ~110bp yoy to 24.7% for FY2014. Over FY201214E, we expect a CAGR of 6.2% and 5.3% in EBIT and PAT, respectively.

Outlook and valuation

The companys Management continues to remain cautiously optimistic on the business environment. The company continues to see a challenging macro environment and delays in decision making from clients ends. We remain cautious on the company. In our view, the problems faced by the company currently are not industry specific, but are ones that are to do with the company itself. Considering Infosys current quarter results and a tepid guidance of 6-10% revenue growth, including Lodestone, we expect the stock to remain an underperformer within the sector. The companys stock price has corrected by ~22% today, which is its highest ever fall in a single trading session in the last decade. At the CMP of `2,297, the stock is trading at 13.6x and 12.6x its FY2014E and F2015E EPS, respectively, which appears to be attractive compared to its historical valuation. However, huge volatility in quarterly performance is unlikely to fetch Infosys a higher multiple in the near term. We value the company at 13.5x FY2015E EPS of `183 and maintain our Accumulate rating on the stock with a target price of `2,465.

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 8.5 54.0 7.4 27.5 28.0 2.8

FY2015 9.0 54.0 9.0 27.7 28.0 7.9

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Infosys | 4QFY2013 Result Update

Exhibit 13: Change in estimates

FY2014 Parameter (` cr) Net revenue EBITDA PBT Tax PAT Earlier estimates 45,463 12,998 2,294 14,019 3,995 Revised estimates 43,338 11,916 2,734 13,437 3,762 Variation (%) (4.7) (8.3) 19.2 (4.1) (5.8) Earlier estimates 49,792 14,148 2,410 15,164 4,322 FY2015 Revised estimates 47,244 13,080 2,749 14,506 4,062 Variation (%) (5.1) (7.5) 14.0 (4.3) (6.0)

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

Apr-07

Apr-08

Apr-09

Apr-10

Apr-11

Apr-12

Oct-07

Oct-08

Oct-09

Oct-10

Oct-11

Price
Source: Company, Angel Research

26x

22x

18x

14x

10x

Exhibit 16: Recommendation summary

Company HCL Tech Hexaware Infosys Infotech Enterprises KPIT Cummins Mahindra Satyam Mindtree Mphasis NIIT Persistent TCS Tech Mahindra Wipro Reco Accumulate Buy Accumulate Buy Buy Buy Accumulate Accumulate Buy Accumulate Accumulate Buy Buy CMP (`) 776 91 2,297 170 96 113 842 362 23 533 1,511 980 383 Tgt. price (`) 876 105 2,465 196 130 143 926 395 30 602 1,624 1,230 450 Upside (%) 12.9 15.4 7.3 15.4 36.1 26.3 10.0 9.1 30.2 13.0 7.5 25.6 17.4 FY2015E EBITDA (%) 19.5 19.2 27.7 18.5 15.2 19.1 19.4 17.4 9.1 24.6 28.1 18.1 19.5 FY2015E P/E (x) 13.3 7.8 12.6 7.8 6.6 9.5 9.1 8.7 4.3 8.8 17.2 8.5 12.2 FY2012-15E EPS CAGR (%) 17.4 9.5 7.9 14.5 21.8 2.3 19.9 3.3 (7.1) 19.3 17.3 10.7 11.6 FY2015E EV/Sales (x) 1.5 0.9 2.1 0.4 0.4 0.9 0.8 0.6 0.1 0.9 3.4 1.4 1.3 FY2015E RoE (%) 21.1 22.1 19.3 13.1 18.8 20.1 18.8 13.6 11.9 16.8 27.4 19.1 17.6

Source: Company, Angel Research

April 12, 2013

Oct-12

Apr-13

Infosys | 4QFY2013 Result Update

Company Background
Infosys is the second largest IT company in India, employing over 1,50,000 professionals. The company services more than 750 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 | 4QFY2013 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 43,338 26,481 16,857 38.9 2,167 5.0 2,774 6.4 11,916 27.5 1,213 2.8 10,703 24.7 2,734 13,437 3,762 28.0 9,675 9,675 169.4 FY2015E 47,244 28,872 18,372 38.9 2,362 5.0 2,929 6.2 13,080 27.7 1,323 2.8 11,758 24.9 2,749 14,506 4,062 28.0 10,445 10,445 182.9

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Infosys | 4QFY2013 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 42,917 307 46,600 53,654 286 3,090 50,476 307 54,159 61,657 259 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 6,755 1,976 368 394 503 1,450 1,857 13,303 53,654 6,932 1,976 368 394 503 1,450 2,738 14,361 61,657 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 26,715 1,739 7,124 2,375 101 2,297 40,351 32,597 1,739 7,766 2,589 101 2,504 47,296 FY2011 FY2012 FY2013 FY2014E FY2015E

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12

Infosys | 4QFY2013 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 FY2013E 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 10,703 1,213 11,916 2,734 14,651 3,762 10,888 (155) 500 345 11,234 (1,500) (358) (1,620) (3,478) (200) 2,672 (2,872) 4,883 21,832 26,715 FY2015E 11,758 1,323 13,080 2,730 15,810 4,057 11,754 (1,063) 444 (619) 11,135 (1,500) (881) (2,381) (200) 2,672 (2,872) 5,882 26,715 32,597

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Infosys | 4QFY2013 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 3.5 84 3.5 84 25.9 56.1 25.0 25.5 56.3 24.9 22.5 45.8 23.7 19.9 42.5 20.8 19.1 43.0 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 1.3 0.2 0.8 1.2 20.8 0.7 1.2 0.2 0.8 1.1 19.3 119 134 35 477 146 162 15 585 165 184 42 696 169 190 40 815 183 205 40 947 19.2 17.1 4.8 1.5 4.2 12.8 3.7 15.8 14.2 3.9 0.7 3.3 10.3 2.9 13.9 12.5 3.3 1.8 2.7 9.3 2.3 13.6 12.1 2.8 1.7 2.4 8.6 1.9 12.6 11.2 2.4 1.7 2.1 7.4 1.6 FY2011 FY2012 FY2013E FY2014E FY2015E

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Infosys | 4QFY2013 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 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 endeavors 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 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 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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