Infosys ru2 qfy2011-151010

Please refer to important disclosures at the end of this report 1

(` cr) 2QFY11 1QFY11 %chg (qoq) 2QFY10 %chg (yoy)

Net Revenue 6,947 6,198 12.1 5,585 24.4

EBITDA Margins (%) 33.3 31.7 165bp 34.5 (120)bp

PAT 1,737 1,488 16.7 1,535 13.2 Source: Company, Angel Research; IFRS financials in rupee term

Double-digit growth backed by persistent volume growth & better business mix: Infosys’s reported revenues for 2QFY2011, which was way ahead of street as well as our expectation. Revenues stood at US $1,496mn with a 10.2% qoq growth backed by volume growth of 7.2%, cross-currency benefit of 0.7% as well as better business mix (higher component of discretionary services like consulting & package implementation, product engineering & system integration) aiding revenue productivity by 2.5% qoq.

Operating margins rebound: EBITDA margins rebounded by 165bp qoq to 33.3% on strong utilisation absorbing the previous quarter’s wage hike effect and favourable currency negating the effect of higher onshore effort.

FY2011 guidance revised upwards: Infosys has revised its FY2011 revenue growth guidance from the earlier growth of 19-21% to 24-25% yoy at US $5.95-6.0bn, and EPS growth from the earlier 5.2-9.6% to 10.4-12.2% yoy in US dollar terms. This is the first quarter ever when the company had incremental revenues of more than US $100mn qoq, whereas in FY2010 it was only US $141mn, envisaging return of discretionary spending.

Outlook and Valuation: At a macro level, the indicators point towards bleak outlook, but at the client level the company is witnessing increasing propensity to spend on the change-the-business initiatives. We expect the company to record robust 25.6% CAGR in US$ revenues over FY2010-12. However, margin headwinds are expected to persist due to necessities like competitive wage hikes & promotion, higher onshore component in near-term with flat pricing situation as well as stronger rupee against the USD. EBIDTA and PAT CAGR are expected to be subdued at 17.0% and 13.8% over FY2010-12, respectively. At the CMP, the stock is trading at fair valuations of 21.7x FY2012E earnings and at par with historical 5-year average PE of 22x. Hence, we remain Neutral on the stock.

Key Financials (Consolidated, IFRS) Y/E March (` cr) FY2009 FY2010 FY2011E FY2012E

Net sales 21,693 22,742 27,690 33,728

% chg 30.0 4.8 21.8 21.8

Net profit 5,990 6,219 6,787 8,085

% chg 28.6 3.8 9.1 19.1

EBITDA margin (%) 33.2 34.5 32.4 32.0

FDEPS(`) 104.6 109.5 118.9 141.7

P/E (x) 29.4 28.1 25.9 21.7

P/BV (x) 9.2 7.3 6.6 5.3

RoE (%) 34.5 28.7 26.7 27.0

RoCE (%) 32.1 27.7 27.5 28.3

EV/Sales (x) 7.8 7.2 5.8 4.6

EV/EBITDA (x) 23.4 20.9 18.0 14.4

Source: Company, Angel Research

NEUTRAL CMP `3, 076 Target Price -

Investment Period -

Stock Info

Shareholding Pattern (%)Promoters 16.1MF / Banks / Indian Fls 14.1FII / NRIs / OCBs 55.3Indian Public / Others 14.5

Abs. (%) 3m 1yr 3yrSensex 12.1 16.2 7.9Infosys 10.7 40.5 60.0

Sector ITMarket Cap (` cr) 175,947Beta 0.8

Bloomberg Code INFO@IN

BSE Sensex 20,125Nifty 6,063Reuters Code INFY.BO

52 Week High / Low 3,249/2,127Avg. Daily Volume 151107Face Value (`) 5

Srishti Anand 022 – 4040 3800 Ext: 345

[email protected]

Infosys Performance Highlights

2QFY2011 Result Update | IT

October 15, 2010

Infosys | 2Q FY2011 Result Update

October 15, 2010 2

Exhibit 1: 2QFY2011 Performance (Consolidated, IFRS)

Y/E March (` cr) FY2011 FY2011 % chg FY2010 % chg H1FY2011 H1FY2010 % chg

2Q 1Q (qoq) 2Q (yoy)

Net Revenues 6,947 6,198 12.1 5,585 24.4 13,145 11,057 18.9

Software Development Expenses 3,971 3,648 8.9 3,203 24.0 7,619 6,342 20.1

Gross Profit 2,976 2,550 16.7 2,382 24.9 5,526 4,715 17.2

SG&A Expenses 878 795 10.4 689 27.4 1,673 1,378 21.4

EBIT 2,098 1,755 19.5 1,693 23.9 3,853 3,337 15.5

Other Income 267 239 11.7 239 11.7 506 508.00 -0.4

Income before Income Taxes 2,365 1,994 18.6 1,932 22.4 4,359 3,845 13.4

Tax 628 506 24.1 397 58.2 1,134 785.00 44.5

Net Income 1,737 1,488 16.7 1,535 13.2 3,225 3,060 5.4

Diluted EPS (Rs) 30.4 26.1 16.5 26.9 13.0 57 53.4 5.7

Gross Profit Margin (%) 42.8 41.1 170bp 42.6 20bp 42.0 42.6 (60)bp

EBIT Margin (%) 30.2 28.3 190bp 30.3 (10)bp 29.3 30.2 (87)bp

Net Profit Margin (%) 24.1 24.0 10bp 26.4 (230)bp 23.6 26.5 Source: Company, Angel Research

Exhibit 2: 2QFY2011 – Actual v/s Angel estimates (`cr) Estimates Actual Variation (%)

Net Revenues 6,809 6,947 2.0

EBITDA Margin (%) 34.0 33.3 (2.1)

PAT 1,693 1,737 2.6 Source: Company, Angel Research

Volume-led growth with better service mix aided revenue productivity

The company reported revenues at US $1,496mn with a 10.2% qoq growth backed by persistent volume growth of 7.2%, cross-currency benefit of 0.7% as well as better business mix (higher component of discretionary services like consulting & package implementation, product engineering & system integration) aiding revenue productivity by 2.5% qoq.

The discretionary services grew in double digits with system integration leading the pack with 49.5% qoq growth followed by product engineering services at 31.1% qoq. The consulting & package implementation services, one of the anchor service vertical for the company (contributes 26% to overall revenues), registered robust 14.1% qoq growth and emerged as the major contributor to incremental revenues at US $111mn. The investments in this vertical is mostly focused on simplifying internal processes, harmonising business processes across the enterprise, and the major drive is towards making organisations smarter and leaner - primarily focused on increasing efficiencies and reducing throughput


October 15, 2010 3

Exhibit 3: Trend in services growth (reported basis) Particulars % of revenue % qoq gr % yoy gr

Application development & maintenance 39.1 5.6 24.2

BPO 5.6 8.2 17.1

Consulting & package implementation 25.8 14.1 40.5

Infrastructure management 6.2 (1.0) 3.0

Product engineering services 2.5 31.1 40.9

System integration 5.7 49.5 67.9

Testing services 7.6 14.7 58.9

Products 4.2 (1.6) 32.8


The volume growth of 7.2% qoq was primarily driven by onshore volume growth ofa whopping 11.1% qoq, whereas offshore grew a mere 5.5% qoq. The onshoreramp up was primarily because of pent up demand in consulting & packageimplementation services, which typically kicks off onshore.

Exhibit 4: Trend in volume growth (effort-wise)

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2QFY10 3QFY10 4QFY10 1QFY11 2QFY11

(%)

Offshore Onsite Total volume growth


Thus, revenue growth stood tad higher than volume growth due to productivity gain of 2.5% qoq with better service mix aiding in addition to cross-currency benefits derived due to dollar depreciation of 4%, 1.9% and 1.6% qoq as against the GBP, Euro and AUD, respectively.


October 15, 2010 4

Exhibit 5: Trend in volume and revenue growth

0

2

4

6

8

10

2QFY10 3QFY10 4QFY10 1QFY11 2QFY11(%

)

Revenue growth(constant currency) Total volume growth


Broad-based growth across industries and geographies

Industry-wise, the growth was broad-based. For instance, the anchor segment ofretail & CPG grew a whopping 19.9% qoq extending the strong 7.5% qoq growthin 1QFY2011. This vertical is witnessing huge traction due to clients looking atmulti–channel integration to encash on the digital consumer behaviour. The BFSIvertical continues to be the growth driver with 7.4% qoq as more and more spendtowards risk management is gaining momentum. The insurance sector, which is aconservative spender, has also started spending on customer relationshipmanagement solutions. Manufacturing is also back with IT spend especiallyindustries like hi-tech and semiconductor looking at immediate go-to-the-marketstrategies and spending on product engineering, supply chain management andconsulting to drive cost efficiencies and targeting to go global. This vertical, whichis the second largest vertical for the company (19% of revenues), grew 6.1% qoq.Telecom remained a soft spender clocking 2.2% qoq growth (de-grew 0.9% in1QFY2011).

Exhibit 6: Growth trend for industries(constant-currency)


(6)

0

6

12

18


(%)

BFSI Manufacturing Retail Telecom Others


October 15, 2010 5

The company saw broad-based growth across geographies. Surprisingly, Europe grew 15.6% qoq in constant currency terms post de-growing by 0.8% in 1QFY2011. Industries like retail & CPG, energy & utilities, manufacturing & insurance are spending in Europe. The US continued its growth momentum at 7.5% qoq extending similar growth of 6.9% in 1QFY2011. Rest of the world growth remained decent at 4.7%.

Exhibit 7: Growth trend for geographies (constant currency)


Hiring spree continues but utilisation remained unhampered

Infosys added a gross of 14,264 employees in 2QFY2011, with higher conversion at 7,646 (vis-à-vis only 1,026 net additions out of 8,859 gross hiring in 1QFY2011). This was primarily because of the sudden surge in demand, which resulted in hiring in more laterals.

Exhibit 8: Trend in employee metrics Number of people 2QFY10 3QFY10 4QFY10 1QFY11 2QFY11

Gross Addition 6,069 8,719 9,313 8,859 14,264

Net Addition 1,548 4,429 3,914 1,026 7,646

Lateral Employees 1,064 1,420 2,041 2,942 4,138

Attrition (%) 10.9 11.6 13.4 15.8 17.1


Thus, despite strong hiring, utilisation including trainees expanded by 130bp qoq to 74.3%. As of 2QFY2011, the company had 122,468 employees on its rolls, and has revised upwards its gross addition guidance from earlier 36,000 to 40,000 employees for FY2011. The attrition rate, on the LTM basis, stood at 17.1% in 2QFY2011 on account of the overall buoyancy in the job market with a strong economic recovery.


October 15, 2010 6

Exhibit 9: Trend in utilisation

Source: Company, Angel Research Rebound in EBITDA margins

EBITDA margins rebounded to 33.3%, expanding by 165bp qoq on the back ofbetter utilisations, cross-currency benefits offsetting higher visa costs and on-shoreeffort.

Exhibit 10: Trend in EBITDA margins


60

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(%)

Including trainees (%) Excluding trainees (%)

30

32

34

36

(300)

(200)

(100)

0

100

200


(BPs

)

Margin movement EBITDA Margins

(%)


October 15, 2010 7

Client pyramid improves in the higher ticket-size segment

Exhibit 11: Client mining Client Metrics 2QFY11 1QFY11 2QFY10

Top client( % of revenue) 4.7 4.9 4.6

Client addition 27 38 35

Active client 592 590 571

USD $1-5 million 164 171 180

USD $5-10 million 60 67 54

USD$10-20 million 47 43 37

USD$20-50 million 39 34 38

USD$50-100 million 17 18 16

USD $100 million plus 8 7 4

USD$200 million plus 2 1 1

Source: Company, Angel Research The company added 27 new clients during the quarter, of which 5 are amongst the Fortune 500. The higher-end of the client pyramid saw improvement with clients with billing of more than US $200mn as well as US $100mn plus increasing by one each. The company also closed four large deals, which were qualitative as they are multi-million dollar transformational deals. In 1HFY2011, the company added 9 clients and incremental total contract value (TCV) of US $872mn on the back of surge in discretionary spending. The top-10 clients grew 12.1% qoq, whereas the rest grew 9.3% qoq indicating that the clients who restrained from spending allocated budgets are now returning. This has resulted in return of large deals typically of US $100-300mn. Another round of upward revision in annual guidance

Infosys has revised its FY2011 revenue growth guidance from the earlier growth of 19-21% to 24-25% yoy at US $5.95-6.0bn, and EPS growth from the earlier 5.2-9.6% to 10.4-12.2% yoy in US dollar terms. This is the first quarter ever when the company had incremental revenues of more than US $100mn qoq, whereas in FY2010 it was only US $141mn, envisaging return of discretionary spending.

The company’s strong upward guidance is based on the robust client feedback with improvement in the demand environment and infusion of 40,000 gross employees to deliver strong volume-backed growth with pricing expected to remain stable.

Exhibit 12: 3QFY2011, FY2011 guidance Guidance 3QFY11 FY2011 Revised FY2011

IFRS

As on 1QFY11 As on 2QFY11

Revenue (` cr) 6,884-6, 953 26,441-26,885 26,951-27,165

EPS (`) 29.37-29.89 112.21-116.73 115.07-117.07

IFRS

Revenue (US bn) 1.55-1.56 5.72-5.81 5.95-6.00

Basic EPADS (US$) 0.66-0.67 2.42-2.52 2.54-2.58 Source: Company, Angel Research


October 15, 2010 8

Outlook Return of large quality deals

The nature of spend has seen a tectonic shift in 1HFY2011 compared to FY2010. In FY2010, when the macro environment was at the trough, the IT spend that was taking place was more on run-the-business, whereas spend related to change-the-business had completely dried up. In 1HFY2011, clients returned to spending on initiatives to drive efficiencies as well as invest for the future, which involves spend on transformation engagements, client facing applications, R&D engineering services for earliest go–to-market, and collaborate platforms. This has resulted in comeback of large, multi-year transformational deals with typical size of US $100-300mn.

The company signed off TCV of US $872mn in 1HFY2011. Also, the early indications got from clients on the budgets for CY2011 is flat-to-positive. This has resulted in the company getting aggressive in hiring getting laterals on board for immediate pent up work and creating capacity by hiring freshers to meet the increasing deal pipeline. Thus, the company increased its FY2011 hiring target yet again from 30,000 at the start of the year and 36,000 at the end of 1QFY2011 to 40,000 in 2QFY2011.

Valuation

At the macro level, the indicators point towards a bleak outlook, but at the client level, the company is witnessing increasing propensity to spend on the change-the-business initiatives. We expect the company to record 25.6% CAGR in US$ revenues over FY2010-12. In rupee terms, we expect revenue CAGR to be lower at 21.8% due to more than 4% rupee appreciation assumed in FY2011 and 2% in FY2012. However, margin headwinds are expected to persist due to necessities like competitive wage hikes & promotion, higher onshore component in near-term with flat pricing situation as well as stronger rupee against the USD. EBIDTA and PAT CAGR are expected to be subdued at 17.0% and 13.8% over FY2010-12, respectively. At the CMP, the stock is trading at fair valuations of 21.7x FY2012E earnings and at par with historical 5-year average PE of 22x. We remain Neutral on the stock.

Exhibit 13: Key Assumptions

FY2011E FY2012E

Volume growth 26.4 24.0

Pricing growth 0 0

Revenue growth (US $) 26.7 24.5

USD-INR rate (realised) 45.5 44.5

Revenue growth (`) 21.8 21.8

EBITDA margin (%) 32.4 32.0

Tax rate (%) 26 26

EPS growth (%) 8.6 19.1 Source: Company, Angel Research


October 15, 2010 9

Exhibit 14: Change in Estimates

FY2011E FY2012E

Parameter (` cr)

Earlier Estimates

Revised Estimates

Variation (%)

Earlier Estimates

Revised Estimates

Variation (%)

Net Revenues 27,264 27,690 1.6 33,640 33,728 0.3 EBITDA 9,124 8,978 (1.6) 10,992 10,803 (1.7) Other Income 1,016 1,128 11.0 1,316 1,236 (6.1) PBT 9,063 9,172 1.2 11,048 10,926 (1.1) Tax 2,344 2,385 1.7 2,872 2,841 (1.1) PAT 6,719 6,787 1.0 8,175 8,086 (1.1)


In line with the upward revision in Infosys’s guidance for FY2011 and expected higher infusion of gross manpower, we have also upgraded our FY2011 and FY2012 top-line estimates. We have revised downwards our EBITDA estimates owing to initiation of the mid-year promotion cycles by the company due in October every year henceforth. We however, expect other income to be higher on account of the in-the-money hedges of US $600mn covering net receivables over the next two quarters. We estimate PAT to be slightly higher in FY2011 as compared to our earlier numbers. However, PAT in FY2012 would be slightly lower than our earlier estimates, as cost pressures like competitive wage inflation is not expected to be passed on as clients are working with flat pricing. Exhibit 15: One-year forward PE chart


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500

1,000

1,500

2,000

2,500

3,000

3,500

Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10

(Rs)

Price 26x 22x 18x 14x 10x


October 15, 2010 10

Exhibit16: Premium/Discount in Infosys P/E v/s Sensex P/E


Exhibit 17: Recommendation summary

Company Reco. CMP Tgt. Price Upside FY2012E FY2012E FY2010-12E FY2012E FY2012E

(`) (`) (%) P/BV (x) P/E (x) EPS CAGR (%) RoCE (%) RoE (%)

3iInfotech Buy 63 100 59.1 0.7 3.9 204.0 15.7 19.5

Educomp Buy 624 734 17.6 2.8 13.6 26.9 21.0 22.9

HCL Tech Neutral 431 - - 3.3 13.8 33.2 17.1 23.8

Infosys Neutral 3,076 - - 5.3 21.7 13.8 28.3 27.0

Infotech Enterprises Accumulate 165 184 16.3 1.5 9.8 4.4 17.3 16.4

Mphasis Buy 626 872 39.3 2.3 10.3 8.4 43.6 24.1

NIIT Buy 66 83 25.3 1.7 11.5 16.6 12.1 15.8

TCS Accumulate 951 2,032 8.5 6.2 20.3 15.6 41.5 33.8

Tech Mahindra Buy 752 942 25.2 2.3 14.1 (0.5) 56.9 18.5

Wipro Neutral 474 - - 4.2 18.4 16.6 17.6 24.4 Source: Company, Angel Research

(50)

(30)

(10)

10

30

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70

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110

Apr

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Oct

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Apr

-06

Oct

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Apr

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Apr

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Premium/Discount to Sensex Avg. Historical Premium


October 15, 2010 11

Profit & Loss Statement (Consolidated, IFRS) Y/E March (` cr) FY2009 FY2010 FY2011E FY2012E

Net sales 21,693 22,742 27,690 33,728

Cost of revenues 11,765 12,078 16,140 19,968

Gross profit 9,928 10,664 12,483 14,872

% of net sales 45.8 46.9 45.1 44.1

Selling & Marketing expense 1,104 1,184 1,519 1,837

% of net sales 5.1 5.2 5.5 5.4

General & Administrative expense 1,629 1,628 1,986 2,232

% of net sales 7.5 7.2 7.2 6.6

EBITDA 7,195 7,852 8,978 10,803

% of net sales 33.2 34.5 32.4 32.0

Depreciation & Amortization 761 942 933 1112

% of net sales 3.5 4.1 4.0 4.2

EBIT 6,434 6,910 8,045 9,690

% of net sales 29.7 30.4 29.1 28.7

Other Income 475 990 1128 1236

Interest expenses 0 0 0 0

Profit Before Tax 6,909 7,900 9,172 10,926

Provision for Tax 919 1,681 2,385 2,841

% of PBT 13.3 21.3 26.0 26.0

PAT 5,990 6,219 6,787 8,085

Minority interest 0 0 0 0

Profit after minority interest 5,990 6,219 6,787 8,085

Fully diluted EPS(`) 104.6 109.5 118.9 141.7


October 15, 2010 12

Balance Sheet (Consolidated, IFRS) Year to (` cr) FY2009 FY2010 FY2011E FY2012E

Current Assets Cash and Cash equivalents 10,993 12,111 13,458 17,653

Available for sale financial assets 2,556 4,486 5,886

Investment in certificates of deposit 1,190 Trade receivables 3,672 3,494 3,868.8 4,627.4

Unbilled revenue 750 841 898.1 1,093.7

Derivative financial instruments 95 Prepayments and other current assets 411 641 678.4 843.2

Total current assets 15,826 20,928 23,389 30,104

Non -Current Assets Property, plant and equipment 4,665 4,439 4,705.9 5,193.5

Goodwill 692 829 830.0 830.0

Intangible assets 35 56 60.0 60.0

Deferred income tax assets 447 356 300.0 250.0

Income tax assets 274 667 1,095.7 809.3

Other non-current assets 262 347 400.0 450.0

Total non-current assets 6,375 6,694 7,392 7,593

Total assets 22,201 27,622 30,781 37,697

Current Liabilities Trade payables 27 10 10 10

Derivative financial instruments 114 - - -

Current income tax liabilities 581 724 750.0 800.0

Client deposits 5 8 8 8

Unearned revenue 331 531 731 931.0

Employee benefit obligations 104 131 170 200

Provisions 92 82 80 80.0

Other Liabilties 1,471 1,707 1,850 2,115

Total current liabilities 2,725 3,193 3,599 4,144

Non-Current Liabilities Deferred income tax liabilties 39.0 124.0 160.0 124.0

Employee benefit obligations 187.0 171.0 171.0 171.0

Other liabilities 56.0 61.0 70.0 61.0

Total non-current liabilities 282 356 401 356

Total liabilities 3,007 3,549 4,000 4,500

Equity Share Capital 286 286 286 286

Share Premium 2,944 3,047 3,047 3,047

Retained earnings 15,972 20,668 23,448 29,864

Other Components of equity (8) 72 - Total Equity 19,194 24,073 26,781 33,197

Total liabilities & equity 22,201 27,622 30,781 37,697


October 15, 2010 13

Cash Flow Statement (Consolidated, IFRS) Y/E March (`cr) FY2009 FY2010 FY2011E FY2012E

Pre-tax profit from operations 6,434 6,910 8,045 9,690

Depreciation 761 942 933 1,112

Pre tax cash from operations 7,195 7,852 8,978 10,803

Other income/prior period ad 475 990 1128 1236

Net cash from operations 7,670 8,842 10,105 12,039

Tax 919 1,681 2,385 2,841

Cash profits 6,751 7,161 7,720 9,198

(Inc)/Dec in Current assets (664) (238) (374) (1,119)

Current liabilities 547 468 406 545

Net trade working capital (117) 230 32 (574)

Cashflow from operating activities 6,635 7,391 7,752 8,624

(Inc)/Dec in fixed assets (1,372) (716) (1,200) (1,600)

(Inc)/Dec in investments 71 (3,746) (740) (1,400)

(Inc)/Dec in Deferred Tax assets (213) (302) (373) 336

(Inc)/Dec in other non-current liabilities 115 74 45 (45)

(Inc)/Dec in other non-current assets (77) (243) (58) (50)

Cashflow from investing activities (1,475) (4,933) (2,326) (2,759)

Inc/(Dec) in debt - - - -

Inc/(Dec) in equity/premium (490) 617 609 284

Dividends 1,841 1,957 4,688 1,953

Cashflow from financing activities (2,331) (1,340) (4,079) (1,670)

Cash generated/(utilised) 2,829 1,118 1,347 4195

Cash at start of the year 8164 10993 12111 13458

Cash at end of the year 10993 12111 13458 17653


October 15, 2010 14

Key Ratios Y/E March FY2009 FY2010 FY2011E FY2012E

Valuation ratio (x) P/E (on FDEPS) 29.4 28.1 25.9 21.7

P/CEPS 26.1 24.6 22.8 19.1

P/BVPS 9.2 7.3 6.6 5.3

Dividend yield (%) 0.9 1.0 2.3 0.9

EV/Sales 7.8 7.2 5.8 4.6

EV/EBITDA 23.4 20.9 18.0 14.4

EV/Total assets 7.6 5.9 5.3 4.1

Per share data(`) EPS(Basic) 104.6 109.5 118.9 141.7

EPS(Fully diluted) 104.6 109.5 118.9 141.7

Cash EPS 118.0 125.2 135.0 160.8

Dividend 27.5 29.2 70.0 29.2

Book value 335.6 420.9 468.2 580.4

Dupont analysis Tax retention ratio (PAT / PBT) 0.9 0.8 0.7 0.7

Cost of debt(PBT / EBIT) 1.1 1.1 1.1 1.1

EBIT margin(EBIT / Sales) 0.3 0.3 0.3 0.3

Asset turnover ratio(Sales / Assets) 1.0 0.8 0.9 0.9

Leverage ratio (Assets / Equity) 1.2 1.1 1.1 1.1

Operating ROE 31.2 25.8 25.3 24.4

Return ratios (%) ROCE(pre-tax) 32.1 27.7 27.5 28.3

Angel ROIC 66.1 64.4 70.1 76.5

ROE 34.5 28.7 26.7 27.0

Turnover ratios (x) Asset turnover(fixed assets) 3.4 3.4 3.7 4.4

Receivables days 62 58 56 55


October 15, 2010 15

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 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 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.

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Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section).

Disclosure of Interest Statement (Company name) Infosys 1. Analyst ownership of the stock No 2. Angel and its Group companies ownership of the stock No 3. Angel and its Group companies' Directors ownership of the stock No 4. Broking relationship with company covered No Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors. Ratings (Returns) : Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%) Reduce (-5% to 15%) Sell (< -15%)

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Infosys ru2 qfy2011-151010