INFOSYS LTD. (ADR)
TIMELINESS
SAFETY
TECHNICAL
3
2
2
High:
Low:
Lowered 7/29/16
RECENT
PRICE
NYSE-INFY
10.3
7.0
14.2
8.0
15.3
9.6
12.5
5.3
18.0 RELATIVE
DIV’D
Median: 20.0) P/E RATIO 0.88 YLD 2.6%
16.39 P/ERATIO 16.7(Trailing:
14.0
5.7
19.2
12.4
19.5
11.5
15.2
9.5
14.6
9.7
17.6
12.5
19.5
15.3
20.5
15.8
Target Price Range
2019 2020 2021
LEGENDS
18.0 x ″Cash Flow″ p sh
. . . . Relative Price Strength
Lowered 8/12/16
2-for-1 split 7/04
BETA .85 (1.00 = Market)
2-for-1 split 7/06
2-for-1 split 12/14
2019-21 PROJECTIONS
2-for-1 split 6/15
Ann’l Total Options: Yes
Shaded area indicates recession
Price
Gain
Return
Raised 5/21/10
High
40 (+145%)
Low
30 (+85%)
Insider Decisions
to Buy
Options
to Sell
O
0
0
0
N
0
0
0
D
0
0
0
J
0
0
0
F
0
0
0
M
0
0
0
80
60
50
40
30
25
20
15
27%
19%
A
0
0
0
M
0
0
0
J
0
0
0
% TOT. RETURN 7/16
Institutional Decisions
3Q2015
4Q2015
1Q2016
110
125
128
to Buy
to Sell
127
115
122
Hld’s(000) 412439 414609 407068
Percent
shares
traded
18
12
6
1 yr.
3 yr.
5 yr.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
.20
.26
.36
.50
.74
.98
1.35
1.83
2.04
2.10
2.64
3.06
3.24
3.63
.07
.09
.11
.15
.22
.30
.42
.57
.63
.66
.74
.84
.85
.87
.06
.08
.09
.13
.19
.25
.38
.51
.56
.58
.65
.75
.76
.77
.00
.01
.02
.02
.09
.04
.13
.08
.09
.12
.13
.18
.16
.19
.05
.03
.02
.04
.09
.11
.15
.16
.12
.06
.12
.13
.17
.20
.15
.21
.30
.45
.58
.83
1.19
1.71
1.65
2.35
2.68
2.88
3.21
3.49
2117.1 2118.0 2119.8 2132.5 2164.6 2204.4 2284.8 2288.0 2291.3 2284.0 2285.3 2285.6 2285.6 2274.3
NMF
47.9
42.8
33.9
37.7
36.0
31.4
23.0
14.9
19.9
24.9
19.2
15.3
16.6
NMF
2.45
2.34
1.93
1.99
1.92
1.70
1.22
.90
1.33
1.58
1.20
.97
.93
.0%
.3%
.4%
.5%
1.3%
.5%
1.1%
.7%
1.0%
1.0%
.8%
1.2%
1.4%
1.5%
CAPITAL STRUCTURE as of 6/30/16
Total Debt None
Leases, Uncapitalized: Annual rentals $50.0 mill.
No Defined Benefit Pension Plan
Pfd Stock None
Common Stock 2,285,633,494 shs.
(Each ADR represents one ordinary share.)
(adjusted for 2-for-1 split effective 6/25/15)
MARKET CAP: $37.5 billion (Large Cap)
CURRENT POSITION 2014
2015 6/30/16
($MILL.)
Cash Assets
4999.0 4946.0 4681.0
Receivables
1554.0 1710.0 1761.0
Inventory (Avg Cst)
---Other
998.0 1146.0 1298.0
Current Assets
7551.0 7802.0 7740.0
Accts Payable
22.0
58.0
39.0
Debt Due
---Other
1798.0 1940.0 2145.0
Current Liab.
1820.0 1998.0 2184.0
ANNUAL RATES Past
of change (per sh) 10 Yrs.
Revenues
24.5%
‘‘Cash Flow’’
22.0%
Earnings
22.5%
Dividends
27.5%
Book Value
26.0%
Fiscal
Year
Begins
VALUE
LINE
Past Est’d ’12-’14
5 Yrs.
to ’19-’21
13.5%
9.0%
9.5% 10.5%
9.5% 11.0%
12.0% 17.5%
16.0% 10.0%
QUARTERLY REVENUES ($ mill.) A
Jun.30 Sep. 30 Dec. 31 Mar. 31
2013 1991 2066 2100 2092
2014 2133 2201 2218 2159
2015 2256 2392 2407 2446
2016 2501 2575 2650 2724
2017 2800 2850 2900 2950
Fiscal
EARNINGS PER SHARE A B
Year
Begins Jun.30 Sep. 30 Dec. 31 Mar. 31
2013
.18
.17
.20
.22
2014
.21
.22
.23
.22
2015
.21
.23
.23
.23
2016
.22
.25
.28
.30
2017
.25
.27
.30
.33
QUARTERLY DIVIDENDS PAID D
Calendar Mar.31 Jun.30 Sep.30 Dec.31
2012
-.094 - .064
2013
-.111 - .076
2014
-.173 - .117
2015
-.222 - .133
2016
-.212
Full
Fiscal
Year
8249.0
8711.0
9501.0
10450
11500
Full
Fiscal
Year
(A) Fiscal year ends March 31st of the following calender year.
(B) Diluted earnings. Next earnings report due
late October.
.77
.88
.90
1.05
1.15
Full
Year
.16
.19
.29
.36
3090.0
31.4%
118.0
850.0
9.0%
27.5%
1743.0
-2717.0
31.3%
31.3%
18.9%
40%
4176.0
31.3%
157.0
1155.0
12.9%
27.7%
2558.0
-3910.0
29.5%
29.5%
24.2%
18%
4663.0
33.0%
165.0
1281.0
13.2%
27.5%
2583.0
-3784.0
33.9%
33.9%
28.7%
15%
4804.0
34.5%
199.0
1313.0
21.3%
27.3%
3951.0
-5361.0
24.5%
24.5%
19.2%
21%
6041.0
32.6%
189.0
1499.0
26.7%
24.8%
4496.0
-6122.0
24.5%
24.5%
19.7%
19%
6994.0
31.6%
195.0
1716.0
28.8%
24.5%
5008.0
-6576.0
26.1%
26.1%
20.0%
23%
7398.0
28.6%
207.0
1725.0
26.3%
23.3%
5347.0
-7331.0
23.5%
23.5%
18.3%
22%
8249.0
26.7%
226.0
1751.0
27.6%
21.2%
5656.0
-7933.0
22.1%
22.1%
15.5%
30%
THIS
STOCK
VL ARITH.*
INDEX
-0.9
40.6
16.6
4.8
25.2
69.0
© VALUE LINE PUB. LLC
10
7.5
19-21
3.79
4.16
4.55
5.00
.95
.99
1.15
1.25
.88
.90
1.05
1.15
.29
.36
.40
.45
.16
.18
.20
.20
3.81
4.08
4.70
5.00
2296.9 2285.61 2290.0 2295.0
16.6
18.8 Bold figures are
Value Line
.94
.95
estimates
1.5%
2.0%
Revenues per sh A
6.50
‘‘Cash Flow’’ per sh
1.80
B
Earnings per sh
1.65
Div’ds Decl’d per sh D
.65
Cap’l Spending per sh
.25
Book Value per sh
6.75
Common Shs Outst’g C 2300.00
Avg Ann’l P/E Ratio
20.0
Relative P/E Ratio
1.25
Avg Ann’l Div’d Yield
2.2%
8711.0
27.9%
175.0
2013.0
28.6%
23.1%
5731.0
-8762.0
23.0%
23.0%
15.4%
33%
Revenues ($mill) A
Operating Margin
Depreciation ($mill)
Net Profit ($mill)
Income Tax Rate
Net Profit Margin
Working Cap’l ($mill)
Long-Term Debt ($mill)
Shr. Equity ($mill)
Return on Total Cap’l
Return on Shr. Equity
Retained to Com Eq
All Div’ds to Net Prof
9501.0
27.3%
222.0
2052.0
28.0%
21.6%
5804.0
-9324.0
22.0%
22.0%
13.2%
40%
10450
30.0%
250
2400
30.0%
23.0%
6250
Nil
10750
22.5%
22.5%
14.0%
38%
11500
30.0%
270
2630
30.0%
23.0%
7000
Nil
11500
23.0%
23.0%
15.0%
35%
15000
33.5%
410
3775
32.0%
25.0%
9500
Nil
15500
24.5%
24.5%
15.5%
37%
BUSINESS: Infosys Limited is a global information technology services firm. Through its majority-owned subsidiaries: Progeon Ltd., Infosys Technologies (Australia) Pty. Ltd., Infosys Technologies
(Shanghai) Co. Ltd., and Infosys Consulting, Inc., it provides solutions that leverage tech. for clients across the entire software life
cycle: consulting, design, development, re-engineering,
maintenance, systems integration, and package evaluation and implementation. Also provides software products to the banking industry, as well as client business process mgmt. services through
Progeon. Has about 176,200 empls. CEO: Dr. Vishal Sikka. Address.: Electronics City, Hosur Rd., Bangalore, Karnataka 560 100,
India. Tel.: +91-80-2852-0261. Internet: www.infosys.com.
It has been a volatile three months for
Infosys Ltd. ADRs. Subsequent to establishing a new all-time high price during
the fiscal fourth quarter (year ended
March 31st), the ADRs have bounced
around quite a bit. In addition, the company issued a rather unfavorable update to
guidance (discussed below) that sent the
stock sharply lower, thus giving back some
of the gains seen from the beginning of the
year.
Management has reduced its sales
outlook for this fiscal year. As a consequence of Brexit, or Britain’s separation
from the European Union, Infosys is taking a more reserved position on its
projected revenue growth targets for fiscal
2016. It now expects growth of 10.5%12.0%, down from 11%-13%. The company
generates roughly one-quarter of its total
revenues from the European region, with a
large portion stemming from banking and
financial services. While negative impacts
have yet to emerge, we think INFY is
being cautious until greater transparency
on the matter is available.
We are leaving intact our fiscal 2016
and 2017 top- and bottom-line es-
timates at this time. To wit, management’s revised expectations now fall in
line with the more conservative stance we
adopted in our May review. Still, there are
a few bright spots to highlight, including
noteworthy progress on strategic initiatives. Namely, the company is making
strides in creating a friendlier and more
efficient work environment to retain key
talent and lower attrition. Operating margins should get a boost from cost controls,
too. Lastly, order growth and backlog are
strong, and large-scale customer additions
should persist. What’s more, the company
is flush with cash and has zero debt on its
books, thus the ability to pursue acquisitions and reinvest in the business is
within its reach.
It would be wise for investors to be
cautious with Infosys ADRs until
there is a bit more clarity on European revenues. The issue is neutrally
ranked for Timeliness (3). That said, we
think the recent pullback in price presents
a decent buy-and-hold opportunity for
those capable of exercising patience and
assuming some risk.
Nicholas P. Patrikis
August 12, 2016
(C) In millions, adjusted for stock splits.
and of $0.09 a share in June 2012.
(D) Dividends typically paid in the second and
fourth quarters of the calender year. Special
div’d of $0.34 a share paid in October 2010
© 2016 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind.
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Company’s Financial Strength
Stock’s Price Stability
Price Growth Persistence
Earnings Predictability
A++
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