KEY RATIOS OF INFOSYS TECHNOLOGIES LTD

(EXTRACTS OF FINANCIAL INFORMATION ARE TAKEN FROM THE FINANCIAL STATEMENTS AVAILABLE ON
THE WEBSITE OF THE INFOSYS LTD FOT THE YEAR ENDED MARCH 31, 2013)

Ratios

Current Years Performance

(Infosys)
( 2012-13)

Last Years Performance (Infosys)

(2011-12)

Current Best in Industry (TCS)

( 2012-13)

Current Ratio

5.62 Times (35313/6286)

6.35 Times(30246/4766)

2.67 Times

Debtor Turnover Ratio

Average Collection Period
Return on Equity
Return on Capital Employed
Dividend per Share
Earnings per Share (Basic)
Earnings per Share(Diluted)
P
E Ratio

5.70 Times (40352/7083)

64 Days (approx.) (365/5.70)
23.67% (9421/39797)
32.13% (12788/39797)
42 (Rs.)
164.87 Per share
164.87 Per share

5.735 Times(33734/5882)
64 Days(approx.)(365/5.735)
24.85% (8316/33461)
34.92% (11683/33461)
47 (Rs.)
145.55 Per share
145.54 Per share

4.06 Times
90 Days
40.85%
40.15%
22 (Rs.)
70.99 Per share
70.99 Per share

17.53 Times (2889.90/164.87)

19.68 Times (2864.95/145.55)

22.14 Times

Net Profit Ratio

Operating Profit Ratio
Gross profit ratio

23.35% (9421/40352)
25.85% (10429/40352)
37.35% (15072/40352)

24.65% (8316/33734)
28.99% (9779/33734)
41.28% (13926/33734)

21.94%
28.19%
76%

It has lower growth as reflected in ratios as compared to industry best company i.e. TCS

 CALCULATION OF INVESTORS REQUIRED RATE OF RETURN THROUGH

CAPM (CAPITAL ASSET PRICING MODEL)

E(ri)= rf+ (E(rm)-rf) B

E(ri)= Required Rate Of Return, rf= Risk free rate from default , E(rm)=Expected rate of return on
market , B= Beta value of Infosys
E (ri) =7.5824 + {(16.73-7.5824) 0 .85} = 15.353786%

Beta value represents 1year beta of Infosys stock in relation to Sensex taken from BSE website.
http://www.bseindia.com/indices/betavalues.aspx?expandable=1#markets
Risk free return represents yield on treasury bills of 364 days auctioned by RBI.
http://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=28512
Expected return on market is CAGR for nifty calculated for period April 1 2009 to march 31 2013.
http://www.nseindia.com/products/content/equities/indices/historical_index_data.htm
Thus investors required rate of return is 15.353786%for year. That means they expect
15.353786%yield from Infosys ltds stock.

TRENDS IN VARIOUS FINANCIAL INDICATORS OVER A PERIOD OF TIME

PARTICULARS

2009-10

Sales (rupees in crores)

Earnings per share (rupees)
Stock price (closing price as on 31st march)

21140
100.3
2716

2010-11
25385
112.26
2904

2011-12
33734
145.55
2864.95

2012-13
40352
164.87
2889.9

Sales (rupees in crores) Earnings per share (rupees)

200

50000
40000
30000
20000

150
Sales (rupees
in crores)

100

10000

50

Earnings per
share (rupees)

Stock price (closing price as on 31st march)

Stock price (closing price as on 31st march)
2904

2889.9

2864.95

2716
2009-10

2010-11

2011-12

2012-13

Sales have risen 19.62% in 2013 over 2012 & there is only marginal increase on QOQ basis.

There is improvement in earnings per share in 2013 as compared to 2012 but still it is away from its benchmark

performance of EPS in 2009.missed its guidance for EPS.

Although on a YOY basis there is rise in profit by 13.29%, the company's net profit was Rs 2,394 crore for the

fourth quarter of fy13, a rise of nominal 1.06% QOQ. Its revenues saw a meagre rise of 0.29% on QOQ basis
There has been a constant improvement in book value of Infosys over last 4 years. However % increase differs

from year to year.

Companys capital structure has remained unchanged over a period of 4 year. That means management has
followed the policy of keeping company debt free even in economic down turn and adverse business conditions

also.
A close study of cash flow statement of a company indicates constant rise in cash flow from operating activity but
a fall in cash flow from investing ( (2,061) to (5,051) )and financing activity ( (2,321) to (3,211). This indicates

reduced focus of a company in non core business activity and expansion of operation in core business areas only.
There has been up & down noticed in Infosyss stock price due to variation in economic and other business
related condition.

DIVIDEND POLICY

Dividend policy is a part of corporate governance policy of a company.

Currently, Infosys regularly pays dividend to its shareholders. The current dividend policy is to distribute not
more than 30% of the PAT (unconsolidated Indian GAAP) as dividend. The Board of Directors reviews the
dividend policy periodically and on Apr 15, 2008 decided to hike the dividend policy to up to 30% of post-tax
profits from 20% of post-tax profits earlier.

Further co has continued its policy of giving bonus dividend and stock split option for once in every four year and
has continued maintaining shareholders expectation.

Infosys does not offer a dividend reinvestment program or dividend stock program, at present.

Infosys pays dividend twice a year. An interim dividend is generally declared by the board in October along with
the adoption of second quarter results. Additionally, a final dividend is recommended by the Board in April along
with the adoption of annual results. The final dividend is subject to the approval of shareholders at the AGM
(Annual General Meeting).

For fiscal 2012-13, the Board has declared final dividend of Rs 42 per share. The payment is subject to the
approval of the shareholders in the ensuing Annual General Meeting of the company to be held on June 15, 2013.
The book closure was from June 1, 2013 to June 15, 2013. (Both days inclusive)

CAPITAL STRUCTURE OF INFOSYS & ITS ADVANTAGES AND DISADVANTAGES

As Infosys is a Debt Free company, it has certain Advantages and Disadvantages:
ADVANTAGES:
Not dependent on external borrowers.
No interest burdens, therefore higher

Can get loan easily in future.

More stable than short term debt.

profits.
No burden of loan repayment.

Less need for maintenance and monitoring.

DISADVANTAGES:
Gives lower EPS for shareholders.
Costly interest charges.

Restrictive clauses and covenant.

 SUGGESTIONS
1. Company needs to reduce its cost of sales i.e. Software Development related expenses, to
increase its Gross Profit ratio and Operating net ratio.
2. May go for some Debt borrowing to increase E.P.S. for shareholders.
3. Managing extreme currency volatility in an uncertain economic environment by appropriate
Hedging strategies.
4. Battling slowing growth in European and slowing emerging economies should be the key
focus area.
5. Strategies to gain lost market share and improve profit margins by product differentiation.