Global Markets Research

Infosys INFY.NS INFO IN 15 July 2021

EQUITY: SOFTWARE & SERVICES

Preferred pick; reaffirm Buy Rating

Remains Buy
Potential for industry-leading growth, but EBIT margins Target price
Increased from INR INR 1,810
could be a potential dampener 1,615

Closing price
Action: Lift TP to INR1,810 (~15% implied upside), led by increase in target multiple 14 July 2021 INR 1,577
4Q results surprised positively on revenue growth at 4.8% q-q in CC (vs our estimate of
4.2%), led by broad-based growth across verticals and a 2pp increase in revenue growth Implied upside +14.8%
guidance to 14-16% (vs our forecast of 1pp raise to 13-15%). This was driven by a
healthy total contract value (TCV) of USD2.6bn (up 48% y-y), strong pipeline and Market Cap (USD mn) 89,726.2
demand improvement in Manufacturing, Retail and Energy. However, EBIT margins came ADT (USD mn) 132.6

in at 23.7%, slightly below our estimate of 24% and impacted due to cost increases in
sub-contractors and employees owing to rising attrition, increased hiring efforts and higher Relative performance chart
number of promotions offered to improve retention. INFO appears well-placed to deliver
revenue growth at the top-end of management’s FY22F guidance of 16%, given its
achievable ask rate of ~2% CQGR over 2Q-4QFY22F (excluding Daimler). On EBIT
margins, INFO retained FY22F guidance of 22-24%; this includes the affects of 1) wage
hikes effective 1 July 2021; 2) the Daimler deal and 3) reversal of cost benefits related to
travel, facilities and discretionary expenses. However, quarterly attrition spiked sharply in
1Q to ~22% (vs 15.6% in 4Q) and could be a key headwind to margins. We look for
FY22F-24F EBIT margins of ~22.5-23%. We reaffirm our Buy; we like INFO for its: 1)
potential to achieve industry-leading growth over FY21-23F; 2) improved capabilities in
digital; 3) potential to fill gaps in the portfolio by expanding into ER&D and products
business and 4) downside support from the ongoing buyback, although we see limited
potential for the stock to move up in the near term.
Source: Thomson Reuters, Nomura
1Q: Growth and guidance provide comfort, but margins don’t
Positives: 1) Client metrics: 12 clients added in USD10mn+ and 26 in the USD1mn+ Research Analysts
band; 2) deal TCV of USD2.6bn and pipeline are robust; and 3) outlook on large verticals
India Technology/Services &
like BFSI/Retail/Manufacturing are favorable. Negatives: 1) quarterly annualized attrition
Software
rose further to ~22%; 2) utilization excluding trainees at 88.5% is at historic highs and 3)
Rishit Parikh - NFASL
net new component in the overall TCV is only 30%. rishit.parikh@nomura.com
Raise FY21-23F revenues; lift TP to INR1,810 led by 2x increase in multiple +91 22 403 74360
For FY21-23F we lift revenues by 1-3% and now forecast a USD revenue CAGR of ~14.3%
and EPS CAGR of ~15.5%. We lift our TP to INR1,810 led by a 2-notch increase in target
multiple to 28x 1-yr fwd EPS of INR64.6. INFO trades at 5% discount to TCS. Our target
multiple is now at a ~7% premium to TCS led by better comfort on growth. Downside risks:
material impact on margins due to rising attrition, large deals and cost reversals.
Year-end 31 Mar FY21 FY22F FY23F FY24F
Currency (INR) Actual Old New Old New Old New
Revenue (mn) 1,004,730 1,179,108 1,189,108 1,333,7681,344,961 1,436,818 1,486,565
Reported net profit (mn) 193,510 225,655 220,009 256,114 255,765 273,774 283,384
Normalised net profit (mn) 193,510 225,655 220,009 256,114 255,765 273,774 283,384
FD normalised EPS 45.54 53.63 52.27 61.09 60.98 65.30 67.57
FD norm. EPS growth (%) 18.6 17.8 14.8 13.9 16.7 6.9 10.8
FD normalised P/E (x) 34.6 – 30.2 – 25.9 – 23.3
EV/EBITDA (x) 22.6 – 20.5 – 17.9 – 16.0
Price/book (x) 8.7 – 9.4 – 7.5 – 6.2
Dividend yield (%) 1.7 – 1.2 – 1.2 – 1.2
ROE (%) 27.1 28.7 30.0 28.7 32.4 25.7 29.3
Net debt/equity (%) net cash net cash net cash net cash net cash net cash net cash
Source: Company data, Nomura estimates Production Complete: 2021-07-15 02:13 UTC

See Appendix A-1 for analyst certification, important disclosures and the status of non-US analysts.
Nomura | Infosys 15 July 2021

Key Data on Infosys

Cashflow statement (INRmn)
Year-end 31 Mar FY20 FY21 FY22F FY23F FY24F
Performance EBITDA 222,680 278,900 307,915 343,669 374,174
(%) 1M 3M 12M Change in working capital 33,160 15,020 54,953 -22,897 -25,744
Absolute (INR) 7.9 12.9 101.3 M cap (USDmn) 89,726.2 Other operating cashflow -51,490 -72,770 -77,221 -84,444 -93,640
Absolute (USD) 6.0 13.7 103.4 Free float (%) 84.0 Cashflow from operations 204,350 221,150 285,647 236,327 254,790
Rel to NIFTY50 7.9 3.9 52.3 3-mth ADT (USDmn) 132.6 Capital expenditure -103,600 -47,830 -25,520 -26,000 -26,000
Free cashflow 100,750 173,320 260,127 210,327 228,790
Income statement (INRmn) Reduction in investments 0 0 0 0 0
Year-end 31 Mar FY20 FY21 FY22F FY23F FY24F Net acquisitions
Revenue 907,910 1,004,730 1,189,108 1,344,961 1,486,565 Dec in other LT assets -760 5,530 480 0 0
Cost of goods sold -604,426 -650,882 -789,287 -895,735 -996,561 Inc in other LT liabilities 0 0 0 0 0
Gross profit 303,484 353,848 399,821 449,226 490,004 Adjustments
SG&A -109,744 -107,628 -126,590 -142,195 -155,607 CF after investing acts 99,990 178,850 260,607 210,327 228,790
Employee share Cash dividends -89,132 -114,560 -79,537 -81,630 -97,956
expense Equity issue -68,658 30,430 -207,000 0 0
Operating profit 193,740 246,220 273,231 307,032 334,396 Debt issue
EBITDA 222,680 278,900 307,915 343,669 374,174 Convertible debt issue
Depreciation -28,940 -32,680 -34,684 -36,637 -39,778 Others 23,920 20,060 23,999 33,177 42,627
Amortisation CF from financial acts -133,870 -64,070 -262,538 -48,453 -55,329
EBIT 193,740 246,220 273,231 307,032 334,396 Net cashflow -33,880 114,780 -1,932 161,874 173,461
Net interest expense Beginning cash 308,290 274,410 389,190 387,258 549,133
Associates & JCEs Ending cash 274,410 389,190 387,258 549,133 722,594
Other income 23,920 20,060 23,999 33,177 42,627 Ending net debt -274,410 -389,190 -387,258 -549,133 -722,594
Earnings before tax 217,660 266,280 297,230 340,209 377,024 Balance sheet (INRmn)
Income tax -53,680 -72,050 -77,611 -85,052 -94,256 As at 31 Mar FY20 FY21 FY22F FY23F FY24F
Net profit after tax 163,980 194,230 219,619 255,157 282,768 Cash & equivalents 274,410 389,190 387,258 549,133 722,594
Minority interests -230 -720 390 608 616 Marketable securities
Other items Accounts receivable 256,080 268,210 327,952 370,936 409,989
Preferred dividends Inventories 0 0 0 0 0
Normalised NPAT 163,750 193,510 220,009 255,765 283,384 Other current assets 129,220 149,800 151,857 189,564 229,716
Extraordinary items 2,420 0 0 0 0 Total current assets 659,710 807,200 867,067 1,109,632 1,362,299
Reported NPAT 166,170 193,510 220,009 255,765 283,384 LT investments 0 0 0 0 0
Dividends -89,132 -114,560 -79,537 -81,630 -97,956 Fixed assets 250,530 265,680 256,516 245,879 232,101
Transfer to reserves 77,038 78,950 140,472 174,134 185,428 Goodwill
Valuations and ratios Other intangible assets
Reported P/E (x) 40.4 34.6 30.1 25.8 23.3 Other LT assets 7,760 2,230 1,750 1,750 1,750
Normalised P/E (x) 41.0 34.6 30.1 25.8 23.3 Total assets 918,000 1,075,110 1,125,333 1,357,261 1,596,150
FD normalised P/E (x) 41.1 34.6 30.2 25.9 23.3 Short-term debt
Dividend yield (%) 1.1 1.7 1.2 1.2 1.2 Accounts payable 142,820 177,250 220,511 250,565 278,366
Price/cashflow (x) 32.9 30.3 23.2 28.0 26.0 Other current liabilities 116,740 130,040 203,530 231,270 256,930
Price/book (x) 10.2 8.7 9.4 7.5 6.2 Total current liabilities 259,560 307,290 424,041 481,835 535,296
EV/EBITDA (x) 28.8 22.6 20.5 17.9 16.0 Long-term debt
EV/EBIT (x) 33.1 25.6 23.1 20.0 17.9 Convertible debt
Gross margin (%) 33.4 35.2 33.6 33.4 33.0 Other LT liabilities 0 0 0 0 0
EBITDA margin (%) 24.5 27.8 25.9 25.6 25.2 Total liabilities 259,560 307,290 424,041 481,835 535,296
EBIT margin (%) 21.3 24.5 23.0 22.8 22.5 Minority interest 0 0 0 0 0
Net margin (%) 18.3 19.3 18.5 19.0 19.1 Preferred stock 0 0 0 0 0
Effective tax rate (%) 24.7 27.1 26.1 25.0 25.0 Common stock 21,220 21,240 2,860 2,860 2,860
Dividend payout (%) 53.6 59.2 36.2 31.9 34.6 Retained earnings 637,220 746,580 698,432 872,566 1,057,993
ROE (%) 25.4 27.1 30.0 32.4 29.3 Proposed dividends
ROA (pretax %) 33.0 37.0 38.4 39.7 39.8 Other equity and reserves
Growth (%) Total shareholders' equity 658,440 767,820 701,292 875,426 1,060,853
Revenue 9.8 10.7 18.4 13.1 10.5 Total equity & liabilities 918,000 1,075,110 1,125,333 1,357,261 1,596,150
EBITDA 6.6 25.2 10.4 11.6 8.9 Liquidity (x)
Normalised EPS 3.6 18.6 14.8 16.7 10.8 Current ratio 2.54 2.63 2.04 2.30 2.54
Normalised FDEPS 3.6 18.6 14.8 16.7 10.8 Interest cover – – – – –
Source: Company data, Nomura estimates Leverage
Net debt/EBITDA (x) net cash net cash net cash net cash net cash
Net debt/equity (%) net cash net cash net cash net cash net cash
Per share
Reported EPS (INR) 39.03 45.61 52.37 61.10 67.70
Norm EPS (INR) 38.46 45.61 52.37 61.10 67.70
FD norm EPS (INR) 38.40 45.54 52.27 60.98 67.57
BVPS (INR) 154.64 180.99 166.93 209.12 253.42
DPS (INR) 17.44 27.00 18.93 19.50 19.50
Activity (days)
Days receivable 92.3 95.2 91.5 94.8 96.1
Days inventory 0.0 0.0 0.0 0.0 0.0
Days payable 67.7 89.7 92.0 96.0 97.1
Cash cycle 24.6 5.5 -0.5 -1.1 -1.0
Source: Company data, Nomura estimates

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Nomura | Infosys 15 July 2021

Company profile

Valuation Methodology
We value INFO on 28x 1-yr fwd EPS of INR64.6 (upto Sept-23F) to arrive at our TP of INR1,810. The benchmark for this stock is NIFTY50.

Risks that may impede the achievement of the target price

Downside risks include weaker than expected performance on margins due to supply side pressures

Other notes

ESG

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Nomura | Infosys 15 July 2021

Thesis in charts
Fig. 1: Revenue growth trends at INFO and TCS (% y-y in CC) Fig. 2: Revenue growth trends across verticals (% y-y in CC)

Source: Company data, Nomura research Source: Company data, Nomura research

Fig. 3: Revenue growth trends across geographies (% y-y in Fig. 4: Deal TCV trends (USD bn)
CC)

Source: Company data, Nomura research

Source: Company data, Nomura research

Fig. 5: Utilization (%) and Subcontractor costs (as a % of Fig. 6: EBIT margin (%) and EBIT growth trends
sales) trends

Source: Company data, Nomura estimates

Source: Company data, Nomura research

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Nomura | Infosys 15 July 2021

Fig. 7: 1-Yr fwd P/E Fig. 8: INFO valuation discount to TCS

Source: Bloomberg Finance L.P., company data, Nomura estimates

Source: Bloomberg Finance L.P., company data, Nomura estimates

Fig. 9: Costs as a % of revenues

Change in bps Absolute change
Costs as a % of Revenues 1QFY21 4QFY21 1QFY22 Q-Q Y-Y Q-Q Y-Y
COGS excluding Depreciation 63.2% 62.1% 63.4% 130 bps 20 bps 8.2% 18.3%
Salaries and bonus including overseas staff expenses 51.0% 49.0% 48.9% -10 bps -210 bps 5.8% 13.0%
Technical sub-contractors 6.9% 7.5% 8.8% 130 bps 190 bps 23.6% 51.0%
Overseas travel expenses 0.4% 0.5% 0.0% -50 bps -40 bps -91.7% -87.6%
Others 4.9% 5.0% 5.6% 60 bps 70 bps 19.4% 35.5%
Sales and Marketing 4.8% 4.6% 4.5% -10 bps -40 bps 4.0% 8.9%
Salaries and bonus including overseas staff expenses 4.4% 3.9% 3.8% -10 bps -60 bps 2.5% 1.7%
travelling and conveyance 0.0% 0.0% 0.0% 0 bps 0 bps 50.0% -14.3%
brand building 0.2% 0.4% 0.4% 0 bps 20 bps 10.7% 93.2%
Others 0.2% 0.2% 0.2% 0 bps 10 bps 15.0% 76.9%
General and Administrative 6.1% 5.7% 5.5% -20 bps -60 bps 2.1% 6.1%
Salaries and bonus including overseas staff salaries 2.1% 2.0% 1.9% -10 bps -20 bps 2.7% 7.0%
Others 4.0% 3.8% 3.6% -10 bps -40 bps 1.8% 5.6%

Source: Company data, Nomura research

Fig. 10: Revenue split between Digital and Legacy Fig. 11: USD y-y revenue growth trends in Digital and Legacy

Source: Company data, Nomura research Source: Company data, Nomura research

Key takeaways from the 14 July 2021 conference call

• Optimistic on demand and growth outlookGrowth in 1QFY22 was led by broad-
based growth across verticals: 7 of the 8 verticals grew double-digit y-y and were
driven by strong demand for digital transformation initiatives at clients. INFO indicated
that its outlook continues to be robust, driven by strong demand in areas of cloud,
customer experience and core modernization. Management’s confidence in the

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Nomura | Infosys 15 July 2021

company’s growth outlook is visible in its 2pp increase in CC growth guidance for
FY22F from 12-14% earlier to 14-16% now. We build in a ~16%+ y-y CC growth in
FY22F, excluding the contribution from the Daimler deal. The top end of guidance
assumes a ~1.5% CQGR over the next three quarters, which is achievable in our
view, based on our assumptions.
• Large deal TCV remains healthyINFO announced a large deal TCV of USD2.6bn in
1QFY22 with a net new component of ~30% and indicated that the TCV has a healthy
mix of mid-sized and large deals. The TCV includes 22 large deals, of which 9 were in
BFSI, 4 each in Retail and Energy, 2 in Manufacturing and 1 each in Communication,
Hi-Tech and Life Sciences. Geo-wise, 14 deals were in North America, 5 in Europe, 2
in ROW and 1 in India. INFO indicated that the pipeline continues to be robust and
sees demand in areas of data & analytics, cloud and core modernization. Vertical-
wise, the strength in pipeline is driven by BFSI, Retail, Mfg, Life Sciences and Utilities.
• Vertical outlook: Optimism acrossVertical-wise, 1) BFSI: growth was led by
banking, mortgages, wealth management especially in North America. INFO expects
demand to improve in the payment segment as economies open up over the next
couple of quarters. INFO sees demand uptick in cloud migration, cloud transformation
and cloud-related platforms in BFSI. 2) Retail: INFO saw a sharp recovery in retail
driven by pent-up demand and ramp-up from deals won in the current and the past
quarter. INFO sees demand in areas of omni-channel, personalisation, analytics and
supply chain. 3) Communication: INFO continues to strength led by ramp-up from
deals won in the prior quarters and sees demand in areas of 5G, IoT, Cyber-security,
etc. 4) Manufacturing: INFO indicated that its gaining market share in the aero, auto
and industrial segments and sees opportunities in areas of ER&D, Industrial IoT,
Cloud adoption and automation. Revenue growth in 2Q will be driven by ramp-up
from the Daimler deal. 5) Energy: INFO saw recovery led by the utilities vertical and
continues to see demand in areas of customer experience, operational efficiency and
legacy transformation areas.
• EBIT margins: Retain guidance of 22-24% for FY22F, attrition remains a key risk
EBIT margins were -80bp q-q led by a 50bp impact from a rise in sub-contractor costs
and 80bp impact due to various employee initiatives (e.g., increased hiring efforts,
emphasis on employee retention and higher promotions). This was offset by a ~10bp
benefit from currency and ~40bp benefit from higher utilization and offshoring. We
think the company’s investments in employee initiatives were driven by the substantial
jump in quarterly annualized attrition (~22%+). 2QFY22 should see EBIT margin
impacts from wage hikes for a large percentage of junior employees starting
2QFY22F and the transition of the Daimler deal. INFO continues to reiterate its
guidance of 22-24% EBIT margin for FY22F and includes impacts from 1) wage
hikes; 2) dilution due to Daimler deal, and increases in marketing, travel and
discretionary expenses (expect discretionary and marketing costs to revert by prior
levels by year-end). This should be partly offset by strong revenue growth and levers
from automation, pyramid optimization and increased pricing in digital services.
• Hiring and sub-contractorsINFO increased fresher hiring targets to ~35k for FY22F
(from ~25k earlier) due to increased attrition and strong demand for digital services.
Near term, the company should continue to make use of sub-contractors to fulfil
demand and over time is likely tp replace that with in-house talent. Sub-contractor
costs increased by ~130bp q-q. Management expects costs to remain elevated in the
near terms as freshers often take time before they become productive.

Fine-tune estimates; raise TP to INR1,810

(from INR1,615)
We raise revenue estimates by 1-3% and now expect a USD revenue CAGR of 14.3%
and EPS CAGR of ~15.5% over FY21-23F. We value INFO on a higher multiple of 28x
(vs 26x) on 1-year forward EPS (up to Sept-23F) of INR64.6 to arrive at our TP of
INR1,810 (vs INR1,615 previously).

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Nomura | Infosys 15 July 2021

Fig. 12: Estimate revisions

New Old Change (%)
FY22F FY23F FY24F FY22F FY23F FY24F FY22F FY23F FY24F
Revenue (US$ mn) 15,917 17,697 19,306 15,771 17,581 18,694 0.9 0.7 3.3
US$/INR rate 74.1 74.7 76.0 74.1 74.7 76.0 0.0 0.1 0.0
Revenue (Rs bn) 1,189.1 1,345.0 1,486.6 1,177.5 1,336.2 1,439.4 1.0 0.7 3.3
EBIT margin (%) 23.0 22.8 22.5 23.2 22.8 22.3 -30 bps 0 bps 20 bps
Tax Rate (%) 26.1 25.0 25.0 26.0 25.0 25.0 10 bps 0 bps 0 bps
Diluted EPS (Rs) 52.3 61.0 67.6 53.0 61.1 65.3 -1.4 -0.2 3.5

Source: Company data, Nomura estimates

1QFY22: Strong revenue growth, raised revenue growth guidance, though margin
were below
• USD revenue was USD3,782mn (4.7% q-q and 21.2% y-y), vs. our forecast and the
Bloombergconsensus estimate of 4.2% and /3.7%, respectively.
• CC revenue growth was 4.8% q-q vs. our/consensus estimates of 4.0%/3.6%.
• EBIT margin was 23.7% (vs 24.5% in 4QFY21) and vs. our/consensus estimates of
24.0%/24.5%. Weakness in EBIT is due to ~34% q-q jump in subcontracting cost,
employee cost remain stable.
• Other income was INR5.7bn vs. our estimate of INR7.1bn.
• PAT was INR52bn vs. our/consensus estimates of ~INR53.6bn/INR53.6bn.
• Deal wins: INFO announced deal wins of USD2.6bn in 1QFY22 vs USD2.1bn in
4QFY21 and USD1.7bn in 1QFY21.

Segments: Broad-based growth

• Geographies: In y-y CC terms, North America (21.6%), Europe (21.9%), India
(23.1%) and ROW (16.9%).
• Verticals: In y-y CC terms, BFSI (27.1%), Manufacturing (23.1%), Retail CPG
(26.6%), Communication (10.6%), Energy & Utilities (14.5%), Hi-Tech (15.1%) and
Life sciences (23.4%).
• Digital now contributes ~53.9% of revenues and grew 42.1% y-y in CC terms.

FY22F Guidance:
• INFO raised guidance for CC revenue growth to 14-16% vs earlier guidance of 12-
14%, ahead of our expectations of 13-15%%. This implies a q-q growth of 2.3-3.5%
and includes contribution from Daimler.
• INFO retained EBIT margins guidance of 22-24%.

Other highlights
• Headcount grew 3.2% q-q to ~268k. Demand for digital talent is high posing risk from
attrition, hence INFO increased hiring target to 35k freshers globally
• Voluntary Attrition (Annualised - IT services) was at 13.9% vs 15.2% in 4QFY21.
Utilization including trainees at 83.3% (vs 82.2% in 4QFY21) and utilization excl.
trainees at 88.5% vs (87.7% in 4QFY21).
• DSO days of 70 days vs 71 days in 4QFY21 and 71 days in 1QFY21.
• CFO/EBITDA was 92% vs 85% in 4QFY21 and 97% in 1QFY21

Fig. 13: Actual vs Estimates

Key parameters 1QFY22 4QFY21 q-q (%) 1QFY21 y-y (%)

Actual Est.
Revenues (USD mn) 3,782 3,765 3,613 4.7% 3,121 21.2%
Revenues (INR mn) 2,78,960 2,77,127 2,63,110 6.0% 2,36,650 17.9%
EBIT (INR mn) 66,030 66,433 64,400 2.5% 53,650 23.1%
EBIT (%) 23.7% 24.0% 24.5% -80bp 22.7% 100bp
PAT (INR mn) 52,010 53,655 50,780 2.4% 42,720 21.7%
Diluted EPS (INR) 12.2 12.7 11.9 2.3% 10.0 22.5%
Source: Company data, Nomura estimates

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Nomura | Infosys 15 July 2021

Fig. 14: Q-Q CC revenue growth trends across segments

q-q CC growth 1QFY21 2QFY21 3QFY21 4QFY21 1QFY22
Verticals (CC growth)
Banking and Financial Services -1.1% 5.7% 8.6% 1.9% 4.9%
Manufacturing -8.1% -0.6% 7.5% 5.2% 5.4%
Retail, CPG & Transport -9.4% 7.8% 3.6% 3.2% 6.0%
Life Sciences and Healthcare 1.6% 6.8% 9.7% -0.6% 4.1%
Energy and Utilities -2.3% 0.4% 7.0% 0.0% 2.9%
Communication Services 4.4% -3.7% 5.3% -0.5% 3.7%

Geography (CC growth)

North America -2.6% 4.3% 7.8% 2.6% 5.5%
Europe -3.1% 3.1% 2.2% 2.9% 12.4%
India 11.6% 8.8% -8.5% 17.8% 5.0%
RoW 0.6% 3.7% 1.4% -6.3% 18.6%

Overall CC growth -2.0% 4.0% 5.3% 2.0% 4.8%

Source: Company data, Nomura research

Fig. 15: Y-Y CC revenue growth across segments

y-y CC growth 1QFY21 2QFY21 3QFY21 4QFY21 1QFY22
Verticals (CC growth)
BFSI 2.1% 2.9% 12.0% 15.6% 22.6%
Manufacturing 0.3% -8.2% -4.1% 3.4% 18.5%
Retail & CPG -7.4% -0.3% 2.0% 4.5% 22.2%
Life Sciences and Healthcare 7.7% 7.4% 11.0% 18.3% 21.2%
Energy and Utilities -0.2% -3.7% 4.9% 4.9% 10.5%
Communication Services 4.9% 2.6% 7.3% 5.4% 4.6%

Geography (CC growth)

North America 0.0% 1.9% 8.8% 12.3% 21.6%
Europe 4.4% 0.6% 1.3% 5.1% 21.9%
India 32.8% 20.4% 4.3% 30.8% 23.1%
RoW -2.0% 3.7% 6.1% -0.9% 16.9%

Overall CC growth 1.5% 2.2% 6.6% 9.6% 16.9%

Source: Company data, Nomura research

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Nomura | Infosys 15 July 2021

Appendix A-1
Analyst Certification
I, Rishit Parikh, 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, (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 and (3) no part of my
compensation is tied to any specific investment banking transactions performed by Nomura Securities International, Inc.,
Nomura International plc or any other Nomura Group company.

Issuer Specific Regulatory Disclosures

The terms "Nomura" and "Nomura Group" used herein refers to Nomura Holdings, Inc. and its affiliates and subsidiaries, including Nomura
Securities International, Inc. ('NSI') and Instinet, LLC('ILLC'), U. S. registered broker dealers and members of SIPC.

Materially mentioned issuers

Issuer Ticker Price Price date Stock rating Sector rating Disclosures
Infosys INFO IN INR 1,577 14-Jul-2021 Buy N/A
Tata Consultancy
Services TCS IN INR 3,215 14-Jul-2021 Neutral N/A

Infosys (INFO IN) INR 1,577 (14-Jul-2021) Buy (Sector rating: N/A)
Rating and target price chart (three year history)
Date Rating Target price Closing price
15-Apr-21 1,615.00 1,360.75
14-Jan-21 1,620.00 1,370.50
15-Oct-20 1,355.00 1,108.25
05-Oct-20 1,165.00 1,048.70
15-Jul-20 Buy 830.95
15-Jul-20 975.00 830.95
21-Apr-20 710.00 633.20
13-Jan-20 805.00 773.55
14-Oct-19 760.00 786.10
15-Jul-19 Neutral 779.35
15-Jul-19 720.00 779.35
15-Apr-19 Reduce 727.50
14-Jan-19 Neutral 698.06
14-Jan-19 680.00 698.06
03-Oct-18 670.00 724.52
16-Jul-18 585.00 662.78

For explanation of ratings refer to the stock rating keys located after chart(s)

Valuation Methodology We value INFO on 28x 1-yr fwd EPS of INR64.6 (upto Sept-23F) to arrive at our TP of INR1,810. The
benchmark for this stock is NIFTY50.
Risks that may impede the achievement of the target price Downside risks include weaker than expected performance on
margins due to supply side pressures

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Nomura | Infosys 15 July 2021

Tata Consultancy Services (TCS IN) INR 3,215 (14-Jul-2021) Neutral (Sector rating: N/A)
Rating and target price chart (three year history)
Date Rating Target price Closing price
09-Jul-21 3,160.00 3,208.15
13-Apr-21 3,140.00 3,104.05
10-Jan-21 3,070.00 3,120.90
08-Oct-20 2,600.00 2,825.70
05-Oct-20 2,450.00 2,705.80
10-Jul-20 2,120.00 2,222.35
17-Apr-20 1,775.00 1,806.20
20-Jan-20 2,060.00 2,170.35
11-Oct-19 1,950.00 1,948.01
10-Jul-19 2,000.00 2,066.98
15-Apr-19 Neutral 2,071.98
15-Apr-19 1,925.00 2,071.98
11-Jan-19 1,780.00 1,806.53
15-Oct-18 1,840.00 1,911.39
03-Oct-18 1,950.00 2,120.57

For explanation of ratings refer to the stock rating keys located after chart(s)

Valuation Methodology Our TP of INR3,160 is based on 26x 1-yr fwd EPS (upto June 23F) of INR121.6. The benchmark for
this stock is NIFTY50.
Risks that may impede the achievement of the target price Downside risks include: weaker translation of deal wins into
revenue growth and impact of COVID on recovery in UK. Upside risks: continued momentum in deal wins and market share
gains

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Distribution of ratings (Nomura Group)

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As at 30 June 2021.
*The Nomura Group as defined in the Disclaimer section at the end of this report.
** As defined by the EU Market Abuse Regulation

Definition of Nomura Group's equity research rating system and sectors

The rating system is a relative system, indicating expected performance against a specific benchmark identified for each individual stock,
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STOCKS
A rating of 'Buy', indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of 'Neutral',
indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of 'Reduce', indicates that
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additional information from Nomura relating to such securities and/or companies. Benchmarks are as follows: United States/Europe/Asia ex-
Japan: please see valuation methodologies for explanations of relevant benchmarks for stocks, which can be accessed at:
http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx ; Global Emerging Markets (ex-Asia): MSCI
Emerging Markets ex-Asia, unless otherwise stated in the valuation methodology; Japan: Russell/Nomura Large Cap.

SECTORS

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Nomura | Infosys 15 July 2021

A 'Bullish' stance, indicates that the analyst expects the sector to outperform the Benchmark during the next 12 months. A 'Neutral' stance,
indicates that the analyst expects the sector to perform in line with the Benchmark during the next 12 months. A 'Bearish' stance, indicates that
the analyst expects the sector to underperform the Benchmark during the next 12 months. Sectors that are labelled as 'Not rated' or shown as
'N/A' are not assigned ratings. Benchmarks are as follows: United States: S&P 500; Europe: Dow Jones STOXX 600; Global Emerging
Markets (ex-Asia): MSCI Emerging Markets ex-Asia. Japan/Asia ex-Japan: Sector ratings are not assigned.

Target Price
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Nomura | Infosys 15 July 2021

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