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Infosys Technologies Limited
Infosys Technologies Limited
INTRODUCTION
History of the Company:
Services offered by Infosys: Application Development & Maintenance, Corporate Performance Management,
Enterprise Quality Services Infrastructure Services Packages Application Services Product Engineering Systems Integration
Banking and Capital Markets Communication Services Consumer Packaged Goods Discrete Manufacturing Energy Healthcare High Technology Hospitality & Leisure Insurance Life Sciences Media & Entertainment Resources Retail Transportation Services Utility
because of defend spending. It provides a valuable resource by adding to the customers bottom line results. Weaknesses: Not doing well enough when it comes to innovation beyond process IP.
Reliance on less experienced talent pool for lower costs and therefore better financial results. This precludes certain types of work.
Over reliance on India as delivery geography, has not diversified delivery capability to other offshore locations.
FINANCIAL INFORMATION
Balance Sheet of Infosys Technologies Limited As On March 2007 & March 2008
Particulars Sources Of Funds Owned Fund Equity Share Capital Share Application Money Preference Share Capital Reserves & Surplus Borrowed Fund Secured Loans Unsecured Loans Total Application Of Funds
Fixed Assets Gross Block Less: Revaluation Reserve Less: Accumulated Depreciation Net Block Capital Work In Progress Investments Net Current Assets Current Assets, Loans & Advances Less: Current Liabilities & Provisions Total Net Current Assets Misc. Expenses Not Written Total Notes: Book Value Of Unquoted Investments Market Value Of Quoted Investments Contingent Liabilities Number Of Equity Shares Outstanding (Lacs)
4,508.00 1,837.00 2,671.00 1,260.00 964.00 12,326.00 3,731.00 8,595.00 13,490.00 964.00 603.00 5719.96
3,889.00 1,739.00 2,150.00 957.00 839.00 9,040.00 1,824.00 7,216.00 11,162.00 839.00 670.00 5712.10
Profit & Loss Account for the Years Ended March 2007 & March 2008
Particulars Income Operating Income Expenses Material Consumed Manufacturing Expenses Personnel Expenses Selling Expenses Administrative Expenses Expenses Capitalised Cost of Sales Operating Profit Other Recurring Income Adjusted PBIT Financial Expenses Depreciation Other Write Offs
March 2008 15,648.00 18.00 1,549.00 7,771.00 89.00 1,257.00 10,684.00 4,964.00 678.00 5,642.00 1.00 546.00 -
(Rs Crore) March 2007 13,149.00 22.00 1,378.00 6,316.00 63.00 1,144.00 8,923.00 4,226.00 333.00 4,559.00 1.00 469.00 -
Adjusted PBT Tax Charges Adjusted PAT Non Recurring Items Other Non Cash Adjustments Reported Net Profit Earnings Before Appropriation Equity Dividend Preference Dividend Dividend Tax Retained Earnings
4,089.00 352.00 3,737.00 46.00 -5.00 3,778.00 5,973.00 649.00 102.00 5,222.00
RATIO ANALYSIS
Current Ratio:
Return On Investment as on 31st March 2008: Return On Investment = => => => = x 100 x 100 x 100 0.3776 x 100 37.77%
Gross Profit Ratio as on 31st March 2008: Gross Profit Ratio = x 100 => = x 100 31.72%
Net Profit Ratio as on 31st March 2008: Net Profit Ratio = x 100 => => = x 100 0.2853 x 100 28.53%
Price Earning Ratio as on 31st March 2008: Price Earning Ratio = => = 21.71 (Approx) Price Earning Ratio as on 31st March 2007: 31.32 (Approx)
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over 654 global companies, 185 of which are Fortune 500 corporations. Satyam has strategic technology and marketing alliances with over 50 companies. Apart from Hyderabad, it has development centers in India at Bangalore, Chennai, Pune, Mumbai, Nagpur, Delhi, Kolkata, Bhubaneswar, and Visakhapatnam.
Small Competitors: Their small competitors include Accenture, EDS, iGate, Sapient, Computer Sciences, Bull, and S1. These companies are noticing the advantages of having outsourcing as one of its services and are starting to put them to use. Accenture: Accenture (NYSE: ACN, ISIN: BMG1150G1116) is a global management consulting, technology services, and outsourcing company. It is registered in Hamilton, Bermuda. It is said to be the largest consulting firm in the world. Accenture is a Fortune Global 500 company with morethan181,000peoplein49countries. EDS: Electronic Data Systems (EDS) (NYSE: EDS, LSE: EDC) is a global business and technology services company headquartered in Plano, Texas that defined the outsourcing business when it was established in 1962 by Ross Perot. General Motors acquired the company in 1984, spun it off again as an independent company in 1996, and became an EDS client. iGate: iGATE Corporation (NASDAQ: IGTE)is the first fully integrated technology and operations firm with a Global Services Model. iGATE caters to different geographies through its wholly owned subsidiary iGATE Global Solutions Ltd. iGATE has offices throughout the United States, Canada, Europe, Australia, Japan and four delivery centers in India including Bangalore, Chennai, Hyderabad and Noida (Delhi). iGATE enables clients to optimize their business through a combination of process investment strategies, technology leverage and business process outsourcing and provisioning.
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evidence to support such a worst case imagination turning itself into economic reality. Major US IT companies such as IBM, Accenture, EDS, Yahoo and Google have not yet reported any signs which signal a reversal in the fortunes of these IT giants. Thus it is difficult to construct a case for Infys decline in the light of facts emerging from the US. As a contrarian call, a slowdown in the US may herald in an era of brand new opportunities for companies such as Infosys. Traditional factors to the Indian cost advantage such as talented tech pool, high quality execution skills, and English fluency will lead to higher US productivity, greater corporate profitability thereby bringing about an acceleration in offshoring and outsourcing deals.
TalentManagement: With growing demand for skilled resources the competition for acquiring talent is also intensifying. Going forward talent acquisition and talent retention is likely to emerge as a major challenge. In response to this emerging situation, Infosys has put in place a world class training centre in Mysore along with well structured training initiatives. On the compensation front, Infosys has adopted a highly competitive compensation policy which will enable Infy to manage the talent challenge effectively.
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FUTURE OUTLOOK
At this point of time, Infosys is positioned as a rank ONE tire 1 Indian IT company. From its modest beginnings in 1981, the company today has emerged as the number 2 software services exporter. Infosys is recognised globally for its excellent management practices and work ethics. It has been making consistent efforts to move up the software value chain and offers services like software development, testing, package implementation, IT consulting and maintenance. Infosys offers all these services through its globally acknowledged global delivery model. The companys top line and bottom line have grown at 40% and 37% CAGR in period FY02 to FY07. EPS Projections: Year EPS (Rs) FY 09 109.68 (Assuming 25% y-o-y growth) FY10 137.10 (Assuming 25% y-o-y growth)
Recommendation to Market Players: Buy. In the volatile Indian stock market where we currently have a view driven by a bullish buyers, investors are constantly in the search for a dependable high return stock. Infosys is one of the prized possessions of any intelligent investor. The stock which is currently trading at a forward PF
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multiple of 22.10 presents an attractive investment opportunity. This is not to say that the Infy stock price will not fall further or that it has bottomed out. Any stock price declined in this best of blue-chips should be utilized to add positions.