3QFY2014 Result Update | IT

January 10, 2014

Infosys
Performance highlights
(` cr) Net revenue EBITDA EBITDA margin (%) PAT 3QFY14 13,026 3,620 27.8 2,875 2QFY14 12,965 3,390 26.1 2,626 % chg (qoq) 0.5 6.8 164bp 9.5 3QFY13 10,424 2,970 28.5 2,369 % chg (yoy) 25.0 21.9 (70)bp 21.4

ACCUMULATE
CMP Target Price
Investment Period

`3,549 `3,730
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 202,997 (27,440) 0.5 3581/2,190 111,288 5 20,758 6,171 INFY.BO INFY@IN

Source: Company, Angel Research

Infosys, in its 3QFY2014 results, reported operating margins ahead of our expectations, but the top-line came in below our estimates. The key positive surprise in the result was the expansion in the EBIT margin by ~145bp qoq to 25%, while the key negative surprise was a muted volume growth of 0.7% qoq. The company has revised its USD revenue growth guidance for FY2014 to 11.5-12% from 9-10% given earlier, implying a USD revenue growth of 1.4% qoq for 4QFY2014 (to meet the upper end of guidance), which seems attainable. We recommend an Accumulate rating on the stock. Quarterly highlights: For 3QFY2014, Infosys reported a revenue of US$2,100mn, up 1.6% qoq, led by a 0.7% qoq volume growth and 0.7% sequential rise in blended realization. The company posted an EBIT margin growth of 145bp qoq to 25.0%, led by operational efficiency with an inch up in utilization level and sequential decline in selling and marketing (S&M) spends. The PAT for the quarter came in at `2,875cr, up 9.5% qoq, aided by a healthy operating performance as well as higher other income at `731cr as against `510cr in 2QFY2014. Outlook and valuation: The companys Management opined that the global economic environment has improved and looks exciting for the IT services industry. The company expects client budgets to be flat over last year, but expects the business environment to improve gradually. While the improvement in IT spending outlook for CY2014 bodes well for FY2015E in terms of revenue outlook for the sector in general and for Infosys in specific, we believe Infosys will continue to lag behind its tier-I peers such as TCS and HCL Technologies (HCL Tech) on the revenue growth front. Over FY2013-15E, we expect Infosys USD and INR revenue to grow at a CAGR of 12.1% and 19.5%, respectively. The current set of results as well as the given guidance are largely in line with our expectations and factored in the companys stock price, which limits a sharp upside potential in the immediate future. We value the stock at 17.5x FY2015E EPS of `213.3, which gives us a target price of `3,730. We recommend an Accumulate rating on the stock. Key financials (Consolidated, IFRS)
Y/E March (` cr) Net sales % chg Adj. 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 29.7 7.4 25.0 25.9 6.8 20.8 FY2012 33,733 22.7 8,315 21.9 31.7 145.5 24.4 6.1 24.9 25.5 5.4 17.0 FY2013 40,352 19.6 9,421 13.3 28.6 164.9 21.5 5.1 23.7 22.5 4.4 15.5 FY2014E 50,545 25.3 10,775 14.4 27.1 184.8 19.2 4.1 21.7 21.8 3.4 12.5 FY2015E 57,612 14.0 12,183 13.1 26.4 213.3 16.6 3.4 20.5 20.4 2.8 10.8

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 15.9 16.2 39.9 28.0

Abs. (%) Sensex Infosys

3m 2.4 13.6

1yr 5.6 52.9

3yr 8.0 4.5

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 | 3QFY2014 Result Update

Exhibit 1: 3QFY2014 performance (IFRS, consolidated)

(` cr) Net revenue Cost of revenue Gross profit SG&A expenses EBITDA Depreciation EBIT Other income PBT Income tax Exceptional item Reported PAT Adjusted PAT EPS Gross margin (%) EBITDA margin (%) EBIT margin (%) PAT margin (%) 3QFY14 13,026 7,960 5,066 1,446 3,620 361 3,259 731 3,990 1,115 2,875 2,875 50.3 38.9 27.8 25.0 20.9 2QFY14 12,965 8,050 4,915 1,525 3,390 334 3,056 510 3,566 940 219 2,407 2,626 42.1 37.9 26.1 23.6 19.5 19.4 9.5 19.5 98bp 164bp 145bp 141bp 11.9 18.6 % chg (qoq) 0.5 (1.1) 3.1 (5.2) 6.8 8.1 6.6 3QFY13 10,424 6,273 4,151 1,181 2,970 293 2,677 503 3,180 811 2,369 2,369 41.5 39.8 28.5 25.7 21.7 21.4 21.4 21.3 (93)bp (70)bp (66)bp (78)bp 25.5 37.5 % chg (yoy) 25.0 26.9 22.0 22.4 21.9 23.2 21.7 9MFY14 37,258 23,010 14,248 4,255 9,993 1,014 8,979 1,818 10,797 2,922 219 7,656 7,875 134.0 38.2 26.8 24.1 20.2 9MFY13 29,898 17,664 12,234 3,453 8,781 814 7,967 1,685 9,652 2,625 7,027 7,027 123.0 40.9 29.4 26.6 22.2 9.0 12.1 8.9 (268)bp (255)bp (255)bp (210)bp 11.9 11.3 % chg (yoy) 24.6 30.3 16.5 23.2 13.8 24.6 12.7

Source: Company, Angel Research

Exhibit 2: 3QFY2014 Actual vs Angel estimates

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

Actual 13,026 27.8 2,875

Estimate 13,101 26.8 2,705

% Var. (0.6) 100bp 6.3

Operating margin beat, but revenues still weak

For 3QFY2014, Infosys reported USD revenue of US$2,100mn, up 1.6% qoq (vs an estimated growth of 2%). The constant currency (CC) revenue growth came in at 1.2% qoq led by a mere 0.7% qoq volume growth (largely offshore led). Volume growth was lower than expectations as onsite volumes declined by 3.4% qoq, mostly due to offshore effort shift. Offshore volume grew by 2.6% qoq. The reported price realization grew by 0.7% qoq (onsite realization up by 2.1% qoq and offshore realization up by 2.2% qoq). Cross currency movement benefitted the companys USD revenue by US$9mn with revenue in CC terms coming in at US$2,091mn. In INR terms, revenue came in at `13,026cr, up 0.5% qoq.

January 10, 2014

Infosys | 3QFY2014 Result Update

Exhibit 3: Trend in volume growth (Effort wise)

6 4.8 4 2 3.7 2.0 1.3 0.5 0 (2) (4) 3QFY13 4QFY13 Offshore
Source: Company, Angel Research

5.8 4.1 3.3 1.8 0.7 0.7 4.3 3.1 2.6

(%)

1QFY14 Onsite

2QFY14 Total volume growth

(3.4) 3QFY14

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

7 6 5 5.8 4.1 4.2

(%)

4 3 2 1 0 3QFY13 4QFY13 1QFY14 Revenue growth (constant currency) 2QFY14 3QFY14 Volume growth 2.0 3.4 3.1 1.2 1.7 0.7

1.8

Source: Company, Angel Research

Service wise, revenue growth was across all service lines with the primary growth driver being Consulting and Systems Integration area of services, the revenues of which grew by 2.0% qoq. Consulting and System Integration is largely discretionary in nature and the Management indicated that the company is seeing some signs of discretionary spending picking up, especially in the US. Infosys has renewed its focus towards traditional IT services to revive growth momentum, which has resulted in business operations continuing with the revenue momentum (though still lagging peers) quarter after quarter. In 3QFY2014, revenues from the Business Operations area of services grew by 1.5% qoq, led by a 5%+ sequential revenue growth in BPO and Testing Services. The company saw good performance in Application Maintenance and Application Development, while revenues from IMS declined qoq in 3QFY2014. 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$420mn currently.

January 10, 2014

Infosys | 3QFY2014 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 61.3 15.9 19.2 6.9 8.7 5.3 3.2 2.1 33.4 5.3 3.8 0.4 1.5 1.0 2.2 (2.6) 5.3 5.6 (1.4) (7.2) 2.0 1.6 4.4 1.6 8.9 10.6 5.5 9.9 13.8 12.0 9.9 (3.8) 12.6 5.9 7.1 46.6

Industry-wise, the revenue from Financial Services and Insurance (FSI), the companys anchor vertical contributing 33.5% to revenue, grew by 2.0% qoq, led by a 2.0% qoq growth in revenue of Banking and Financial Services. In CC terms, revenue from FSI grew by 1.5% qoq. The spending by banks and financial institutions is coming for 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 commoditized deals that are coming in. The Manufacturing industry vertical (contributed 22.8% to revenue) registered a 0.1% qoq decline in revenues. In CC terms, the revenue from this vertical declined by 0.3% sequentially. 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 traction in Manufacturing sub-segments such as aerospace and auto is good for services like digitization, expansion and connected vehicles while the company expects budgets to decline for the hi-tech industry segment. The Retail, CPG and Logistics (RCL) segment (contributed 24.6% to revenue) reported a 3.3% qoq revenue growth and emerged as the primary growth driver for the company. Revenues from Retail & CPG and Life Sciences grew by 3.6% and 10.5% qoq, respectively. In CC terms, the revenue from RCL grew by 2.9% qoq. Infosys possesses strong capabilities in the Retail & CPG segment and the Management indicated that the spending in this space is coming for work related to cloud, analytic, IMS and ERP related transformation practices. Also, the company is witnessing pricing challenges in this industry vertical in some of the large commoditized deals that are coming in. The Management indicated that budgets are expected to be under pressure for next year in the Life Sciences industry vertical. The Energy Utilities, Communications & Services (ECS) segment (contributed 19.1% to revenue) reported a 1.1% qoq increase in its revenue with 3.6% qoq growth in revenues from Energy & Utilities. Revenues from Communication & Services
January 10, 2014

Infosys | 3QFY2014 Result Update

industry declined by 3.3% qoq. In CC terms, revenue from this segment grew by 0.3% qoq. In Energy and Utilities, the Management indicated that barring oil and few utility companies, growth will remain subdued in the near-term. In Communication & Services, the Management indicated at IT spend in the telecom industry vertical to continue to remain challenged on discretionary as well as nondiscretionary sides of the business.

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 33.5 27.2 6.3 22.8 24.6 16.0 1.6 5.0 2.0 19.1 5.2 7.9 6.0

% growth qoq 2.0 2.0 1.6 (0.1) 3.3 3.6 (9.6) 10.5 (3.2) 1.1 3.6 (3.3) 5.2

% growth yoy 9.3 11.6 0.4 15.5 12.2 9.9 (2.3) 14.5 46.6 2.4 5.8 (9.5) 19.9

In terms of geographies, although revenue from North Americas came in weaker than expected at -0.8% qoq (CC terms), strong growth in Europe (+3.5% qoq CC terms) and RoW (+5.2% qoq CC terms) resulted in healthy overall growth.

Exhibit 7: Growth trend in geographies (CC basis)

16 14 12 10 8 7.4 14.4

(%)

6 4 2 0 (2) (4) 3QFY13 1.6 0.1

6.5

5.0

6.5 3.9 5.2 1.8 (0.8) 3.5

5.2

(1.5) 4QFY13 North America

(2.4) 1QFY14 Europe 2QFY14 3QFY14 Rest of the world

Source: Company, Angel Research

January 10, 2014

Infosys | 3QFY2014 Result Update

Hiring and utilization

Infosys added 6,682 gross employees in 3QFY2014 (3,333 lateral additions), but on a net level the companys employee base actually declined by 1,823 employees to 158,404. Attrition remained persistently high in 3QFY2014, increasing to 18.1% (LTM), up from 17.3% in 2QFY2014 and at its highest in recent history. The Management indicated that hiring going ahead will be based on business needs and the company 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

3QFY13 Gross addition Net addition Gross lateral emp. addition Attrition LTM basis (%)
Source: Company, Angel Research

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

1QFY14 10,138 575 3,008 16.9

2QFY14 12,168 2,964 3,806 17.3

3QFY14 6,682 (1,823) 3,333 18.1

8,390 1,868 4,351 15.1

With the company focusing on improving its utilization level, the utilization rate including as well as excluding trainees, grew by 40bp and 20bp qoq to 74.1% and 78.0%, respectively.

Exhibit 9: Trend in utilization

79 77 75 73.9 73.7 72.4 70.1 70.9 74.1 75.9 73.2 77.8 78.0

(%)

73 71 69 67 3QFY13 4QFY13 Including trainees 1QFY14

2QFY14 Excluding trainees

3QFY14

Source: Company, Angel Research

Margins expand
Infosys operating margins have been a concern since the last six quarters. But during 3QFY2014 the company posted a whopping 145bp qoq growth in EBIT margin to 25.0%, led by operational efficiency with inch up in utilization level to 74.1% (73.7% in 2QFY2014) and sequential decline in S&M spends. Selling, General and Administrative (SG&A) spend as a percentage to sales declined by 65bp sequentially to 11.1%. The company expects margins to stabilize around the current levels in the medium to long term.

January 10, 2014

Infosys | 3QFY2014 Result Update

Exhibit 10: Trend in EBIT margin

200 150 100 50 0 (50) (100) (150) (200) (250) 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 Margin movement (qoq)
Source: Company, Angel Research

25.7 145 25.0 9 23.6 23.6 (7)

26

25

(BP)

(66)

23.6

23

(213) 22 EBIT margin (%)

Client pyramid
Infosys added 54 new clients (gross additions) during the quarter, taking its total active client base to 888. The company witnessed addition of one client in US$300mn+ revenue bracket. Overall, the company added 26 clients in US41mn+ revenue brackets. The companys growth during the quarter was led by non top-10 clients which grew by 3% qoq. Revenues from the top 5/10 clients declined by 4.5%/2.5% qoq, respectively, which the Management indicated as a one-off thing. A 3% qoq growth in ex-top 10 clients suggests ramp up of new deal wins.

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 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 2QFY14 3.9 68 873 248 75 60 46 25 12 3 3QFY14 3.7 54 888 269 78 60 47 26 11 3 1

US$300mn plus
Source: Company, Angel Research

January 10, 2014

(%)

24

Infosys | 3QFY2014 Result Update

Investment arguments
Guidance revised upwards: Infosys has revised its USD revenue growth guidance for FY2014 to 11.5-12% (our expectation was of 11-12%) from 9-10% given

earlier, implying a 1.4% qoq USD revenue growth in 4QFY2014 (to meet the upper end of guidance) which seems attainable as currently we were factoring Infosys to clock a ~2.2% qoq USD revenue growth in 4QFY2014. In INR terms,
the company has given a revenue guidance of 24.4-24.9% (assuming USD/INR rate at `61.81). The Management opined that 2H is traditionally soft for Infosys and that is the reason it is cautiously optimistic for the next quarter. We believe a healthy 1HFY2014 performance increases the probability of beating the top end of the guidance. Deal pipeline healthier: The Management commentary indicated that though the deal pipeline seems to be better than what it was the same time last year, the company continues to remain focused on reviving growth momentum. Also, the company is witnessing sporadic pricing pressure in large deals coming in re-bid market space because of competitive intensity. While the improvement in IT spending outlook for CY2014 does bode well for the FY2015E revenue outlook of the sector in general and Infosys in specific, we believe Infosys will continue to lag behind its tier-I peers like TCS and HCL Tech on revenue growth. We expect Infosys to post an 11.5% USD revenue growth in FY2014. Over FY2013-15E, we expect USD and INR revenue to grow at a CAGR of 12.1% and 19.5%, respectively. Operating margin likely to be range bound: The Management maintained its stance that the company is right now focused on growth (at least for the next couple of quarters) and this may lead to sacrifice in margins in the near term. The operating margin is subject to tailwinds on a stable rupee, further improvement in utilization rates and cost optimization drive running in the company, but it currently faces headwinds because of pricing pressure seen for traditional IT services and higher S&M spends. The company still has headroom to increase its utilization level by ~300bp to be comparable with peers and this, in turn, will assist in increasing operating margins further. Going ahead, we expect the EBIT margin of Infosys to improve moderately in 4QFY2014 and land at 24.1% for FY2014. But given a stable rupee, higher S&M spends, and wage hikes in FY2015, we expect the EBIT margin to decline to 23.7% in FY2015. Over FY201315E, we expect an EBIT CAGR of 14.3%.

Outlook and valuation

The companys Management opined that the global economic environment has improved and looks exciting for the IT services industry. The company expects client budgets to be flat from last year, but the business environment to improve gradually. The deal pipeline has seen a steady improvement over the last 4-5 quarters which could be attributed to a better macro-economic environment in the US and EU and increased focus on traditional Business IT. We expect the growth rate to get better in CY2014 as pipeline and sales cycle witness improvement.

January 10, 2014

Infosys | 3QFY2014 Result Update

We believe that the impact of the current high level exits could be felt in the medium term. However, a company like Infosys is system driven with a healthy management bandwidth and hence the impact will not be long lasting. With Infosys valuations at a 25% discount to TCS, we believe there is scope of a re-rating if and when things turnaround decisively. The current set of results as well as guidance given is largely in line with expectations and factored in the stock, which limits a sharp upside potential in the immediate future. At the CMP of `3,550, the stock is trading at 19.2x and 16.6x its FY2014E and FY2015E EPS, respectively. We value the stock at 17.5x FY2015E EPS of `213.3, which gives us a target price of `3,730. We recommend an Accumulate rating on the stock and believe that the companys initiatives will lead to restoring the predictability and consistency in the performance going ahead. Downside risks to target price: - INR strengthening, continued management attrition and US immigration bill

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 12.2 60.8 25.3 27.1 27.3 12.1

FY2015 12.0 62.0 14.0 26.4 28.0 15.5

Exhibit 13: One-year forward PE (x)

5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500

(`)

Oct-08

Oct-11

Jan-08

Jan-11

Apr-07

Apr-10

Price
Source: Company, Angel Research

26x

22x

18x

14x

January 10, 2014

Apr-13

10x

Jan-14

Jul-09

Jul-12

Infosys | 3QFY2014 Result Update

Exhibit 14: Recommendation summary

Company HCL Tech Hexaware Infosys Infotech Enterprises KPIT Cummins Mindtree Mphasis NIIT Persistent TCS Tech Mahindra Wipro Reco Neutral Neutral Accumulate Neutral Neutral Neutral Accumulate Neutral Neutral Accumulate Neutral Accumulate CMP (`) 1,299 140 3,549 351 181 1,648 429 28 1,005 2,282 1,882 555 Tgt. price (`) 3,730 455 2,500 600 Upside (%) 5.1 6.0 9.6 8.2 FY2015E EBITDA (%) 24.8 22.8 26.4 18.9 16.3 20.9 18.4 7.0 25.5 30.9 22.1 23.1 FY2015E P/E (x) 14.2 9.9 16.6 12.9 10.9 12.4 9.5 7.0 13.2 19.8 14.2 15.3 FY2012-15E EPS CAGR (%) 36.4 16.6 13.6 23.4 27.2 35.2 6.3 (16.1) 29.1 28.5 19.3 16.8 FY2015E EV/Sales (x) 2.1 1.4 2.8 1.2 0.9 1.5 0.8 0.1 1.6 4.4 0.8 2.2 FY2015E RoE (%) 26.3 24.5 20.5 16.2 19.8 23.8 14.6 9.4 19.9 31.7 25.2 21.4

Source: Company, Angel Research

Company Background
Infosys is the second largest IT company in India, employing over 1,58,000 professionals. The company services more than 850 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.

January 10, 2014

10

Infosys | 3QFY2014 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 Exceptional item 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 50,545 31,013 19,532 38.6 2,716 5.4 3,094 6.1 13,723 27.1 1,386 2.7 12,337 24.4 2,488 14,825 4,050 27.3 10,556 219 10,775 184.8 FY2015E 57,612 35,723 21,890 38.0 3,309 5.7 3,398 5.9 15,184 26.4 1,556 2.7 13,628 23.7 3,293 16,921 4,738 28.0 12,183 12,183 213.3

January 10, 2014

11

Infosys | 3QFY2014 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 46,066 307 49,749 56,703 286 3,090 55,700 307 59,383 66,737 259 60 319 3,960 12 109 121 4,887 119 149 268 6,554 119 149 268 6,954 119 149 268 7,354 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 3,482 6,686 189 1,329 36 823 614 213 3,882 7,086 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 6,582 1,976 368 394 503 1,192 456 11,470 56,703 6,526 1,976 368 394 503 1,292 1,161 12,221 66,737 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 29,912 1,739 8,170 2,631 101 2,679 45,232 37,311 1,739 9,313 2,999 101 3,053 54,516 FY2011 FY2012 FY2013 FY2014E FY2015E

January 10, 2014

12

Infosys | 3QFY2014 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 actv. (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 12,337 1,386 13,723 2,488 16,211 4,050 12,161 (1,839) 400 (1,439) 10,722 (1,500) (100) (219) (1,819) 2,316 3,139 (823) 8,080 21,832 29,912 FY2015E 13,628 1,556 15,184 3,293 18,477 4,738 13,739 (1,885) 400 (1,485) 12,254 (1,500) (100) (706) (2,306) 591 3,140 (2,549) 7,399 29,912 37,311

January 10, 2014

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Infosys | 3QFY2014 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 4.4 78 4.7 78 25.9 56.1 25.0 25.5 56.3 24.9 22.5 45.8 23.7 21.8 49.2 21.7 20.4 49.2 20.5 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 21.2 0.7 1.2 0.2 0.9 1.1 20.5 119 134 35 477 146 162 15 585 165 184 42 696 185 213 47 870 213 240 47 1038 29.7 26.4 7.4 1.0 6.8 20.8 6.0 24.4 22.0 6.1 0.4 5.4 17.0 4.7 21.5 19.3 5.1 1.2 4.4 15.5 3.9 19.2 16.7 4.1 1.3 3.4 12.5 3.0 16.6 14.8 3.4 1.3 2.8 10.8 2.5 FY2011 FY2012 FY2013 FY2014E FY2015E

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Infosys | 3QFY2014 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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