1QFY2013 Result Update | IT

July 12, 2012

Infosys
Performance highlights
(` cr) Net revenue EBITDA EBITDA margin (%) PAT 1QFY13 9,616 2,962 30.8 2,289 4QFY12 8,852 2,887 32.6 2,316 % chg (qoq) 8.6 2.6 (181)bp (1.2) 1QFY12 7,485 2,176 29.1 1,722 % chg (yoy) 28.5 36.1 173bp 32.9

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 1.0 2,990/2,169 148,860 5 17,233 5,235 INFY.BO INFY@IN IT 129,572

`2,265 `2,530
12 Months

Source: Company, Angel Research

For 1QFY2013, Infosys reported yet another disappointing quarterly result, broadly underperforming on all fronts. The most disappointing thing in Infosys result was revision of FY2013 USD revenue growth guidance downwards to at least 5% from 8-10% earlier, tad lower than our estimate of 6-8%. In addition, the company has stopped issuing quarterly guidance citing uncertainly in demand environment which is discomforting. The stock has got corrected significantly, so owing to this we maintain our Accumulate rating on the stock. Quarterly highlights: For 1QFY2013, Infosys reported revenue of US$1,752mn, down 1.1% qoq, impacted due to 3.7% qoq decline in pricing and a hit of US$15mn as a one-time reversal in a transformation project from a European utilities client. EBITDA margin declined by 181bp qoq to 30.8%, despite having benefits from ~8% qoq INR depreciation against USD because operating margins were impacted adversely by pricing decline (co attributing the decline to change in business mix with some sporadic pricing resets in FSI) and US$15mn of revenue reversal on account of a project cancellation. Outlook and valuation: Management has given a disappointing FY2013 guidance of atleast 5% yoy growth from 8-10% earlier, tad lower than our estimate of 6-8%. Post 1.1% qoq decline in USD revenue in 1QFY2012, the company requires ~3% ask rate in 2Q-4QFY2013 to achieve 5% growth in FY2013, which, at current scenario of companys performance, looks a bit stretched. Hence, we expect USD and INR revenue to post a CAGR of 7.1% and 11.2%, respectively over FY2012-14E. On the EBIT margin front, for FY2013, the management expects it to go down by 50-100bp yoy in FY2013 which does not factor in the wage hike. Over FY201214E, we expect a CAGR of 11.4% and 9.5% in EBIT and PAT, respectively. At the CMP of `2,265, the stock is trading at 14.0x FY2013E and 13.0x FY2014E EPS. We maintain Accumulate rating on the stock with a target price of `2,530 but in the near term though we do not expect Infosys to give considerable absolute upsides. Key financials (Consolidated)
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) FY2010 22,742 4.8 6,219 3.8 34.5 108.7 20.8 5.4 25.8 25.0 5.0 14.5 FY2011 27,501 20.9 6,823 9.7 32.6 119.5 19.0 4.7 25.0 25.9 4.1 12.6 FY2012 33,733 22.7 8,315 21.9 31.7 145.5 15.6 3.9 24.9 25.5 3.2 10.1 FY2013E 39,151 16.1 9,247 11.2 31.6 161.9 14.0 3.3 23.8 26.1 2.7 8.6 FY2014E 41,743 6.6 9,966 7.8 31.9 174.5 13.0 2.9 22.1 24.7 2.4 7.6

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 16.0 18.3 37.9 27.8

Abs. (%) Sensex Infosys

3m (0.6) (17.6)

1yr (6.4) (18.9)

3yr 27.6 31.2

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

Source: Company, Angel Research

Please refer to important disclosures at the end of this report

Infosys | 1QFY2013 Result Update

Exhibit 1: 1QFY2013 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

1QFY13 9,616 5,541 4,075 1,113 2,962 269 2,693 476 3,169 880 2,289 40.1 42.4 30.8 28.0 22.7

4QFY12 8,852 4,959 3,893 1,006 2,887 240 2,647 652 3,299 984 2,316 40.5 44.0 32.6 29.9 24.4

% chg (qoq) 8.6 11.7 4.7 10.6 2.6 12.2 1.7 (4.0) (10.5) (1.2) (1.2) (160)bp (181)bp (190)bp (168)bp

1QFY12 7,485 4,353 3,132 956 2,176 224 1,952 443 2,395 673 1,722 30.1 41.8 29.1 26.1 21.7

% chg (yoy) 28.5 27.3 30.1 16.4 36.1 20.3 38.0 32.3 30.8 32.9 32.9 54bp 173bp 193bp 96bp

FY2012 33,733 18,877 14,856 4,147 10,709 931 9,778 1,904 11,683 3,368 8,315 145.5 44.0 31.7 29.0 23.3

FY2011 27,501 15,054 12,447 3,483 8,964 862 8,102 1,211 9,313 2,490 6,823 119.5 45.3 32.6 29.5 23.8

% chg (yoy) 22.7 25.4 19.4 19.1 19.5 8.0 20.7 25.4 35.2 21.9 21.8 (122)bp (85)bp (47)bp (43)bp

Exhibit 2: 1QFY2013 Actual vs. Angel estimates

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

Actual 9,616 30.8 2,289

Estimate 9,590 34.4 2,348

% Var. 0.3 (362)bp (2.5)

Muted results, Guidance disappointing

For 1QFY2013, Infosys reported yet another disappointing quarterly result. The dollar revenues declined by 1.1% qoq to US$1,752mn, impacted due to 3.7% qoq decline in pricing. The cross currency movement also impacted the companys revenue by US$13mn. In addition, the company took a hit of US$15mn as a onetime reversal in a transformation project from a European utilities client. In the constant currency terms also, the company has not been able to meet its dollar revenue guidance of 0-1% qoq growth. Revenue in constant currency (CC) terms came in at US$1,763mn, down 0.4% qoq. Billing rates in CC terms decreased by 3.2% qoq as offshore pricing declined 3.2% qoq, while onsite CC billing rates were down 2.8% qoq. One key positive thing was that the companys volumes grew at a modest pace by 2.7% qoq led by 2.9% offshore volume growth and 2.3% onsite volume growth. In INR terms, revenue came in at `9,616cr, up 8.6% qoq, aided by ~8% qoq INR depreciation against the USD in 1QFY2013.

July 12, 2012

Infosys | 1QFY2013 Result Update

Exhibit 3: Trend in volume growth (Effort wise)

8 6 4
(%)

6.8 4.0 2.7 1.4 4.5 4.7 4.5 3.8

3.1

2.9

2 0 (2) (4) 1QFY12 2QFY12

Offshore

2.3

2.7

(1.2) (1.5) (2.1) 3QFY12

Onsite

4QFY12
Total volume growth

1QFY13

Source: Company, Angel Research

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

6 4 2
(%)

5.0 4.0 4.5 3.1

4.4 2.7 3.1

0 (2)

(1.5) (0.4) (2.1)

(4) 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13

Revenue growth (constant currency) Volume growth

Source: Company, Angel Research

Service wise, revenues from services having higher discretionary proportion such as consulting and system integration and products, platforms and solutions, declined on a qoq basis. Revenue from the companys major revenue contributor service application development and maintenance (contributing 38% to revenue) remained almost flat qoq. Revenues from consulting and package implementation service vertical declined by 4.9% qoq. On the other hand, revenues from IMS as well as testing services grew by 5.3% qoq each. 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. Revenues from products, platforms and solutions service line declined by 2.7% qoq. This is one of the major focus areas of the company, and the total TCV of this service area currently stands greater than US$380mn.

July 12, 2012

Infosys | 1QFY2013 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 64.0 17.1 20.9 6.6 8.3 4.9 3.5 2.7 29.9 6.1 4.5 0.3 1.0 0.1 (1.1) 5.3 5.3 1.0 1.8 (1.1) (4.9) (2.7) 1.2 (25.8) 6.2 11.4 (1.7) 17.3 16.0 (4.9) 14.7 1.1 (1.1) 25.4 (1.7) 4.8

Industry wise, revenue from FSI, the companys anchor industry vertical contributing 34.3% to revenue, declined by 1.1% qoq, led by 5.4% qoq de-growth in revenue from insurance. Revenues from banking and financial services industry remained almost flat qoq. In CC terms, revenue from FSI declined by 0.4% qoq. This was because of sporadic price negotiations in few accounts. 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 22.0% to revenue) posted 2.2% qoq revenue growth. In CC terms, revenue from this vertical grew by 3.1% 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 manufacturing segment. The RCL segment (contributed 23.7% to revenue) emerged as the major growth driver for the company, recording 2.4% qoq revenue growth, led by considerable 5.8% and 5.1% qoq growth in revenues from retail and CPG and transport and logistics, respectively. In CC terms, revenue from RCL grew by 2.6% 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 ECS segment (contributed 20.0% to revenue) reported significant 8.0% qoq decline in revenues. In CC terms, revenue from this segment declined by 7.3% qoq. This was because of a one-time order cancellation impact of US$15mn from a utilities client in Europe. Going ahead, the company expects its deal pipeline to pick up for the energy and utilities industry segment.

July 12, 2012

Infosys | 1QFY2013 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 34.3 27.7 6.6 22.0 23.7 16.9 1.7 3.7 1.4 20.0 4.6 10.1 5.3

% growth qoq (1.1) 0.0 (5.4) 2.2 2.4 5.8 5.1 (6.1) (13.4) (8.0) (25.4) (1.1) (1.1)

% growth yoy 1.6 3.4 (5.2) 13.6 9.5 10.1 (1.0) 4.8 33.4 (2.9) (15.4) (0.1) 4.8

In terms of geographies, revenue decline was primarily led by Europe, which posted 7.2% qoq decline in revenues in CC terms. Revenue from North America grew by 1.7% qoq in CC terms, while revenues from India and Rest of the World declined by 5.0% and 2.2% qoq, respectively in CC terms.

Exhibit 7: Growth trend in geographies (CC basis)

20 15 10
(%)

16.8

5 0

5.1 2.4

6.3 2.1

7.3 1.1 2.5 0.8 2.5 1.7 2.2

(5) (10)

(2.6)

(4.1) (7.2)

1QFY12

2QFY12
North America

3QFY12
Europe

4QFY12
Rest of the world

1QFY13

Source: Company, Angel Research

Hiring intact
Infosys added 9,236 gross employees in 1QFY2013, of which 5,233 were lateral additions. The net addition number for the quarter stood at 1,157. Attrition, on LTM basis, grew marginally to 14.9% in 1QFY2013 from 14.9% in 4QFY2012. The company has maintained its gross hiring target of 35,000 employees for FY2012.

July 12, 2012

Infosys | 1QFY2013 Result Update

Exhibit 8: Employee metrics

1QFY12 Gross addition Net addition Lateral employees Attrition LTM basis (%)
Source: Company, Angel Research

2QFY12 15,352 8,262 2,318 15.6

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

9,922 2,740 4,044 15.8

Utilization rate, including trainees, remained flat qoq at 67.2%, while utilization rate, excluding trainees, declined by 140bp qoq to 71.6% during the quarter.

Exhibit 9: Trend in utilization

80 74.9 75
(%)

77.3

77.4 73.0

71.6

70 69.6 65 70.2 69.9 67.2 67.2

60 1QFY12 2QFY12
Including trainees

3QFY12

4QFY12
Excluding trainees

1QFY13

Source: Company, Angel Research

Margins decline
The companys EBITDA and EBIT margin declined by 181bp and 190bp qoq to 30.8% and 28.0%, respectively, despite having considerable benefits from ~8% qoq INR depreciation against USD. Operating margins of the company were impacted adversely by ~3.7% qoq decline in revenue productivity (3.1% qoq in CC terms, with co attributing the decline to change in business mix with some sporadic pricing resets in BFSI) and US$15mn of revenue reversal on account of a project cancellation. Management indicated that they expect EBIT margin to go down by 50-100bp in FY2013 which does not factor any wage hike.

July 12, 2012

Infosys | 1QFY2013 Result Update

Exhibit 10: Trend in EBITDA margin

300 200 100 197 31.0 32.6 30.8 (108) 29.1 (298) (181) 265 33.7 35 34 33 32 30 29 28 27 26 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 31

(BP)

(100) (200) (300) (400)

Margin movement (qoq)

EBITDA margin (%)

Source: Company, Angel Research

Client pyramid
Infosys added 51 new clients during the quarter, taking its total active client base to 711. One client moved from lower revenue bracket to higher bracket of US$50mn-100mn. The top 5 and top10 clients grew well by posting ~4.1% qoq and 2.6% qoq in terms of revenues despite 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 1QFY12 4.5 26 628 191 58 45 48 21 9 2 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

US$300mn plus
Source: Company, Angel Research

Guidance disappoints
The most disappointing thing in Infosys result was revision of FY2013 USD revenue growth guidance downwards to at least 5% from 8-10% earlier, tad lower than our estimate of 6-8% taking into account: a) 1.5% impact due to adverse cross currency movement, b) 3.2% impact due to price decline and c) rest due to impact on overall demand scenario. Management expects FY2013 USD revenue to be at least US$7.34bn. The FY2013 EPS guidance is to reach atleast `166.46 (at assumed currency rate of INR/USD rate of `55.0). The management has stopped issuing quarterly guidance citing uncertainly in demand environment which is discomforting. We believe this clearly indicates challenging visibility in business volumes and managements future expectation.
July 12, 2012

(%)

Infosys | 1QFY2013 Result Update

Post 1.1% decline in USD revenue in 1QFY2012, the company requires ~3% ask rate in 2Q-4QFY2013 to achieve 5% growth in FY2013, which at 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

Outlook and valuation

Management commentary has turned extremely cautious for the next years budget flush pattern. Also, the company is witnessing delays in ramp-ups of the deals being signed. This is clearly reflected in managements disappointing FY2013 guidance of atleast 5% yoy growth from 8-10% earlier, tad lower than our estimate of 6-8%. In addition, the management has stopped issuing quarterly guidance citing uncertainly in demand environment which clearly indicates challenging visibility in business volumes and managements future expectation. Post 1.1% decline in USD revenue in 1QFY2012, the company requires ~3% ask rate in 2Q-4QFY2013 to achieve 5% growth in FY2013, which at current scenario of companys performance, looks a bit stretched. Hence, we have assumed moderation in demand going forward in FY2013 and have built in a USD revenue growth of 4.8% for FY2013. Over FY2012-14E, we expect USD and INR revenue CAGR of 7.1% and 11.2%, respectively. On the EBIT margin front, for FY2013, the management expects it to go down by 50-100bp yoy in FY2013 which does not factor in the wage hike. Despite giving no salary hikes, the company posted 190bp cut on the EBIT margin. If the company announces wage hike later in this year, there will be further pressure on the margin but currently we are not factoring wage hike impact in our estimates of FY2013. We expect EBIT margin to decline by 17bp yoy to 28.8% for FY2013. Over FY201214E, we expect a CAGR of 11.4% and 9.5% in EBIT and PAT, respectively. At the CMP of `2,265, the stock is trading at 14.0x FY2013E and 13.0x FY2014E EPS. We value the company at 14.5x FY2014E of `174.5 which is significant discounts to its peak valuations as well as to Sensex. We maintain Accumulate rating on the stock with a target price of `2,530 but in the near term though we do not expect Infosys to give considerable absolute upsides.

July 12, 2012

Infosys | 1QFY2013 Result Update

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 4.8 53.5 16.1 31.6 28.3 11.3

FY2014 9.6 52.0 6.6 31.9 28.2 7.8

Exhibit 14: Change in estimates

FY2013 Parameter (` cr) Net revenue EBITDA Other income PBT Tax PAT Earlier estimates 39,364 12,657 1,354 12,909 3,679 9,230 Revised estimates 39,151 12,378 1,618 12,901 3,654 9,247 Variation (%) (0.5) (2.2) 19.5 (0.1) (0.7) 0.2 Earlier estimates 42,981 13,105 1,718 13,620 3,813 9,806 FY2014 Revised estimates 41,743 13,306 1,742 13,880 3,914 9,966 Variation (%) (2.9) 1.5 1.4 1.9 2.6 1.6

Source: Company, Angel Research

Exhibit 15: Sensitivity analysis

Net sales (` cr) INR USD @51 INR USD @52 INR USD @53 EBITDA margin (%) EPS (`) INR USD INR USD INR USD INR USD INR USD INR USD INR USD INR USD INR USD @54 @51 @52 @53 @54 @53 @54 @51 @52

FY2013E
FY2014E

38,036
40,940

38,593
41,743

39,151
42,545

39,708
43,348

31.0
31.5

31.3
31.9

31.6
32.3

31.9
32.7

158.6
171.6

160.2
174.4

161.9
177.1

163.5
179.9

Source: Company, Angel Research

Exhibit 16: 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

Price
Source: Company, Angel Research

26x

22x

18x

14x

Oct-11

10x

July 12, 2012

Apr-12

Infosys | 1QFY2013 Result Update

Exhibit 17: Recommendation summary

Company HCL Tech Hexaware Infosys Infotech Enterprises KPIT Cummins Mahindra Satyam MindTree Mphasis NIIT Persistent TCS Tech Mahindra Wipro Reco Buy Accumulate Accumulate Neutral Neutral Accumulate Accumulate Neutral Buy Neutral Neutral Neutral Buy CMP (`) 482 115 2,265 183 114 80 637 382 43 390 1,236 710 359 Tgt. price (`) 562 132 2,530 87 710 52 451 Upside (%) 16.7 14.4 11.7 8.3 11.4 22.4 25.5 FY2014E EBITDA (%) 17.2 20.0 31.9 17.1 14.8 16.3 16.8 17.7 15.1 26.0 29.2 16.5 20.5 FY2014E P/E (x) 11.1 10.1 13.0 9.8 10.1 9.6 9.9 10.3 4.8 9.1 16.8 8.3 11.9 FY2012-14E EPS CAGR (%) 8.2 8.7 6.2 8.8 12.1 (6.5) 6.3 0.5 9.5 6.4 10.7 (1.2) 9.8 FY2014E EV/Sales (x) 1.2 1.2 2.4 0.6 0.8 0.7 0.8 0.8 0.3 0.9 3.3 1.3 1.4 FY2014E RoE (%) 21.0 23.4 22.1 13.3 19.1 12.6 18.0 12.6 18.4 15.4 28.2 18.4 18.9

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 650 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.

July 12, 2012

10

Infosys | 1QFY2013 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 39,151 22,293 16,858 43.1 1,975 5.0 2,504 6.4 12,378 31.6 1,096 2.8 11,282 28.8 1,618 12,901 3,654 28.3 9,247 9,247 161.9 FY2014E 41,743 23,636 18,107 43.4 2,129 5.1 2,672 6.4 13,306 31.9 1,169 2.8 12,137 29.1 1,742 13,880 3,914 28.2 9,966 9,966 174.5

July 12, 2012

11

Infosys | 1QFY2013 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 3,120 35,226 270 38,902 43,254 286 3,120 41,354 270 45,030 49,236 124 171 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 5,713 993 173 51 300 1,152 789 9,170 43,254 5,644 993 173 40 397 1,450 1,220 9,917 49,236 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 23,114 30 450 6,650 2,038 1,801 34,084 27,712 30 550 6,976 2,173 1,878 39,319 FY2010 FY2011 FY2012 FY2013E FY2014E

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12

Infosys | 1QFY2013 Result Update

Cash flow statement (IFRS, consolidated)

Y/E March (` cr) Pre-tax profit from operations Depreciation Pre tax cash from operations Other income/prior period ad Net cash from operations Tax Cash profits (Inc)/dec in current assets Inc/(dec) in current liabilities (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 equity/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 11,282 1,096 12,378 1,618 13,997 3,654 10,343 (1,211) (514) (1,725) 8,618 (1,400) (103) (39) (99) (21) (627) (2,288) (1,469) 2,337 (3,806) 2,523 20,591 23,114 FY2014E 12,137 1,169 13,306 1,742 15,049 3,914 11,134 (538) (146) (684) 10,450 (1,100) (100) 11 (395) (432) (2,016) (1,500) 2,337 (3,837) 4,597 23,114 27,711

July 12, 2012

13

Infosys | 1QFY2013 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 81 4.2 80 25.0 58.7 25.8 25.9 56.1 25.0 25.5 56.3 24.9 26.1 57.4 23.8 24.7 58.0 22.1 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 1.1 0.3 0.9 1.1 23.8 0.7 1.1 0.3 0.8 1.1 22.1 109 125 25 421 119 134 35 477 146 162 15 585 162 181 35 680 174 195 35 787 20.8 18.1 5.4 1.1 5.0 14.5 4.1 19.0 16.9 4.7 1.5 4.1 12.6 3.6 15.6 14.0 3.9 0.7 3.2 10.1 2.8 14.0 12.5 3.3 1.5 2.7 8.6 2.5 13.0 11.6 2.9 1.5 2.4 7.6 2.1 FY2010 FY2011 FY2012 FY2013E FY2014E

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Infosys | 1QFY2013 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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