Infosys Stock Analysis (INFY): Complete Annual Review 2019-20

Infosys was started by 7 engineers in the year 1981 in Pune, Maharashtra.

The company was led by the founder N. R. Narayana Murthy from 1981 till 2002.

Infosys went public in 1993.

Infosys - N.R. Narayana Murthy | Management Profiles

IT Sector

Product

Pros

Same product can be sold to every customer.
Less competition.

Cons

R&D expenses for new products.
One time income from product sell.

Services

Pros

Recurring money from services.
Less Research expenses.

Cons

Competition and Talent retention.
Every service requires unique efforts.

Infosys Business

It is a B2B company with 2.4+ lakhs employees.

It provides IT services and consulting to enterprises in 46 countries with 1000+ clients.

Revenue Distribution By Geography

The key regions from which Infosys earns revenue can be broadly divided into North America, Europe, India and Rest of the World.

Business Areas & Revenue Distributions

The key business areas from which Infosys earns revenue can be broadly divided into Financial Services, Retail & FMCG, Communication & Media, Energy & Utilities, Manufacturing, Hi-Tech, Healthcare.

Infosys Top Clients

Financial Services: ICICI Bank, Bank of America, HSBC

Healthcare: Novartis

Manufacturing: Lockheed Martin, Mercedes Benz

Retail & FMCG: Johnson & Johnson

Energy & Utilities: Department of Energy, USA

Business Segments & Revenue Distribution

Core Services

Application development & management services
Support and integration services
Infrastructure management services
Product engineering & management

Digital Services

Experience
Assure
Accelerate
Innovate
Insight

Infosys Subsidiaries

Edgeverve
Skava
Panaya
Infosys Public Services
Infosys Consulting
Infosys BPM

Infosys 2019-20 Business Review

Experience: Opening of 12 innovation experience centres around the world.

Assure: Software testing services and cybersecurity services grew. Launched Cybergaze, a cyber-security platform.

Accelerate: Acquired Fluido and Simplus. Transformed client’s legacy landscapes by migrating to cloud. Automation and AI services grew using RPAs.

Innovate: Acquired Stater N.V, expand Finacle (banking suite), McCamish (insurance platform), Skava (E-commerce suite) & Panaya (automation suite).

Insight: Solutions strengthened with Infosys Nia (in-house AI platform).

Implemented LEAP (Live Enterprise Application Platform) and launched for clients. It is a tool to manage large-scale software application maintenance.

Recruited 6,932 employees locally, of which 2,035 were fresh graduates.

Infosys 2021 Strategy & COVID-19 Impact

Infosys will continue to execute the strategy along digital services and solutions as fiscal 2020.

Focus areas will be digitization of processes, migration to cloud based technologies, and enhanced cybersecurity controls.

Covid-19 : Q1 2021 results clearly showed the increased spending of clients on digital transformation. Digital Services contributed to ~45% of revenues.

Infosys Leadership & Shareholding

Nandan Nilekani, Chairman

Infosys - Nandan M. Nilekani: Co-founder and Non-Executive ...

Nandan Nilekani is one of the co-founders of Infosys and current chairman.

He did his bachelor’s from IIT Bombay.

He holds ~0.96% Infosys shares ( ~3.8k crores) and did not take any salary for the fiscal 2020.

Salil Parekh, CEO & MD

Remuneration: 34 crores

Prior Experience: Capgemini (Director), Ernst & Young (Partner)

U.B Pravin Rao, COO & WholeTime Director

Remuneration: 10.5 crores

Prior Experience: Infosys (33 yrs)

Nilanjan Roy, CFO

Remuneration: 6 crores

Prior Experience: Bharti Airtel (CFO). Unilever (15 yrs)

Ravi S., President

Remuneration: 17.5 crores

Prior Experience: Infosys (18 yrs), Sapient Corp. (Director)

Mohit Joshi, President

Remuneration: 15 crores

Prior Experience: Infosys (20 yrs), ABN Amro, ANZ Grindlays

Infosys Financials

Shareholding Pattern

Promoter Holding: 13.1%

FIIs / DIIs: 55.7%

Public Holding: 13.8%

Others: 17.4%

Balance Sheet Metrics

CAG 10 yrs - 10.77%

CAG 5 yrs - 4.77%

Debt/Equity = 0

Reserves (2020) = 63,328 crores

Borrowings (2020) = 4,633 crores

Profit Loss Metrics

CAG 10 yr (Revenues) - 14.85%

CAG 10 yr (Expenses) - 16.5%

CAG 10 yr (Net Profit) - 10.22%

CAG 5 yr (Revenues) - 11.23%

CAG 5 yr (Expenses) - 12.25%

CAG 5 yr (Net Profit) - 5.89%

Revenues (2020) - 90,791 crores (100%)

Expenses (2020) - 68,524 crores (75.4%)

Net Profit (2020) - 16,594 crores (18.27%)

Expenses Breakdown 2020

Employee Expenses
Sub-contractors
Travel expenses
Softwares
Consultancy charges
Depreciation & Amortization

Return on Equity (ROE), Return on Capital Employed (ROCE)

Avg 5 yr (ROE): 23.34%

Avg 5 yr (ROCE): 31.6%

Cash Flow Metrics

Operating Cash Flow (2020): 17,000 crores

Investing Cash Flow (2020): -331 crores

Financing Cash Flow (2020): -17,591 crores

Net Cash Flow (2020): -919 crores

Net Cash Flow (10 Years)

Infosys Stock Information

Bonus Shares

IPO price (1993): Rs. 95

16 shares buy (1993): Rs. 1520

16 shares in 1993 are 16,384 shares in 2020

Infosys avg. share price (2020): Rs. 900

Today’s value = Rs. 900 * 16,384 = Rs 1.51 crores

CAGR (27 years): ~40%

Competition Analysis

Comments

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Infosys Stock Analysis (INFY): Complete Annual Review 2019-20

IT Sector

Infosys Business