Equity Research

Technology | Asia Ex-Japan Software & IT Services 25 June 2013 Stock Rating

Infosys Ltd.

The next three years

Concluding our recent series of deep dive notes on Infosys, we interacted with CEO Mr Shibulal to understand the companys next three-year trajectory. While accepting there were some issues with the company strategy, management highlighted recent changes led by: 1) an increased aggression in pursuit of revenues; 2) willingness to take short-term margin setbacks to drive growth; and 3) a bolstering of management ranks. Results of the changing strategy are visible with 2x contract wins in 2H13 compared to 1H13, although margins could take a hit (some contracts have single-digit margins in Year 1). While near-term earnings visibility remains low, we believe low expectations & reasonable valuations provide an opportunity to accumulate. Maintain Overweight with a price target of Rs2,750. Better execution is resulting in stronger project wins: Management highlighted it is following a two-pronged approach to revive growth: 1) increase client relevance through its run-transform-innovate strategy, with increased responsibilities for each of the industry verticals, including freedom to decide pricing of contracts; and 2) creating balanced growth across service offerings (Business & IT Services, Consulting & System Integration, and Products, Platforms & Solutions). A flexible pricing strategy is now being adopted and the company expects growth in the core business (BITS) will be driven by offering a portfolio of service lines to customers. This renewed focus is visible through US$1.5bn of project wins in FY13 (US$0.5bn in 1H, US$1bn in 2H). Growth guidance for FY13 of 6-10% US$ revenue growth is safe, according to management. What is the new margin norm? According to management, Year 1 margins of the few large deals signed by Infosys could be as low as 8%. However, this may improve to 1520% in Year 2/3 with overall project margins similar to core business margins in the longer term. With an improvement in growth, other levers like improved utilisation, improved employee pyramid, and better offshore-onsite mix should help margins. CEO succession will be well planned: Management highlighted that any CEO decision is dependent upon the Board of Directors and Nomination Committee. Infosys currently has a strong cadre of leaders who it believes can easily step up for this role. However, the chances of an outside CEO have not been ruled out at the present stage. INFY.NS: Financial and Valuation Metrics INR
FY Mar EPS Previous EPS P/E
Source: Barclays Research.

OVERWEIGHT
Unchanged

Industry View

NEUTRAL
Unchanged

Price Target

INR 2750.00
Unchanged

Price (21-Jun-2013) Potential Upside/Downside Tickers Market Cap (INR mn) Shares Outstanding (mn) Free Float (%) 52 Wk Avg Daily Volume (mn) Dividend Yield (%) Return on Equity TTM (%) Current BVPS (INR)
Source: FactSet Fundamentals

INR 2419.15 +14% INFO IN / INFY.NS 1389164 574.24 83.77 0.1 1.8 27.27 655.74

Price Performance 52 Week range

Exchange-BSE INR 3010.00-2101.65

Link to Barclays Live for interactive charting

Asia Ex-Japan Software & IT Services Bhuvnesh Singh +91 22 6719 6314 bhuvnesh.singh@barclays.com BSIPL, Mumbai

2012 145.55A 145.55A 16.6

2013 164.88A 164.88A 14.7

2014 173.87E 173.87E 13.9

2015 202.37E 202.37E 12.0

2016 229.92E 229.92E 10.5

Hitesh Das +91 22 6719 6213 hitesh.das@barclays.com BSIPL, Mumbai

Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. This research report has been prepared in whole or in part by equity research analysts based outside the US who are not registered/qualified as research analysts with FINRA. PLEASE SEE ANALYST(S) CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 11.

Barclays | Infosys Ltd.

Asia Ex-Japan Software & IT Services Industry View: NEUTRAL Stock Rating: OVERWEIGHT 2013A 403,520 115,346 104,290 127,880 94,210 164.88 571.4 42.00 2014E 434,936 121,612 108,419 132,495 99,372 173.87 571.5 52.16 2015E 470,070 139,215 125,062 154,269 115,702 202.37 571.7 60.71 2016E 512,307 154,666 139,553 175,329 131,496 229.92 571.9 68.98 CAGR 8.3% 10.3% 10.2% 11.1% 11.8% 11.7% 0.0% 18.0% Average 29.1 26.2 32.3 24.1 42.6 20.7 23.7 CAGR -2.5% 21.4% 14.8% 6.4% 0.0% 14.8% N/A 16.1% N/A 12.6% N/A 25.8% Average 12.8 8.4 6.9 2.4 2.8 2.3 0.0 -2.1 Price (21-Jun-2013) INR 2,419.15 Price Target INR 2,750.00 Why Overweight? Our 12-month price target is based on c16x of FY14E EPS, which is based on the trading average since Nov-08. The revival of pricing, steady volume growth and recent large deal wins support our overweight stance. Upside case INR 3,150.00 A strong rebound in discretionary IT spending could lead to more positive revenue and margin scenarios. This would drive multiples to 18x and hence the stock could trade close to Rs3,150. Downside case INR 2,000.00 A significantly weaker macro scenario or a significant decline in the market could lead to both EPS downgrades (down 10%) and multiple compression (to 13x) for a share price of Rs2,000. Upside/Downside scenarios

Infosys Limited (INFY.NS)

Income statement (INRmn) Revenue EBITDA EBIT Pre-tax income Net income EPS (reported) (INR) Diluted shares (mn) DPS (INR) Margin and return data EBITDA margin (%) EBIT margin (%) Pre-tax margin (%) Net margin (%) ROIC (%) ROA (%) ROE (%)

28.6 25.8 31.7 23.3 43.5 22.2 25.7

28.0 24.9 30.5 22.8 39.8 20.0 23.1

29.6 26.6 32.8 24.6 42.5 20.3 23.1

30.2 27.2 34.2 25.7 44.7 20.1 22.7

Balance sheet and cash flow (INRmn) Fixed assets 88,120 86,927 84,774 81,661 Cash and equivalents 240,660 290,838 352,219 430,787 Total assets 463,510 529,131 609,328 701,285 63,989 69,095 75,711 Total current liabilities 62,860 2,680 2,680 2,680 Long-term liabilities 2,680 Total liabilities 463,510 529,131 609,328 701,285 Net debt/(funds) -200,308 -247,345 -305,211 -379,556 Shareholders' equity 397,970 462,462 537,553 622,894 -7,857 Change in working capital -8,110 -14,203 -14,297 Cash flow from operations 97,156 98,362 115,557 138,753 Capital expenditure -33,426 -12,000 -12,000 -12,000 86,362 103,557 126,753 Free cash flow 63,730 Valuation and leverage metrics P/E (reported) (x) EV/EBITDA (x) Equity FCF yield (%) EV/sales (x) P/BV (x) Dividend yield (%) Total debt/capital (%) Net debt/EBITDA (x) Selected operating metrics Total headcount Volume growth (%) Pricing growth (%) Onsite as % of revenues

14.7 10.2 4.6 2.9 3.5 1.7 0.0 -1.7

13.9 9.3 6.2 2.6 3.0 2.2 0.0 -2.0

12.0 7.7 7.5 2.3 2.6 2.5 0.0 -2.2

10.5 6.5 9.2 2.0 2.2 2.9 0.0 -2.5

POINT Quantitative Equity Scores

Value

Quality

Sentiment
149,994 8.8 -3.5 50.0 161,672 8.4 -1.1 55.2 174,732 7.3 0.1 55.1 190,432 8.5 0.0 55.1

Low

High

Source: POINT. The scores are valid as of the date of this report and are independent of the fundamental analysts' views. To view the latest scores, click here.

Source: Company data, Barclays Research Note: FY End Mar

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Barclays | Infosys Ltd.

Renewed focus on large deals

Recent Infosys Reports: 1. Revisiting 4Cs; 2. Issues in risk management; 3. Operationally leveraged Infosys CEO Mr Shibulal outlined that going forward the only primary strategy for the company is to revive growth by winning large outsourcing deals. There are two underlying pillars to this approach: 1) Increasing client relevance: This approach includes creation of new avenues to increase Infosys relevance to clients, which it believes will eventually lead to higher market share and better revenue realisation. Under this approach, industry verticals were reorganised in 2011 in order to respond to client needs effectively. Management noted that this strategy has been successful with the new structure enabling Infosys to work with clients seamlessly at a global level, thereby adding greater value.

FIGURE 1 Infosys: Creation of four integrated verticals

Insurance, Banking, Financial Serv.

Insurance, Banking, Financial

Manufacturing

Manufacturing

Retail

RCL*

Transportation & Logistics

Telecom

ECS

Services

Utilities
* Includes healthcare and life sciences. Note: tentative alignment shown, as per our view Source: Company data, Barclays Research

Others

Significant strategy changes are now behind the company with management completing the implementation of the run-transform-innovate strategy in Q2FY13. This strategic shift marked the creation of three major service offerings from Infosys:

Run: Helping clients run their business in a cost efficient manner; mostly comes under the traditional IT services domain (c62% of Infosys revenues); Transform: Help customers who want to change/transform their business; mostly led by consulting and package implementation domain (c32% of revenues); Innovation: Focus on IP led products and platforms; (c6% of revenues).

Management noted that creation of these verticals (BFSI, Manufacturing, RCL and ECS) have increased organisational agility in responding to customer needs and since each unit now operates as a mini Infosys, they can take independent pricing decisions. However, these units can take on limited liabilities.
25 June 2013 3

Barclays | Infosys Ltd. Management also highlighted that the new structure has enabled efficient execution of the Harley-Davidson deal, which is a multi-tower deal involving Infrastructure Services and Application Development and Management (ADM). Due to the new structure, a development centre was functional within 45 days and customer assets have already been taken over. FIGURE 2 Infosys: Harley-Davidson Deal

Infosys To Expand Its U.S. Operations With A New Delivery Centre In Wisconsin
Infosys, a global leader in consulting and technology, today announced that it will expand its presence in the United States with a new delivery centre in Milwaukee, Wisconsin. The facility will provide end-to-end technology, consulting and systems integration services, and also will house a training centre. Infosys is investing in the Midwest region of the United States to support its clients in the area, including Harley-Davidson. The initiation of a five-year engagement with the worlds leading American motorcycle manufacturer was the catalyst for locating the new delivery centre in Milwaukee. Harley-Davidsons contract with Infosys provides a range of technology services including applications management, infrastructure support and hosting services. As part of this long-term partnership, Infosys also will establish a training centre to facilitate knowledge reuse and to conduct education related to information technology operations and business processes.
Source: Company press release (23 July 2012)

2)

Create balanced growth: While growth in Consulting and System Integration was led by inorganic growth (Lodestone acquisition), growth in the core business has been lagging (Business and IT Services (BITS), c62% of revenues), as per management. To drive growth in this business line, management is now looking to adopt the portfolio approach by combining service lines (such as ADM and Infrastructure Services), with portfolio level pricing also being looked at. Note that in his AGM speech in June 2013, Infosys Executive Chairman Mr. Narayana Murthy also underlined this strategy by stating that a flexible pricing policy will be adopted to enhance growth rates.

FIGURE 3 Infosys Refocus on large revenue yielding outsourcing projects

Infosys AGM 2013 Excerpt from Mr. Narayana Murthys Speech

During the last two years, our focus on the third stream (applications software development, maintenance, testing business process management and infrastructure management) was blurred, we have to therefore refocus on this stream, which is our bread and butter business in the short term, while also ensuring that we accelerate our progress on the first two streams (consulting and selling intellectual property-based solutions) in the medium to long term. . We will adopt a flexible pricing policy, where absolutely necessary, to enhance our growth rate.
Source: Company press release 15 June 2013

Management further noted that Infosys had won cUS$1.5bn of large deals in FY13 (cUS$500mn in 1H and cUS$1bn in 2H), on the back of this portfolio based approach.
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Barclays | Infosys Ltd.

FIGURE 4 Infosys: Service Offerings

Products Platforms

Portfolio approcah of combining service lines

1.0 - Perfecting the off-shore model

2.0 - New service lines in new business sectors

3.0 - Focus on transformation and innovation

BITS

Renewed focus to drive growth in core business

Investment in sales force

Consulting

Source: Company data, Barclays Research

Traction in the Products, Platforms and Solutions (PPS) business remains on track, with management further highlighting that positive feedback is being received from clients. FIGURE 5 Infosys: Revenue split along service offerings in FY13
PPS 6%

FIGURE 6 Infosys: Revenue split along industry verticals in FY13

ECS 24% BFSI 34%

Consulting and System Integration 32% BITS 62%

RCL 20% Manufac. 22%

Source: Company data, Barclays Research

Source: Company data, Barclays Research

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FIGURE 7 PPS No. of clients and percentage contribution to revenues

80 70 60 50 40 30 20 10 0 FY12 PPS - Clients FY13 PPS as % of total revenues - RHS 4.5% 5.0% 44 5.5% 75 6.0%

FIGURE 8 Finacle: Deal wins remain stable

60 50 41 40 30 20 10 0 FY11

52

48

FY12 Finacle - Deal Wins

FY13

Source: Company data, Barclays Research

Source: Company data, Barclays Research; Note: Finacle is a core banking software package developed by Infosys

Given that PPS is a sticky business, management intends to continue to make investments in this service offering. We note, as mentioned in the 2012-13 Annual Report, that management has set aside US$100mn to further this initiative. One of the key challenges in PPS is that clients are sometime reluctant to shift to a new platform due to legacy issues.

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Growth > Margin

Management highlighted that focus on reviving growth is paramount at this juncture as margin expansion will eventually follow growth in the long-term. It expects that higher revenue growth would: 1) improve utilisations which are currently 800bps below managements comfort zone and have impacted margins by c160bps; and 2) improve employee pyramid (average age of employees) and on-site:off-shore mix. FIGURE 9 Infosys: Sluggish growth has impacted utilisations
Utilisation 80% 78% 76% 74% 72% 70% 68% 66% 64% 62% FY09 FY10 Inc. Trainees
Source: Company data, Barclays Research

FIGURE 10 Infosys: employee pyramid has been deteriorating

%

79% 76% 72% 69% 68% 69% 73% 70%

74%

74%

100 90 80 70 60 50 40 30 20 10 0 FY08 FY09 20-25 yrs FY10 26-30 yrs FY11 FY12 FY13E Above 30

FY11

FY12

FY13

Exc. Trainees

Source: Company data, Barclays Research estimates

Execution of the large deals (cUS$1.5bn) won in FY13 remains on-track and management expects c20% revenue accretion from these contracts in FY14. That said, margins in these large deals are initially lower (c8% in Year 1, c15-20% in Year 2 and 3, according to Infosys). However, management noted that average margins over the project lifetime will be closer to BITS segment margins. FIGURE 11 Infosys: Contract win rate in FY13
US$ mn 800 700 600 500 400 300 200 100 0 1HFY13 Q3FY13 Large deals won
Source: Company data, Barclays Research

FIGURE 12 Infosys: Margin trajectory in large deals

US$

Avg. Project Margin

% 35% 30% 25% 20% 15% 10% 5% 0%

730

500

220

100 90 80 70 60 50 40 30 20 10 0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Profit Yr 7 Revenue

Source: Company data, Barclays Research

Q4FY13

Management reasoned that large deals are margin dilutive in the beginning as the company takes over people and assets, and off-shoring takes time. Apart from adopting pricing as a portfolio strategy, Infosys is willing to take over people and assets to win new deals, especially in the infrastructure services domain.
25 June 2013 7

Barclays | Infosys Ltd. Management commented that the win ratio in large deals improved in FY13, and that with the FY14 pipeline looking a tad better than FY13, large deal wins could be strong in FY14. To bolster the win ratio, management has begun investing in its sales force, which was echoed by Mr. Murthy in his AGM speech. FIGURE 13 Infosys Investing in sales development We will make our sales force more effective by improving the quality of the sales talent and by providing them with incentives and every resource needed. Infosys announced wage hikes for FY14, with offshore employees getting 8% hike effective 1 July & global sales force getting the same quantum effective from 1 May.
Source: Economic Times (15 June 2013)

Near-term margin pressures to remain

Management maintain that near-term challenges to margins remain as:

US$100mn of higher employee costs (on-site wage hike) taken in FY13 have yet to be accounted for. Payment for the Lodestone acquisition and impact of its lower margins will also lower operating profit by US$70mn (US$30mn acquisition charge and US$40mn of margin impact). Management also noted that since Lodestone revenues are primarily onsite (US$200mn), an additional US$800mn of downstream revenues will be required to neutralised the lower offshore mix impact. Investments in PPS will impact margins.

FIGURE 14 Infosys: Margin pressures and levers

Source: Company data, Barclays Research estimates

Moreover, Infosys announced wage hikes for its employees last week, with average wage hike for offshore employees of c8% and for on-site employees of c3% (not covered in the February-2013 cycle) effective 1 July 2013. The global sales force also received a c8% hike effective 1 May 2013.

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FIGURE 15 Infosys: Hiring was higher despite lower revenue growth

Employees 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 FY10 FY11 FY12 FY13 Gross employee additions
Source: Company data, Barclays Research

FIGURE 16 Infosys: Sub-contracting costs rose sharply in FY12-13

US$ mn 25,000 20,000 15,000 15% 10% 5% 0% 10,000 5,000 FY10 FY11 FY12 FY13 % Revenues Sub-contracting costs
Source: Company data, Barclays Research

Growth 30% 25% 20%

% 6% 19,670 5% 4% 12,600 9,470 6,500 3% 2% 1% 0%

Revenue growth (US$)

Management admitted that it had miscalculated demand in FY11 on the basis of which it recruited heavily in FY12. Further, it had not applied for adequate visas which increased sub-contracting cost significantly in FY12. However, management notes that planning models are now in place and that it will focus more on just-in-time hiring and lower the dependence on campus hiring going forward.

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CEO Succession
Management noted that any CEO succession decision will be dependent on the Nomination Committee and the Board of Directors. Infosys views it has a strong cadre of internal leaders with three board members (from within the company) and 10 executive council members. However, management also noted that the probability of an outside hire has not yet been ruled out. FIGURE 17 Infosy CEO succession begins

Infosys hires head hunters for CEO search

Infosys has approached three global executive search firms - Heidrick & Struggles, Egon Zehnder and Russell Reynolds - to submit a capability document detailing their CXO searches in the past. The plan appears to be to mandate one of them to search for a CEO to replace incumbent S D Shibulal when his tenure comes to an end in 2015. The US$7.5bn IT company's engagement with executive search firms indicates the company's openness to consider external CEO candidates for the top job besides benchmarking its own candidates to get greater visibility into the company's leadership talent pool. V Balakrishnan, Infosys's India and BPO divisions head; Ashok Vemuri, head of Americas and global head of manufacturing; and B G Srinivas, head of Europe and BFSI, are widely believed to be in the reckoning for the top job.
Source: Times of India (12 June 2013)

Thoughts on Immigration Bill

On the new US Immigration Bill, Infosys management noted it has been lobbying hard against some of the provisions in collaboration with NASSCOM and USIBC (US India Business Council). Based on the Senate version of the Bill, the Infosys CEO views the impact as three-fold: FIGURE 18 Infosys: CEO views on Immigration Bill
Type Usage Clause Response

Limits will be placed on the number of H- Infosys is currently at 73:27 (27% local 1B and L-1 workers an employer may population) which has to decline to 50:50 employ. If the employer employs 50 or in 2017. This transition can be more employees, the percentage of its smoothened out over next 3-4 years. workforce comprising H-1B workers may not exceed 75% in 2015, 65% in 2016, and 50% after 2016. Requires that H-1B dependent employers pay a minimum of a Level 2 wage; Increased visa costs. Will discuss with clients to mitigate the impact. Complex issue; local employee usage has to improve from current levels.

Costs

Outplacement A prohibition on the outplacement of foreign workers will be introduced.

Source: US Senate website, Company data, Barclays Research

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ANALYST(S) CERTIFICATION(S)
I, Bhuvnesh Singh, hereby certify (1) that the views expressed in this research report accurately reflect my personal views about any or all of the subject securities or issuers referred to in this research report and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this research report. The POINT Quantitative Equity Scores (POINT Scores) referenced herein are produced by the firms POINT quantitative model and Barclays hereby certifies that (1) the views expressed in this research report accurately reflect the firm's POINT Scores model and (2) no part of the firm's compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this research report.

IMPORTANT DISCLOSURES CONTINUED

Barclays Research is a part of the Corporate and Investment Banking division of Barclays Bank PLC and its affiliates (collectively and each individually, "Barclays"). For current important disclosures regarding companies that are the subject of this research report, please send a written request to: Barclays Research Compliance, 745 Seventh Avenue, 17th Floor, New York, NY 10019 or refer to http://publicresearch.barclays.com or call 212-526-1072. The analysts responsible for preparing this research report have received compensation based upon various factors including the firm's total revenues, a portion of which is generated by investment banking activities. Research analysts employed outside the US by affiliates of Barclays Capital Inc. are not registered/qualified as research analysts with FINRA. These analysts may not be associated persons of the member firm and therefore may not be subject to NASD Rule 2711 and incorporated NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analysts account. Analysts regularly conduct site visits to view the material operations of covered companies, but Barclays policy prohibits them from accepting payment or reimbursement by any covered company of their travel expenses for such visits. In order to access Barclays Statement regarding Research Dissemination Policies https://live.barcap.com/publiccp/RSR/nyfipubs/disclaimer/disclaimer-research-dissemination.html. and Procedures, please refer to

The Corporate and Investment Banking division of Barclays produces a variety of research products including, but not limited to, fundamental analysis, equity-linked analysis, quantitative analysis, and trade ideas. Recommendations contained in one type of research product may differ from recommendations contained in other types of research products, whether as a result of differing time horizons, methodologies, or otherwise. Primary Stocks (Ticker, Date, Price) Infosys Ltd. (INFY.NS, 21-Jun-2013, INR 2419.15), Overweight/Neutral, C/D/J/L

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IMPORTANT DISCLOSURES CONTINUED

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Guide to the Barclays Fundamental Equity Research Rating System: Our coverage analysts use a relative rating system in which they rate stocks as Overweight, Equal Weight or Underweight (see definitions below) relative to other companies covered by the analyst or a team of analysts that are deemed to be in the same industry (the "industry coverage universe"). In addition to the stock rating, we provide industry views which rate the outlook for the industry coverage universe as Positive, Neutral or Negative (see definitions below). A rating system using terms such as buy, hold and sell is not the equivalent of our rating system. Investors should carefully read the entire research report including the definitions of all ratings and not infer its contents from ratings alone. Stock Rating Overweight - The stock is expected to outperform the unweighted expected total return of the industry coverage universe over a 12-month investment horizon. Equal Weight - The stock is expected to perform in line with the unweighted expected total return of the industry coverage universe over a 12month investment horizon. Underweight - The stock is expected to underperform the unweighted expected total return of the industry coverage universe over a 12-month investment horizon. Rating Suspended - The rating and target price have been suspended temporarily due to market events that made coverage impracticable or to comply with applicable regulations and/or firm policies in certain circumstances including where the Corporate and Investment Banking Division of Barclays is acting in an advisory capacity in a merger or strategic transaction involving the company. Industry View Positive - industry coverage universe fundamentals/valuations are improving. Neutral - industry coverage universe fundamentals/valuations are steady, neither improving nor deteriorating. Negative - industry coverage universe fundamentals/valuations are deteriorating. Below is the list of companies that constitute the "industry coverage universe": Asia Ex-Japan Software & IT Services HCL Technologies (HCLT.NS) Mphasis (MBFL.NS) Distribution of Ratings: Barclays Equity Research has 2381 companies under coverage. 43% have been assigned an Overweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Buy rating; 52% of companies with this rating are investment banking clients of the Firm. 40% have been assigned an Equal Weight rating which, for purposes of mandatory regulatory disclosures, is classified as a Hold rating; 48% of companies with this rating are investment banking clients of the Firm. 14% have been assigned an Underweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Sell rating; 42% of companies with this rating are investment banking clients of the Firm. Guide to the Barclays Research Price Target: Each analyst has a single price target on the stocks that they cover. The price target represents that analyst's expectation of where the stock will trade in the next 12 months. Upside/downside scenarios, where provided, represent potential upside/potential downside to each analyst's price target over the same 12-month period. Guide to the POINT Quantitative Equity Scores: The POINT Quantitative Equity Scores (POINT Scores) are based on consensus historical data and are independent of the Barclays fundamental analysts views. Each score is composed of a number of standard industry metrics. A high/low Value score indicates attractive/unattractive valuation. Measures of value include P/E, EV/EBITDA and Free Cash Flow. Infosys Ltd. (INFY.NS) Tata Consultancy Services (TCS.NS) MindTree (MINT.NS) Wipro Limited (WIPR.NS)

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IMPORTANT DISCLOSURES CONTINUED

A high/low Quality score indicates financial statement strength/weakness. Measures of quality include ROIC and corporate default probability. A high/low Sentiment score indicates bullish/bearish market sentiment. Measures of sentiment include price momentum and earnings revisions. These scores are valid as of the date of this report. To view the latest scores, which are updated monthly, click here. For a more detailed description of the underlying methodology for each score, please click here. Barclays offices involved in the production of equity research: London Barclays Bank PLC (Barclays, London) New York Barclays Capital Inc. (BCI, New York) Tokyo Barclays Securities Japan Limited (BSJL, Tokyo) So Paulo Banco Barclays S.A. (BBSA, So Paulo) Hong Kong Barclays Bank PLC, Hong Kong branch (Barclays Bank, Hong Kong) Toronto Barclays Capital Canada Inc. (BCCI, Toronto) Johannesburg Absa Capital, a division of Absa Bank Limited (Absa Capital, Johannesburg) Mexico City Barclays Bank Mexico, S.A. (BBMX, Mexico City) Taiwan Barclays Capital Securities Taiwan Limited (BCSTW, Taiwan) Seoul Barclays Capital Securities Limited (BCSL, Seoul) Mumbai Barclays Securities (India) Private Limited (BSIPL, Mumbai) Singapore Barclays Bank PLC, Singapore branch (Barclays Bank, Singapore)

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IMPORTANT DISCLOSURES CONTINUED

Infosys Ltd. (INFO IN / INFY.NS)

INR 2419.15 (21-Jun-2013) Rating and Price Target Chart - INR (as of 21-Jun-2013)
3,600

Stock Rating OVERWEIGHT Currency=INR Date 15-Apr-2013 14-Jan-2013 13-Jul-2012 16-Apr-2012 04-Jan-2012 07-Oct-2011 Closing Price 2333.95 2807.25 2227.80 2369.35 2854.25 2507.05 Overweight Overweight Equal Weight Rating

Industry View NEUTRAL

Price Target 2750.00 3020.00 2300.00 3010.00 3320.00 3050.00

3,400

3,200

3,000

2,800

2,600

2,400

2,200

2,000 Jul- 2010 Jan- 2011 Jul- 2011 Jan- 2012 Target Price Jul- 2012 Jan- 2013 Jul- 2013

Closing Price

Rating Change

Link to Barclays Live for interactive charting

C: Barclays Bank PLC and/or an affiliate is a market-maker and/or liquidity provider in securities issued by Infosys Ltd. or one of its affiliates. D: Barclays Bank PLC and/or an affiliate has received compensation for investment banking services from Infosys Ltd. in the past 12 months. J: Barclays Bank PLC and/or an affiliate trades regularly in the securities of Infosys Ltd.. L: Infosys Ltd. is, or during the past 12 months has been, an investment banking client of Barclays Bank PLC and/or an affiliate. Valuation Methodology: Our 12-month target price of INR2,750 for Infosys is based on a P/E of c16x, which we apply to our EPS estimate for FY14. Our target multiple for Infosys is based on average since Nov-08. Risks which May Impede the Achievement of the Barclays Research Price Target: The downside risk to our price target is the failure in revival of growth due to weak macro and execution issues at the company. The upside risk to our target price is stronger than expected turnaround of the macro situation and revival in demand.

25 June 2013

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