FINANCIAL ANALYSIS AND REPORT OF INFOSYS

Submitted by:
Nishant kumar
Shiva Gupta
Nikhil Das
Shaurya

Submitted to:
Dr. Shipra Aggarwal
Faculty of Securities Analysis and portfolio Management
Department of management studies
Aryabhatta college, University of Delhi
Introduction to Infosys

Infosys Limited is a global leader in next-generation digital services and consulting.

Founded in 1981 in Pune, India, by a group of seven engineers, Infosys has grown to become
one of the largest IT companies in the world. Headquartered in Bengaluru, India, it is
recognized for its innovation-driven approach to solving business challenges and providing
digital transformation services.

Key Details About Infosys:

1. Founding and Early Years

• Established: July 2, 1981

• Founders: Narayana Murthy, Nandan Nilekani, S. Gopalakrishnan, S.D. Shibulal, K.
Dinesh, N.S. Raghavan, and Ashok Arora.
• Initial Capital: INR 10,000 (contributed by N.S. Raghavan).
• Headquarters: Bengaluru, Karnataka, India.
• Initially, the company focused on software development and export.

2. Business Model

Infosys operates as an IT services company that provides a wide range of services and
solutions, including:

• Consulting: Business strategy, enterprise architecture, and transformation.

• Technology Services: Application development, systems integration, IT
infrastructure services, and data analytics.
• Engineering Services: Product engineering, IoT, and industrial automation.
• Digital Transformation: Cloud computing, AI, blockchain, cybersecurity, and digital
marketing.
• Outsourcing: Business process outsourcing (BPO) for finance, HR, and customer
service.

3. Global Presence

• Offices: Over 50 countries, including the United States, Europe, Asia-Pacific, and the
Middle East.
• Development Centers: Spread across India and international locations.
• Clients: Infosys serves clients across diverse sectors such as banking, retail,
manufacturing, healthcare, and telecommunications.
•
4. Key Achievements and Milestones

• Public Listing: Became the first Indian company listed on NASDAQ in 1999.
• Revenue: Over $18 billion (FY 2023-2024).
• Employees: Approximately 350,000 (as of 2024).
• Rankings: Regularly features on Forbes Global 2000, Fortune 500 India, and other
prestigious lists.
• Awards: Recognized for innovation, sustainability, and diversity in workplaces.

5. Corporate Philosophy

Infosys is driven by a mission to "navigate the next" by enabling businesses to embrace

digital transformation. Its focus areas include:

• Innovation through its Infosys Innovation Hubs.

• Social impact through Infosys Foundation.
• Environmental sustainability and commitment to net-zero carbon emissions by
2040.

6. Leadership

• Chairman: Nandan Nilekani (Co-founder and former CEO).

• CEO and MD: Salil Parekh (as of 2024).
• Board of Directors: Includes renowned leaders from technology, finance, and global
business.

7. Infosys Foundation

The Infosys Foundation works in areas such as:

• Education and skill development.

• Healthcare and sanitation.
• Women empowerment.
• Art and culture preservation.

8. Future Focus

Infosys is investing heavily in emerging technologies such as artificial intelligence, quantum

computing, and green technologies to maintain its leadership in the IT services space. Its
commitment to sustainability and global partnerships ensures a continued focus on
responsible growth.
 SWOT ANALYSIS OF INFOSYS

Strengths of Infosys

1. Strong Brand Equity and Global Presence

Infosys has established itself as a globally recognized IT giant with a
strong foothold in over 50 countries. Its reputation for delivering
high-quality solutions and services contributes to its trusted global
brand.

2. Diverse Service Portfolio

From AI to cybersecurity and cloud computing, Infosys offers a broad
range of IT and business consulting services. This diversity helps the
company to meet the varying needs of its global clientele across
multiple industries.

3. Strong Financial Performance

Infosys consistently delivers impressive financial results. In FY 2023-
24, the company generated $17.5 billion in revenue, driven by steady
client acquisitions, digital service expansions, and effective cost
management.

4. Commitment to Sustainability and Innovation

Infosys is committed to being carbon-neutral by 2040 and
consistently invests in innovative technology solutions such as AI,
machine learning, and blockchain. This focus keeps Infosys ahead of
its competitors in the rapidly evolving tech space.

5. Experienced Leadership and Skilled Workforce

Infosys boasts a strong leadership team with deep industry expertise.
Additionally, the company employs over 350,000 skilled professionals,
making it a powerhouse of talent that continuously drives its growth
and success.
Service Portfolio Distribution (Pie Chart)

• Represents: The percentage breakdown of Infosys' services.

• Insights:
o Cloud services (35%) dominate the portfolio, aligning with current
industry trends and growth opportunities in cloud computing.
o Consulting (20%) and AI & Automation (15%) are also significant
contributors, reflecting Infosys’ innovative focus.
o Engineering Services (10%) and Others (20%) add diversification but
are smaller revenue streams.

SWOT ANALYSIS

o Strength: The wide range of services supports Infosys’ diversified

offerings and reduces dependency on a single domain.
o Opportunity: Growth areas like cloud and AI services could drive
future expansion.
Weaknesses of Infosys

1. High Dependence on North American Market

A significant portion of Infosys’ revenue is derived from the North
American market. This over-reliance exposes the company to risks
associated with economic downturns or policy changes in the region.

2. High Attrition Rates

Like many other IT companies, Infosys faces high employee attrition
rates, which can lead to talent gaps and increased costs related to
recruitment and training.

3. Challenges in Scaling Emerging Technologies

Despite its efforts in developing new technologies, Infosys faces
challenges in scaling emerging tech offerings, such as blockchain and
AI, to match market demand and meet client expectations.

4. Operational Complexities
Managing large-scale global operations can pose complexities,
especially with varied legal, compliance, and taxation systems across
different geographies.

The percentage of revenue Infosys earns from different regions.

• North America contributes the highest share (61%), indicating a heavy
reliance on this market.

• Europe follows with 25%, showing its importance as a secondary market.

• The Asia-Pacific region and Rest of the World combined contribute only 14%,
highlighting a potential opportunity for market expansion in these regions.

SWOT LINK

This over-reliance on North America represents a weakness, as any economic

or regulatory disruptions in this region could significantly impact Infosys.

Attrition Rate Trends (Line Graph)

Represents: Changes in Infosys' employee attrition rate over the past five years.

• Insights:
o The attrition rate peaked in 2023 at 23%, signal challenges in retaining
talent.
o A slight improvement in 2024 (22.5%) may indicate ongoing efforts to
address this issue.
o High attrition impacts service quality, increases hiring costs, and affects client
satisfaction.
Opportunities for Infosys

1. Expansion into Emerging Markets

Infosys has the potential to further penetrate emerging markets in
regions such as Africa, Latin America, and Southeast Asia. These
markets are increasingly looking for digital solutions and consulting
services, providing a significant growth opportunity.

2. Increased Demand for Digital Transformation

The global shift toward digitalization offers Infosys a massive
opportunity to expand its digital services, such as cloud computing,
AI, and cybersecurity, particularly in industries like healthcare,
finance, and retail.

3. Strategic Acquisitions and Partnerships

Infosys can leverage its financial strength to acquire smaller
tech firms that specialize in cutting-edge technologies.
Strategic partnerships with tech giants, start-ups, and
academic institutions could further enhance its capabilities.
4. Focus on Sustainability Solutions
As businesses across the globe adopt sustainability as a core
part of their operations, Infosys is well-positioned to offer IT
services that contribute to sustainable business models, such
as energy-efficient cloud solutions and digital tools for
carbon management.
5. Expanding the Product Portfolio
By diversifying into newer areas like quantum computing, metaverse
development, and 5G technology, Infosys could create a broader
service portfolio, gaining a competitive advantage over other IT
service providers.
Threats to Infosys

1. Intense Competition
Infosys operates in a highly competitive environment with global IT
players like Tata Consultancy Services (TCS), Accenture, and IBM. This
competition can affect its market share, pricing strategies, and client
retention.

2. Global Economic Uncertainty

Economic downturns, inflation, and currency fluctuations can have an
adverse effect on Infosys’ revenue streams, especially in regions heavily
affected by economic instability.

3. Cybersecurity Threats
With the increasing digital transformation comes the risk of
cyberattacks. While Infosys invests heavily in cybersecurity, any
breach can damage its reputation and lead to financial losses.
4. Regulatory and Political Changes
Change in data protection laws, trade policies, and political
instability in key markets like the US and Europe could impact
Infosys’ business operations and growth.
5. Technological Disruptions
Rapid technological advancements, such as AI and automation,
could disrupt the traditional IT services market. Infosys needs to
remain agile and adapt to these changes to avoid obsolescence.
INDUSTRIAL ANALYSIS

1. Market Trends and Growth

• The global IT services market continues to grow due to cloud adoption, AI-driven
transformations, and cybersecurity demand.
• Digital transformation initiatives have surged, driven by post-pandemic adaptation.
• Emerging markets in Africa and Southeast Asia are showing rapid adoption of IT
solutions.

2. Competitive Position

• Infosys remains among the top 5 global IT firms, competing closely with TCS,
Accenture, and Cognizant.
• Infosys has strengths in financial services and consulting but faces competition in AI
and cloud services.
• Innovation and acquisitions in automation and digital transformation bolster its
position.

3. Financial Performance (August–November 2024)

• Infosys reported steady revenue growth, driven by digital services (AI, cloud
computing).
• The company improved margins due to cost management but faced challenges in high
attrition.
• Currency fluctuations and inflation had minor impacts on profitability.

4. Key Developments

• Infosys expanded partnerships with cloud providers like Microsoft Azure and Google
Cloud.
• Launched new AI-based solutions for healthcare and finance industries.
• Focused on sustainability by introducing green IT solutions.
 5. Sectoral Contribution

• Financial services dominate, contributing nearly 47% of revenue.

• Emerging areas like telecom, healthcare, and sustainability IT services show potential
for growth.

Here are the graphs illustrating Infosys' industrial analysis for August to November 2024:

Revenue and Profit Trends

• Revenue shows a steady increase over the months, rising from $4.2
billion in August to $4.6 billion in November.
• Profit follows a similar upward trajectory, indicating effective cost
management alongside revenue growth.
Sectoral Revenue Contribution

• Financial Services dominates, contributing 47% of total revenue,

reflecting Infosys' strong position in this sector.
• Other significant contributors include Telecom (15%), Healthcare
(12%), Manufacturing (10%), and Others (16%), highlighting
diversified revenue streams.
 Technical Analysis

Technical Analysis and Investment Decision

1. Decision on Buying Infosys Ltd Stock

Based on the technical analysis of Infosys Ltd stock, the decision to buy is as follows:

1. Trend Analysis:
- The stock has been in a mixed trend throughout 2024, showing higher highs till July 2024
and then facing a correction phase starting from August. As of October 31, 2024, the stock is
priced at ₹1757.

2. Support Levels:
- The technical analysis identifies a support zone around ₹1650–₹1700, where buyer
interest might emerge.
- Stabilization near this range could indicate a potential reversal or consolidation.

3. Volume Analysis:
- High trading volumes are observed during the upward trend earlier in 2024 and during
the correction in recent months.
- This suggests active participation by institutional and retail investors.
- If the stock sustains above ₹1750 with increasing volumes, it may signal renewed buying
interest.

4. Conclusion:
- Short-term: Monitor the stock for confirmation of support at ₹1650–₹1700 or a breakout
above ₹1800. Avoid buying immediately without clear signals.
- Long-term: Infosys Ltd remains a fundamentally strong company. Long-term investors
could consider accumulating at dips near the support zone.

2. Conclusion on the Efficiency of Technical Analysis

Technical analysis provides valuable insights for understanding stock trends,
support/resistance zones, and price behaviors. The analysis of Infosys Ltd demonstrates
both the strengths and limitations of this approach:

- Highlights:
1. Trend Identification: Accurately captured the mixed trend in 2024, with bullish
momentum till July and corrections thereafter.
2. Key Levels: Identified critical support/resistance zones like ₹1650–₹1700.
3. Accuracy of Patterns: Recognized potential accumulation zones and breakout points.

- Limitations:
1. Precision of Predictions: While technical analysis highlights probable scenarios, external
events like earnings reports or macroeconomic developments can influence stock
movements unpredictably.
2. External Factors: Sudden changes in market sentiment are not captured by purely
technical indicators.

- Value:
Despite its limitations, technical analysis remains a reliable tool for identifying probable
trends and guiding trading decisions. It should be supplemented with real-time updates and
fundamental analysis for a comprehensive approach.
 RATIO ANALYSIS
Fundamental Analysis has a very broad scope. One aspect looks at the general
(qualitative) factors of a company. The other side considers tangible and
measurable factors (quantitative). This means crunching and analyzing
numbers from the financial statements. If used in conjunction with other
methods, quantitative analysis can produce excellent results.
Ratio analysis isn't just comparing different numbers from the balance sheet,
income statement, and cash flow statement. It's comparing the number against
previous years, other companies, the industry, or even the economy in general.
Ratios look at the relationships between individual values and relate them to
how a company has performed in the past, and might perform in the future.

OBJECTIVE OF RATIOS
Ratio is work out to analyze the following aspects of business organization
A) Solvency
1) Long term
2) Short term
3) Immediate B) Stability
C) Profitability
D) Operational efficiency
E) Credit standing
F) Structural analysis
G) Effective utilization of resources
H) Leverage or external financing

FORMS OF RATIO
Since a ratio is a mathematical relationship between to or more variables /
accounting figures, such relationship can be expressed in different ways as
follows –
A] As a pure ratio:
For example the equity share capital of a company is Rs. 20,00,000 & the
preference share capital is Rs. 5,00,000, the ratio of equity share capital to
preference share capital is 20,00,000: 5,00,000 or simply 4:1.
B] As a rate of times:
In the above case the equity share capital may also be described as 4 times that
of preference share capital. Similarly, the cash sales of a firm are Rs. 12,00,000
& credit sales are Rs. 30,00,000. so the ratio of credit sales to cash sales can be
described as 2.5 [30,00,000/12,00,000] or simply by saying that the credit sales
are 2.5 times that of cash sales.
C] As a percentage:
In such a case, one item may be expressed as a percentage of some other
item. For example, net sales of the firm are Rs.50,00,000 & the amount of the
gross profit is Rs. 10,00,000, then the gross profit may be described as 20% of
sales [ 10,00,000/50,00,000]

Types of Ratios for Analysis

1. Operational & Financial Ratios

These ratios measure a company’s operational efficiency and overall financial
health.
• Current Ratio:
Current Ratio = Current Assets/Current Liabilities
It indicates a company's ability to cover its short-term obligations.
 • Quick Ratio (Acid-Test Ratio):
Quick Ratio = (Current Assets−Inventories) /Current Liabilities
It measures the company’s ability to meet short-term liabilities without
relying on inventory.

• Debt to Equity Ratio:

Debt to Equity Ratio = Total Liabilities/Shareholders’ Equity
It assesses the company’s leverage and financial risk.

2. Margin Ratios
These ratios show the profitability margins at various stages of the income
statement.
 • Gross Profit Margin:
Gross Profit Margin = (Gross Profit / Net Sales) ×100
It measures the percentage of revenue that exceeds the cost of goods
sold.

• Operating Profit Margin:

Operating Profit Margin = (Operating Profit / Net Sales ) ×100
It shows the percentage of sales left after covering operating expenses.

• Net Profit Margin:

Net Profit Margin = (Net Income / Net Sales) ×100
It indicates how much of each dollar earned is converted to net income.

3. Performance Ratios
These ratios evaluate the company’s ability to generate profits relative to its
resources.
• Return on Assets (ROA):
ROA = (Net Income / Total Assets) ×100
It shows how efficiently the company uses its assets to generate profit.

• Return on Equity (ROE):

ROE = (Net Income / Shareholders’ Equity ) ×100
It measures the return generated on shareholders' investments.

• Return on Capital Employed (ROCE):

ROCE = (Earnings Before Interest and Tax (EBIT) / Capital Employed )×100
It indicates how well the company uses its capital to generate profits.
4. Efficiency Ratios
These ratios assess how effectively a company utilizes its assets.
• Asset Turnover Ratio:
Asset Turnover Ratio = (Net Sales / Average Total Assets
It measures how efficiently the company generates sales from its assets.

• Inventory Turnover Ratio:

Inventory Turnover Ratio = (Cost of Goods Sold / Average Inventory )
It shows how often the inventory is sold and replaced.

• Receivables Turnover Ratio:

Receivables Turnover Ratio = (Net Credit Sales /
Average Accounts Receivable )
It assesses how effectively the company collects its receivables.

5. Financial Stability Ratios

These ratios provide insights into the long-term financial stability of the
company.
• Interest Coverage Ratio:
Interest Coverage Ratio = (EBIT / Interest Expense
 It measures the company’s ability to pay interest on its debt.

• Equity Ratio:
Equity Ratio = ( Shareholders’ Equity / Total Assets
It indicates the proportion of a company’s assets financed by
shareholders' equity.

• Debt Ratio:
Debt Ratio = (Total Liabilities / Total Assets
It shows the percentage of assets financed by debt.
 Infosys: 5-Year Financial Ratios Summary

Year Current Quick Operating Net ROA ROE

Ratio Ratio Margin Margin (%) (%)
(%) (%)

2024 2.31 1.8 20.35 17.08 19.05 29.79

2023 1.81 1.5 20.86 16.42 19.15 31.95
2022 2.00 1.7 22.87 18.18 18.76 29.34
2021 2.54 2.3 24.31 19.26 17.85 25.34
2020 2.62 2.3 21.15 18.28 17.89 25.35
 Year Equity Interest Asset Return on
(%) coverage Turnover Capital
Ratio Emloyment

2024 63.94 21.72 116.58 10.31

2023 59.93 118.33 120.45 38.79
2022 63.92 151.55 107.52 35.96
2021 70.44 137.55 99.90 31.74
2020 70.55 130.45 102.30 30.84

Data Collected from : https://www.topstockresearch.com/