INFOSYS Company analysis

Industry Overview :  India is regarded as the premier destination for global IT and ITeS outsourcing, accounting for almost 55% of the global sourcing market in 2010, according to the Ministry of Communications and Information Technology. The ITeS sector includes IT hardware, software and services. The Indian IT-BPO sector is estimated to have aggregated revenues of USD 88.1 billion in 2010–2011, with the IT software and services sector (excluding hardware) accounting for USD 76.2 billion of revenues. During this period, direct employment is expected to have reached nearly 2.5 million, an addition of 240,000 employees, while indirect job creation is estimated at 8.3 million. As a proportion of national GDP, the sector revenues have grown from 1.2% in 1997–1998 to an estimated 6.4% in 2010–2011. Its share of total Indian exports (merchandise plus services) has increased from less than 4% in 1997–1998 to 26% in 2010–2011, as per the report of the working group on the IT sector for the 12th Five-Year Plan (2012–17). 

The IT-BPM sector in India grew at a Compound Annual Growth rate (CAGR) of 15 per cent over 2010-15, which is 3-4 times higher than the global IT-BPM spend, and is estimated to expand at a CAGR of 9.5 per cent to US$ 300 billion by 2020.  The main growth drivers of the IT and ITeS industry are cost efficiencies, utilization rates, diversification into new verticals, and shifting business and pricing models. India is a preferred destination for companies that are seeking to offshore IT and back-office functions. It also retains its low-cost advantage and is a financially attractive location when viewed in combination with the business environment it offers and the availability of skilled people. The country is also known across the world for its successful export-led software industry.

Software and services exports (including ITeS-BPO), excluding hardware exports, were estimated at USD 59 billion in 2010–11, as per NASSCOM, India’s premier association in the IT sector. Software and services exports constituted more than half of the electronics and IT-ITeS industry’s revenues in 2010–11.  Between April 2000 and March 2011, the computer software and hardware sector received cumulative foreign direct investment (FDI) of USD 10,723 million, according to the Department of Industrial Policy and Promotion (DIPP), which is part of the Ministry of Commerce and Industry and which is responsible for formulating the country’s FDI policy.As per the report of the task force set up by Ministry of Communications and Information Technology (MoC&IT), the demand for electronics hardware in the country is projected to increase from the USD 45 billion in 2009 to USD 400 billion by 2020. The task force has been set up to suggest measures to stimulate the growth of the IT-ITeS and the electronics hardware manufacturing industry in India. According to the executive summary report published by the Department of Electronics and Information Technology, MoC&IT, the sector has grown to become the biggest employment generator in the country; direct employment within the IT-BPO sector was expected to be 2.5 million and indirect employment was estimated to be about 8.3 million in 2010–11. As per NASSCOM estimates, the workforce in the Indian IT sector will touch 30 million by 2020.

The recent developments in E-Commerce is important as some big player like Amazon, eBay, Alibaba group are investing. Indian E-Commerce companies like Flipkart and Snapdeal also receiving big FDI. All due to this The Infrastructure which is also important for the business is developing.

Company overview : An Indian multinational company, operating in field of Information Technology, Business consulting, Business application development, outsourcing services.

Bangalore Based, third largest IT company in India. Founded in 1981 with Narayan Murthy, Nandan Nilekani, S. D. Shibulal, S Gopalakrishnan and others. The company went public in 1993, With ₹98 per share. Today the company working with more than 890 client all over the world. The company is leader in providing software development for many businesses like insurance, banking, Manufacturing. Though their major product is finacle, banking solutions application catering for all retail banking.

Due to its recent acquisitions and change in strategy, the company is operating on cloud and e-commerce setup Also. Vishal sikka, New leadership of INFOSYS, trying to Change many things in the company.

SHAREHOLDINGS :

Financials and Ratios : 

 2010-112011-122012-132013-142014-152015-16
Revenue265323308338980469175063756992
Net Profit644384709116101941216415786
Net Profit Margin25.3827.1024.7922.9925.7129.24
EPS122.22147.50158.76178.39105.9168.73
Book value426.85518.41628.21735.87418.71248.94
ROE26.2928.4625.2824.2125.3027.61
ROCE26.2928.4625.1524.0125.2927.58
ROA22.3223.6421.1819.3319.6721.69
Dividend per Share6047426359.5024.25
Dividend Payout53.4631.8626.4535.4942.0135.28

Future Prospects : As the big part of revenue come From (US + Europe) it is big difficulty for the company. It is also expected that expenditure allover the world will be low. It was the first Indian firm which received visual hit of Brexit. RBS cancelled the contract with company and the company also reducing its workforce.  Which Show that everything is not good. But that will give Good chance to buy the shares of company at very Good level. It was the company which increasing Topline more than 10% for more than 10 year. World need IT and the way management is changing it, is important. Finally, impossible to ignore the Cash in pocket of the company. US business will be intact and grow if Hillary Clinton become President. Invest if it suits your Risk appetite.

References

Nasscom

IBEF

SEZ India

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter