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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

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



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