Stock Analysis of : Infosys Ltd
Reco: BUY
CMP: 919.25
Target Price: 985
About the company:
Infosys Limited (formerly Infosys Technologies Limited) is an Indian multinational corporation headquarted in Bengaluru, and provides business consulting, information technology and outsourcing services. is the second-largest Indian IT services company by 2016 revenues, and the largest employer of H-1B visa professionals in the United States.
Shareholding Analysis:
Promoters holding marginally changed to 13.15% as of Jun 2020 Quarter.
FII/FPI holding marginally changed to 30.47% as of Jun 2020 Quarter.
Mutual Funds holding marginally changed to 13.83% as of Jun 2020 Quarter.
Institutional Investors holding marginally changed to 55.89% as of Jun 2020 Quarter.
Financial Ratios:
Market Cap: 398,990 Cr.
Current Price: 936.75
52 weeks High / Low 955.50 / 509.25
Book Value: 155.13
Stock P/E: 23.48
Industry P/E 22.52
Dividend Yield: 1.87 %
ROCE: 32.58 %
ROE: 25.24 %
Sales Growth (3Yrs): 9.85 %
My analysis:
1. Net Profit Qtr Cr growth is stable compared to historical averages.
2. Operating Revenues Qtr Cr growth is lower than historical averages.
3. ROE Annual % is growing faster than historical averages.
4. Total Assets Annual Cr growth is stable compared to historical averages.
5. RoA Annual % is growing faster than historical averages.
6. Cash from Operating Activity Annual Cr growth is higher than historical averages.
Key points to be noted:
1. INFY cracks the largest deal in its history post 1Q, The Infosys Vanguard deal is likely a US $0.9bn-1bn TCV deal based on my analysis for a period of 5 years with an annual contract value of US $200mn to begin with. This along with US $1.74bn TCV in 1QFY21 likely gave visibility to INFY to come out with a guidance.
2. The company’s absolute and relative performance (v/s TCS and Wipro) during
the quarter is indicative of some of the investments made in the previous years
now paying off.
3. Political uncertainty in the US further impacting IT spending decisions in key
verticals such as BFSI and Retail is a key monitorable risk.
4. As the COVID-19-led disruption eases, we expect further expansion in margins
as investments stabilize and back-ended productivity benefits kick in.
Pros:
1. Company is virtually debt free.
2. Company has been maintaining a healthy dividend payout of 54.56%
Cons:
1. The company has delivered a poor growth of 11.23% over past five years.
2. Promoter holding is low: 13.21%
Vision of infosys: "To be a globally respected corporation that provides best-of- breed business solutions, leveraging technology, delivered by best-in-class people."
Research Report:
Annual Report:
AGM
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