2QFY2013 Result Update | IT

October 12, 2012

Infosys
Performance highlights
(` cr) Net revenue EBITDA EBITDA margin (%) PAT 2QFY13 9,858 2,868 29.1 2,369 1QFY13 9,616 2,943 30.6 2,289 % chg (qoq) 2.5 (2.5) (151)bp 3.5 2QFY12 8,099 2,514 31.0 1,906 % chg (yoy) 21.7 14.1 (195)bp 24.3

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 0.9 2,990/2,102 136,366 5 18,675 5,676 INFY.BO INFY@IN IT 137,031

`2,396 `2,573
12 Months

Source: Company, Angel Research

Infosys reported its 2QFY2013 results which were decent on the revenue front but disappointed on the operating front. The most disappointing thing in Infosys result was the decline in operating margin by ~150bp qoq. In addition, the company announced that its CFO V. Balakrishnan would give up his position from October 31, 2012 and will be replaced by VP-finance Rajiv Bansal. Balakrishnan will, however, continue to be on the company's board and will now look after BPO operations, Finacle and India operations. Infosys has seen a slew of management changes in the last couple of years which is a cause of concern. We maintain our Accumulate rating on the stock. Quarterly highlights: For 2QFY2013, Infosys reported a revenue of US$1,797mn, up 2.6% qoq, led by a modest volume growth of 3.8% qoq. The EBITDA margin declined by 151bp qoq to 29.1%, because of higher subcontracting costs, warranty costs and one-time payout for promotion-based compensation increases. The PAT came in at `2,369cr, up 3.5% qoq, aided by higher other income of `706cr as against `476cr in 1QFY2013. Outlook and valuation: The management commentary indicates that the environment remains exactly where it was a few months back. The company continues to see challenges and delays in ramp-ups of the deals being signed. Post 1HFY2013 performance, the company requires a minimum 3.5% qoq growth rate in the next two quarters to achieve its FY2013 USD revenue growth guidance, which in the current scenario looks a bit stretched. Hence, we believe the company can achieve 5-5.5% yoy revenue growth in FY2013, including revenue from Lodestone. Over FY2012-14E, we expect a USD and INR revenue CAGR of 7.0% and 11.0%, respectively. Over FY201214E, we expect a CAGR of 8.4% and 8.6% in EBIT and PAT, respectively. At the current market price of `2,396, the stock is trading at 15.0x FY2013E and 14.0x FY2014E EPS. We value the company at 15x FY2014E EPS of `172 and maintain our Accumulate rating on the stock with a target price of `2,573. 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)
Source: Company, Angel Research

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 16.0 18.3 39.4 26.2

Abs. (%) Sensex Infosys

3m 8.4 5.8

1yr 10.1 (10.6)

3yr 9.7 7.0

FY2010 22,742 4.8 6,219 3.8 34.5 108.7 22.0 5.7 25.8 25.0 5.3 15.4

FY2011 27,501 20.9 6,823 9.7 32.6 119.5 20.1 5.0 25.0 25.9 4.4 13.4

FY2012 33,733 22.7 8,315 21.9 31.7 145.5 16.5 4.1 24.9 25.5 3.4 10.8

FY2013E 39,174 16.1 9,094 9.4 29.5 159.2 15.0 3.6 24.1 24.9 2.9 9.9

FY2014E 41,580 6.1 9,800 7.8 30.4 171.6 14.0 3.2 23.1 24.6 2.7 8.8

Ankita Somani
+91 22-39357800 Ext: 6819 ankita.somani@angelbroking.com

Please refer to important disclosures at the end of this report

Infosys | 2QFY2013 Result Update

Exhibit 1: 2QFY2013 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

2QFY13 9,858 5,831 4,027 1,159 2,868 271 2,597 706 3,303 934 2,369 41.5 40.8 29.1 26.3 22.4

1QFY13 9,616 5,560 4,056 1,113 2,943 250 2,693 476 3,169 880 2,289 40.1 42.2 30.6 28.0 22.7

% chg (qoq) 2.5 4.9 (0.7) 4.1 (2.5) 8.4 (3.6) 4.2 6.1 3.5 3.5 (133)bp (151)bp (166)bp (26)bp

2QFY12 8,099 4,511 3,588 1,074 2,514 233 2,281 387 2,668 762 1,906 33.4 44.3 31.0 28.2 22.5

% chg (yoy) 21.7 29.3 12.2 7.9 14.1 16.3 13.9 23.8 22.6 24.3 24.3 (345)bp (195)bp (182)bp (4)bp

1HFY13 19,474 11,391 8,083 2,272 5,811 521 5,290 1,182 6,472 1,814 4,658 81.5 41.5 29.8 27.2 22.5

1HFY12 15,584 8,864 6,720 2,030 4,690 457 4,233 830 5,063 1,435 3,628 63.5 43.1 30.1 27.2 22.1

% chg (yoy) 25.0 28.5 20.3 11.9 23.9 14.0 25.0 27.8 26.4 28.4 28.4 (161)bp (25)bp 0bp (45)bp

Exhibit 2: 2QFY2013 Actual vs Angel estimates

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

Actual 9,858 29.1 2,369

Estimate 9,940 31.9 2,314

% Var. (0.8) (281)bp 2.4

Muted results, Guidance unsatisfactory

For 2QFY2013, Infosys reported yet another subdued quarter. The dollar revenues grew by 2.6% qoq to US$1,797mn, almost in line with the expectations. The cross currency movement aided the companys revenue by US$3mn. Revenue in constant currency (CC) terms came in at US$1,794mn, up 2.4% qoq. Billing rates in CC terms decreased by 0.3% qoq as offshore pricing declined 1.5% qoq, while onsite CC billing rates were down 0.2% qoq. A key positive thing was that the companys volumes grew at a modest pace by 3.8% qoq led by a 3.6% offshore volume growth and 4.4% onsite volume growth. In INR terms, revenue came in at `9,858cr, up 2.5% qoq. The company signed six large deals during the quarter.

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Infosys | 2QFY2013 Result Update

Exhibit 3: Trend in volume growth (Effort wise)

6 4.5 4 2 4.7 4.5 4.4 3.8 3.1 1.4 2.9 2.3 2.7 3.6 3.8

(%)
0 (2) (4) 2QFY12 3QFY12
Offshore

(1.2) (1.5) (2.1)

4QFY12
Onsite

1QFY13
Total volume growth

2QFY13

Source: Company, Angel Research

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

6 4 2
(%)

5.0 4.5

4.4 2.7 3.1

3.8

2.4 (1.5) (2.1)

0 (2) (4) 2QFY12 3QFY12

(0.4)

4QFY12

1QFY13

2QFY13

Revenue growth (constant currency)

Source: Company, Angel Research

Volume growth

Service wise, revenue growth came in majorly from non-discretionary services such as application maintenance, IMS and testing services, the revenue of which grew by 5.0%, 5.7% and 6.3% qoq respectively. Revenue from one of the companys major revenue contributor service application development grew by 3.4% qoq. Revenues from consulting and package implementation service vertical grew by 2.9% qoq. Services verticals such as application maintenance, IMS, BPO and testing are expected to drive growth for IT companies in a volatile and uncertain macro environment. Out of the six large deals signed, two deals are from one of the fastest growing IT services area of IMS. The company also won eight business transformation deals during 2QFY2013. Revenues from products, platforms and solutions service line declined by 7.5% qoq. This is one of the major focus areas of the company, and the total contract value (TCV) of this service area currently stands at about US$500mn. The company booked ~US$100mn TCV in 2QFY2012.

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Infosys | 2QFY2013 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 64.5 17.0 21.4 6.8 8.6 4.7 3.4 2.6 30.0 5.5 3.8 0.4 3.4 2.0 5.0 5.7 6.3 (1.6) (0.3) (1.2) 2.9 (7.5) (13.4) 36.8 3.3 2.3 2.0 20.7 8.0 (10.4) 2.9 (4.4) (1.0) 25.8 (6.9) 37.2

Industry-wise, the revenue from financial services and insurance (FSI), the companys anchor industry vertical contributing 33.7% to revenue, grew by just 0.8% qoq, led by a 4.1% qoq growth in revenue from insurance. Revenues from the banking and financial services industry remained almost flat qoq. In CC terms, revenue from FSI grew by 0.3% qoq. The spending from banks and financial institutions is coming from work related to risk compliance, fraud prevention and regulatory kind of work, but at a slower pace. Manufacturing (contributed 22.1% to revenue) posted a 3.0% qoq revenue growth. In CC terms, revenue from this vertical grew by 2.9% 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. Although demand from European auto companies has moderated, the strong growth in hi-tech and engineering services has kept the momentum in the manufacturing segment. The retail, CPG and logistics (RCL) segment (contributed 24.0% to revenue) again emerged as the major growth driver for the company, recording a 3.9% qoq revenue growth, led by a considerable 8.1% qoq growth in revenues from lifesciences. In CC terms, the revenue from RCL grew by 3.9% qoq. In this industry segment, retail is gaining traction on account of spend related to digital commerce, digital marketing and clients targeting to go global. The energy utilities, communications & services (ECS) segment (contributed 20.2% to revenue) reported a 3.6% qoq increase in revenues. In CC terms, revenue from this segment declined by 3.7% qoq.

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Infosys | 2QFY2013 Result Update

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 33.7 27.0 6.7 22.1 24.0 17.0 1.7 3.9 1.4 20.2 5.3 9.9 5.0

% growth qoq 0.8 (0.0) 4.1 3.0 3.9 3.2 2.6 8.1 2.6 3.6 18.2 0.6 (3.2)

% growth yoy (1.7) (1.4) (2.9) 12.6 7.9 12.2 2.9 5.6 (19.9) (3.7) (4.3) (2.0) (6.4)

In terms of geographies, revenue growth was primarily led by Europe, which posted a 5.1% qoq decline in revenues in CC terms. Revenue from North America grew by 2.2% qoq in CC terms, while revenues from India declined by 15.4% qoq in CC terms.

Exhibit 7: Growth trend in geographies (CC basis)

20 15 10
(%)

16.8

6.3 2.1

7.3 5.1 1.1 2.5 0.8 2.5 1.7 2.2 2.2 1.8

5 0 (5)

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

(10)

Source: Company, Angel Research

Hiring intact
Infosys added 10,420 gross employees in 2QFY2013, of which 5,234 were lateral additions. The net addition number for the quarter stood at 2,610. Attrition, on last twelve month (LTM) basis grew marginally to 15.0% in 2QFY2013 from 14.9% in 1QFY2013. The company has maintained its gross hiring target of 35,000 employees for FY2012 and has not given any outlook for FY2014 hiring.

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Infosys | 2QFY2013 Result Update

Exhibit 8: Employee metrics

2QFY12 Gross addition Net addition Lateral employees Attrition LTM basis (%)
Source: Company, Angel Research

3QFY12 9,655 3,266 3,863 15.4

4QFY12 10,676 4,906 4,727 14.7

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

2QFY13 10,420 2,610 5,234 15.0

15,352 8,262 2,318 15.6

Utilization rate, including as well as excluding trainees, grew by 240bp and 170bp qoq to 69.6% and 73.3%, respectively. Another major portion of freshers are expected to join in 3QFY2013, which will keep utilization level under pressure.

Exhibit 9: Trend in utilization

80 77.3 77.4 73.0 73.3 71.6

75
(%)

70 70.2 65 69.9 67.2 67.2 69.6

60 2QFY12 3QFY12 Including trainees

Source: Company, Angel Research

4QFY12

1QFY13 Excluding trainees

2QFY13

Margins decline again

The companys EBITDA and EBIT margin declined by 151bp and 166bp qoq to 29.1% and 26.3%, respectively, which was the key disappointment in the results. Operating margins of the company were impacted adversely because of higher subcontracting costs, warranty costs and one-time payout for promotion-based compensation increases. The management indicated that these higher costs were embedded in the FY2013 EPS guidance of Infosys and has no impact on the full year guidance. The company has announced wage hikes for its employee base, 6% for offshore employees and 2-3% for onsite employees. This will further pull down the operating margin of the company in addition to the negative impact of the INR appreciation trend being witnessed. On a full year basis, the company expects margins to go down by 200bp for FY2013 from earlier expectation of 50-100bp, due to wage hike announced by the company.

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Infosys | 2QFY2013 Result Update

Exhibit 10: Trend in EBITDA margin

300 200 197 100
(BP)

35 265 33.7 32.6 30.6 (108) (201) 29.1 (151) 34 33 32 31.0 30 29 28 27 26 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13
(%)

0 (100) (200) (300)

31

Margin movement (qoq)

Source: Company, Angel Research

EBITDA margin (%)

Client pyramid
Infosys added 39 new clients during the quarter (relatively weak than previous quarters), taking its total active client base to 715. The companys top client which contributes US$300mn+ moved to lower revenue bracket of US$200mn-300mn due to slight reduction in revenue run-rate from that client. The company witnessed an addition of a few clients in US$1mn-20mn revenue brackets. The top 5 and top10 clients grew well by posting ~7.8% qoq and ~5.7% qoq growth in terms of revenues despite some sluggishness at the top client.

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 2QFY12 4.6 45 647 200 60 48 45 24 9 1 1 3QFY12 4.1 49 665 198 59 54 41 26 11 1 1 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 -

US$300mn plus
Source: Company, Angel Research

Guidance disappoints
Infosys has kept its FY2013 yearly guidance unchanged and expects revenue growth of at least 5% yoy to US$7.343bn; however in constant currency terms, the guidance has been scaled down from 6% earlier to 5.7% now, which clearly indicates challenging visibility in the business volumes and managements future expectation. This doesnt include the Lodestone acquisition, which we believe would add ~100bps of growth in FY2013. Also, US$ EPS guidance has been revised down slightly to at least US$2.97 from US$3.03, adjusting it for the currency exchange rate. Taking wage hike as well as INR appreciation into
July 12, 2012

Infosys | 2QFY2013 Result Update

account, the company scaled down FY2013 INR EPS guidance to at least `160.61 from at least `166.46 (at assumed currency rate for INR/USD of `55.0). Post 1HFY2013 performance, the company requires a minimum 3.5% qoq growth rate in the next two quarters to achieve their FY2013 USD revenue growth guidance, which in the current scenario looks a bit stretched.

Exhibit 12: FY2013 guidance

Guidance (IFRS) Revenue (` cr) EPS (`) Revenue (US$bn) Basic EPADS (US$)
Source: Company, Angel Research

FY2013 - previous (As on 4QFY12) 38,431-39,136 158.76-161.41 7.55-7.69 3.12-3.17

FY2013 - revised (As on 1QFY13) At least 40,364 At least 166.46 At least 7.34 At least 3.03

FY2013 - revised (As on 2QFY13) At least 39,582 At least 160.61 At least 7.34 At least 2.97

Outlook and valuation

Infosys, which has seen a slew of management changes in the last couple of years, said that its CFO V. Balakrishnan would give up his position from October 31, 2012 and will be replaced by VP-finance Rajiv Bansal. Balakrishnan will, however, continue to be on the company's board and will now look after BPO operations, Finacle and India operations. This is a cause of concern as it does not give out a good picture of the company which is not doing well since the past 3 quarters. Management commentary indicates that the environment remains exactly where it was a few months back. The company continues to see challenges and delays in ramp-ups of the deals being signed. Infosys signed six large deals during the quarter, including two of them with a TCV of US$200m+. Also, two large deals were in infrastructure management services (IMS). The company signed a total of eight transformational deals. Post 1HFY2013 performance, the company requires a minimum 3.5% qoq growth rate in the next two quarters to achieve their FY2013 USD revenue growth guidance, which in the current scenario looks a bit stretched. Hence, we believe the company can achieve a 5-5.5% yoy FY2013 revenue growth including revenue from Lodestone. Over FY2012-14E, we expect USD and INR revenue CAGR of 7.0% and 11.0%, respectively. While we keep our revenue estimates largely unchanged, higher sub-contracted costs may have an impact on margins in subsequent quarters as well, potentially impacting FY2014E EPS estimates. On the EBIT margin front, for FY2013, the management expects it to go down by ~200bp yoy in FY2013, factoring in wage hikes. Despite giving no salary hikes, the company has been posting margin declines since the past couple of quarters, even when the company had got INR depreciation benefit. Wage hikes will further pull down the operating margin of the company in addition to the negative impact of the INR appreciation trend seen. We expect EBIT margin to decline by ~225bp yoy to 26.8% for FY2013. Over FY201214E, we expect a CAGR of 8.4% and 8.6% in EBIT and PAT, respectively. At the current market price of `2,396, the stock is trading at 15.0x FY2013E and 14.0x FY2014E EPS. We value the company at 15x FY2014E EPS of `172and maintain our Accumulate rating on the stock with a

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Infosys | 2QFY2013 Result Update

target price of `2,573. In the near term though, we do not expect Infosys to give any considerable absolute upside.

Exhibit 13: Key assumptions

Parameters Revenue growth USD terms (%) USDINR rate Revenue growth INR terms (%) EBITDA margin (%) Tax rate (%) EPS growth (%)
Source: Company, Angel Research

FY2013 5.0 53.4 16.1 29.5 28.3 9.4

FY2014 9.0 52.0 6.1 30.4 28.0 7.8

Exhibit 14: Change in estimates

FY2013 Parameter (` cr) Net revenue EBITDA PBT Tax PAT Earlier estimates 39,383 12,483 13,009 3,685 9,325 Revised estimates 39,174 11,559 12,676 3,582 9,094 Variation (%) (0.5) (7.4) (2.6) (2.8) (2.5) Earlier estimates 41,380 13,206 13,793 3,890 9,903 FY2014 Revised estimates 41,580 12,655 13,611 3,811 9,800 Variation (%) 0.5 (4.2) (1.3) (2.0) (1.0)

Source: Company, Angel Research

Exhibit 15: 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

Oct-07

Oct-08

Oct-09

Oct-10

Oct-11

Apr-12
10x

Price
Source: Company, Angel Research

26x

22x

18x

14x

July 12, 2012

Oct-12

Infosys | 2QFY2013 Result Update

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 Neutral Buy Neutral Buy Neutral Neutral Neutral Accumulate Accumulate Buy CMP (`) 580 113 2,396 190 121 110 670 403 35 428 1,298 962 352 Tgt. price (`) 632 140 2,573 185 142 110 772 392 36 420 1,405 1046 421 Upside (%) 8.9 23.3 7.4 (2.7) 17.8 (0.0) 15.2 (2.8) 4.2 (1.9) 8.2 8.8 19.7 FY2014E EBITDA (%) 17.6 21.4 30.4 17.5 16.4 18.4 17.6 16.9 11.0 24.3 29.1 17.1 19.3 FY2014E P/E (x) 12.9 9.3 14.0 9.8 9.3 11.0 8.7 10.8 5.4 9.7 17.6 9.7 12.5 FY2012-14E EPS CAGR (%) 7.8 10.9 5.6 10.4 17.3 (0.6) 12.8 (0.5) (1.5) 7.7 10.8 4.2 7.3 FY2014E EV/Sales (x) 1.4 1.2 2.7 0.6 0.8 1.1 0.8 0.9 0.3 0.9 3.5 1.7 1.4 FY2014E RoE (%) 21.1 23.9 23.1 13.6 20.0 22.2 20.4 12.6 14.3 15.5 28.6 20.5 17.9

Source: Company, Angel Research

Company Background
Infosys is the second largest IT company in India, employing over 1,50,000 professionals. The company services more than 700 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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10

Infosys | 2QFY2013 Result Update

Profit and loss statement (IFRS, consolidated)

Y/E March (` cr) Net sales Cost of revenue Gross profit % of net sales Selling and marketing expenses % of net sales General and admin expenses % 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 (`) FY2010 22,742 12,078 10,664 46.9 1,184 5.2 1,628 7.2 7,852 34.5 942 4.1 6,910 30.4 990 7,900 1,681 21.3 6,219 6,219 109.5 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 FY2013E 39,174 23,117 16,057 41.0 1,980 5.1 2,518 6.4 11,559 29.5 1,073 2.7 10,487 26.8 2,189 12,676 3,582 28.3 9,094 9,094 159.2 FY2014E 41,580 24,226 17,354 41.7 2,121 5.1 2,578 6.2 12,655 30.4 1,164 2.8 11,491 27.6 2,038 13,529 3,788 28.0 9,741 9,741 170.5

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Infosys | 2QFY2013 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 Prepayments and 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 3,047 20,668 72 24,073 27,622 286 3,082 23,826 109 27,303 31,263 286 3,089 29,816 270 33,461 38,348 286 3,089 34,072 270 37,717 42,069 286 3,089 38,835 270 42,480 46,686 124 171 61 356 3,549 259 60 319 3,960 12 109 121 4,887 100 100 4,352 100 100 4,206 10 724 8 531 131 82 1,707 3,193 44 817 22 518 140 88 2,012 3,641 23 42 1,054 15 545 498 133 2,456 4,766 20 42 1,054 15 545 450 100 2,026 4,252 20 42 1,054 15 545 450 100 1,880 4,106 4,439 829 56 356 667 347 6,694 27,622 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 5,736 993 173 20 300 1,152 757 9,131 42,069 5,672 993 173 30 400 1,450 1,323 10,041 46,686 12,111 2,556 1,190 3,494 841 95 641 20,928 16,666 21 123 4,653 1,243 66 917 23,689 20,591 32 345 5,882 1,873 1,523 30,246 21,814 32 450 6,654 2,147 1,841 32,938 24,881 32 550 6,949 2,278 1,954 36,645 FY2010 FY2011 FY2012 FY2013E FY2014E

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Infosys | 2QFY2013 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 FY2010 6,910 942 7,852 990 8,842 1,681 7,161 (238) 468 230 7,391 (716) (3,746) (302) 74 (243) (4,933) 333 1,673 (1,340) 1,118 10,993 12,111 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 10,487 1,073 11,559 2,189 13,749 3,582 10,166 (1,364) (514) (1,878) 8,288 (1,400) (105) (8) (99) (21) (595) (2,228) (2,500) 2,337 (4,837) 1,223 20,591 21,814 FY2014E 11,491 1,164 12,655 2,120 14,775 3,811 10,964 (540) (146) (686) 10,278 (1,100) (100) (10) (398) (565) (2,174) (2,700) 2,337 (5,037) 3,067 21,814 24,881

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Infosys | 2QFY2013 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 3.4 70 3.6 78 4.2 84 4.3 82 4.1 81 25.0 58.7 25.8 25.9 56.1 25.0 25.5 56.3 24.9 24.9 53.0 24.1 24.6 54.1 23.1 0.8 1.1 0.3 0.8 1.1 25.8 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 1.1 24.1 0.7 1.2 0.3 0.9 1.1 23.1 109 125 25 421 119 134 35 477 146 162 15 585 159 178 35 659 172 192 35 743 22.0 19.1 5.7 1.0 5.3 15.4 4.4 20.1 17.8 5.0 1.5 4.4 13.4 3.8 16.5 14.8 4.1 0.6 3.4 10.8 3.0 15.0 13.5 3.6 1.5 2.9 9.9 2.7 14.0 12.5 3.2 1.5 2.7 8.8 2.4 FY2010 FY2011 FY2012 FY2013E FY2014E

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Infosys | 2QFY2013 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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