2QFY2012 Result Update | IT

October 12, 2011

Infosys
Performance highlights
(` cr) Net revenue EBITDA EBITDA margin (%) PAT 2QFY12 8,099 2,514 31.0 1,906 1QFY12 7,485 2,176 29.1 1,722 % chg (qoq) 8.2 15.5 197bp 10.7 2QFY11 6,947 2,315 33.3 1,737 % chg (yoy) 16.6 8.6 (229)bp 9.7

ACCUMULATE
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code IT 153,325 1.0 3,494/2169 131,550 5 16,958 5,099 INFY.BO INFY@IN

`2,681 `2,836
12 Months

Source: Company, Angel Research

For 2QFY2012, Infosys reported results that were in-line with our as well as streets expectations on the revenue front; however, the company exceeded expectations on the margin and bottom-line fronts. The company has guided for US$1,802mn1,840mn revenue for 3QFY2012, which implies growth of 3.25.4% qoq. Revenue growth guidance for FY2012 was changed to 17.1-19.1% yoy from 1820% yoy growth due to cross-currency movement; however, on the positive side, the company has increased its USD EPS guidance for FY2012 by 4.5% to US$3.023.06. We recommend Accumulate on the stock. Quarterly highlights: For 2QFY2012, Infosys reported revenue of US$1,746mn, up 4.5% qoq, aided by 4.5% qoq volume growth. In INR terms, revenue came in at `8,099cr, up by whopping 8.2% qoq. The companys EBITDA margin increased by 197bp to 31.0% as the wage hike impact got absorbed and steep currency movement aided margins. The most remarkable development during the quarter was the addition of a client in the US$300mn plus revenue bracket (moved from the US$200mn bracket) for the first time after 4QFY2009. Outlook and valuation: Management commentary has turned cautious as the company is witnessing delays in decision making, especially for long-term deals. We expect the company to record USD revenue growth of 19.3% and 14.1% yoy in FY2012 and FY2013, respectively. We have revised our INR assumption downwards, following a steep 10% depreciation against USD over the past month, for FY2012 and FY2013 from 45.0 and 44.5 to 46.0 for both, respectively. This has led to INR revenue growth to be higher than USD revenue growth at 20.7% yoy for FY2012 and 14.0% yoy for FY2013. On the EBIT front, for FY2012, we expect margins to take a hit by 146bp yoy to 28.0%. Over FY2011-13E, we expect a CAGR of 13.5% and 14.8% in EBITDA and PAT, respectively. At the CMP of `2,681, the stock is trading at 19.2x FY2012E and 17.0x FY2013E EPS. We value the company at 18x FY2013E of `157.5 and recommend Accumulate with target price of `2,836. Key financials (Consolidated)
Y/E March (` cr) Net sales % chg Net profit % chg EBITDA margin (%) EPS (`) P/E (x) P/BV (x) RoE (%) RoCE (%) EV/Sales (x) EV/EBITDA (x)
Source: Company, Angel Research

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 16.0 10.7 36.7 36.6

Abs. (%) Sensex Infosys

3m (7.9) (4.1)

1yr (16.1) (12.8)

3yr 61.1 118.5

FY2009 21,693 30.0 5,990 28.6 33.2 104.6 25.6 8.0 31.2 29.0 6.6 19.8

FY2010 22,742 4.8 6,219 3.8 34.5 109.5 24.5 6.4 25.8 25.0 6.0 17.5

FY2011 27,501 20.9 6,823 9.7 32.6 119.5 22.4 5.6 25.0 25.9 5.0 15.2

FY2012E 33,187 20.7 7,965 16.7 30.9 139.4 19.2 4.7 24.2 25.2 4.0 12.9

FY2013E 37,821 14.0 8,999 13.0 30.6 157.5 17.0 3.8 22.5 24.1 3.4 11.1

Srishti Anand
+91 22-39357800 Ext: 6820 srishti.anand@angelbroking.com

Ankita Somani
+91 22-39357800 Ext: 6819 ankita.somani@angelbrkoing.com

Please refer to important disclosures at the end of this report

Infosys | 2QFY2012 Result Update

Exhibit 1: 2QFY2012 performance (IFRS, consolidated)

(` cr) Net revenue Cost of revenue Gross profit SG&A expenses EBITDA Depreciation EBIT Other income PBT Income tax PAT EPS Gross margin (%) EBITDA margin (%) EBIT margin (%) PAT margin (%)
Source: Company, Angel Research

2QFY12 8,099 4,511 3,588 1,074 2,514 233 2,281 387 2,668 762 1,906 33.4 44.3 31.0 28.2 22.5

1QFY12 7,485 4,353 3,132 956 2,176 224 1,952 443 2,395 673 1,722 30.2 41.8 29.1 26.1 21.7

% chg (qoq) 8.2 3.6 14.6 12.3 15.5 4.1 16.9 11.4 13.2 10.7 10.7 246bp 197bp 209bp 74bp

2QFY11 6,947 3,754 3,193 878 2,315 217 2,098 267 2,365 628 1,737 30.4 46.0 33.3 30.2 24.1

% chg (yoy) 16.6 20.2 12.4 22.3 8.6 7.4 8.7 12.8 21.3 9.7 9.7 (166)bp (229)bp (204)bp (162)bp

1HFY12 15,584 8,864 6,720 2,030 4,690 457 4,233 830 5,063 1,435 3,628 63.6 43.1 30.1 27.2 22.1

1HFY11 13,145 7,195 5,950 1,673 4,277 424 3,853 506 4,359 1,134 3,225 56.5 45.3 32.5 29.3 23.6

% chg (yoy) 18.5 23.2 12.9 21.3 9.6 7.8 9.8 16.1 26.5 12.5 12.6 (215)bp (245)bp (215)bp (152)bp

Exhibit 2: 2QFY2011 Actual vs. Angel estimates

(` cr) Net revenue EBITDA margin (%) PAT
Source: Company, Angel Research

Actual 8,099 31.0 1,906

Estimate 7,988 30.2 1,851

% Var. 1.4 89bp 3.0

2QFY2012 performance Better than expectations

For 2QFY2012, Infosys reported revenue of US$1,746mn, up 4.5% qoq, on the back of modest 4.5% qoq volume growth and 0.5% qoq blended pricing growth. However, cross-currency movement negatively affected the companys revenue by 0.5% qoq. Revenue in constant currency (CC) terms came in at US$1,754mn, up 5.0% qoq. Volume growth of 4.5% qoq was driven by 4.7% and 4.5% qoq growth in onsite and offshore volumes, respectively. Onsite pricing declined by 1.2% qoq; however, offshore pricing grew by 3.5% qoq, which led to blended pricing growth of 0.5% qoq. Blended pricing increased due to higher licence sales of Finnacle (a banking solution of Infosys). In INR terms, revenue came in at `8,099cr, registering whopping 8.2% qoq growth; INR revenue was aided by steep INR depreciation qoq against the USD in 2QFY2012.

October 12, 2011

Infosys | 2QFY2012 Result Update

Exhibit 3: Trend in volume growth (Effort wise)

12 10 8 6
(%)

11.4 7.2 5.5 3.5 2.3 3.1 4.0 2.7

6.8 4.7 4.5 4.5

4 2 0 (2) (4) 2QFY11

(0.2) (2.0) 3QFY11 Offshore (1.4) 1QFY12 Total volume growth 2QFY12

4QFY11 Onsite

Source: Company, Angel Research

Exhibit 4: Trend in volume and revenue growth (qoq)

10 8 6
(%)

9.3

7.2

4.7 4.0

5.0 4.5

4 2 0 (2) 2QFY11 3QFY11 4QFY11 (1.4) 3.1 0.8

3.1

1QFY12

2QFY12

Revenue growth (constant currency)

Source: Company, Angel Research

Volume growth

Modest growth across industries and services

Service wise, revenue from business operations (contributed 60.9% to revenue) grew by 6.1% qoq, majorly led by 14.2% and 11.0% qoq growth in testing services and application development, respectively. Revenue from BPO, application maintenance and IMS posted 4.5%, 1.2% and 2.7% qoq growth, respectively. Revenue from consulting and system integration (contributed 31.2% to revenue) grew by 2.8% qoq, majorly led by 2.4% qoq growth in revenue from consulting and package implementation; however, revenue from system integration declined by 0.5% qoq due to higher base effect, as its revenue had grown by 7.7% qoq in 1QFY2012. Revenue from products, platforms and solutions (contributed 7.9% to revenue), which had grown by 5.6% qoq in 1QFY2012, declined by 0.5% qoq due to an 8.6% qoq decline in revenue from products. On the other hand, product engineering services posted whopping 11.0% qoq growth in revenue. During the

October 12, 2011

Infosys | 2QFY2012 Result Update

quarter, the company signed 17 new platform deals, out of which 10 were for Finnacle.

Exhibit 5: Growth trend in service verticals (Reported basis)

Particulars Business operations Application development Application maintenance Infrastructure management services (IMS) Testing services Business process management (BPO) Others Consulting and systems integration Consulting and package implementation Systems integration Others Products, platforms and solutions Products Product engineering services Others
Source: Company, Angel Research

% to revenue % growth qoq % growth yoy 60.9 17.1 21.6 5.8 8.2 5.4 2.8 31.2 24.7 6.0 0.5 7.9 4.2 3.4 0.3 6.1 11.0 1.2 2.7 14.2 4.5 4.5 2.8 2.4 (0.5) 161.2 (0.5) (8.6) 11.0 4.5 16.0 27.8 7.4 8.5 25.9 11.6 20.3 15.0 11.8 23.1 217.8 30.6 15.4 61.5 (0.9)

Industry wise, revenue of FSI, the companys anchor vertical contributing 35.3% to revenue, grew by 4.2% qoq, led by 4.9% qoq growth in revenue from banking and financial services. Revenue from insurance grew by 1.6% qoq. In CC terms, revenue from FSI grew by 4.8% qoq. Going ahead, the company is seeing traction in this vertical from risk compliance, fraud prevention and regulatory kind of work. Manufacturing (contributed 20.2% to revenue) registered 3.5% qoq growth in revenue. In CC terms, revenue from this vertical grew by 3.7% qoq. The company is seeing IT spending coming in the manufacturing industry segment from clients in terms of work related to harmonising processes and transformation to gain cost efficiency and simplicity. The RCL segment (contributed 22.9% to revenue) emerged as the major growth driver for the company, growing by 5.4% qoq. Growth was majorly led by whopping 71.0% qoq growth in healthcare and 7.3% qoq in life sciences. Revenue from retail and CPG grew by 1.2% qoq. In CC terms, revenue from RCL grew strongly by 6.0% qoq. In this industry segment, retail is gaining good traction on account of spend related to digital commerce, digital marketing and clients targeting to go global. In addition, CPG companies are investing significantly in package implementation kind of services. The ECS segment (contributed 21.6% to revenue) posted 4.5% qoq growth in its revenue, led by 4.5% qoq growth in revenue from energy and utilities. In CC terms, revenue from this segment increased by 5.3% qoq. Going ahead, the company expects its deal pipeline to pick up for the telecom industry segment, with more spend coming in from the wireless space during the quarter.

October 12, 2011

Infosys | 2QFY2012 Result Update

The company has 12 large deals in its pipeline currently. The company signed two business operations deals in the FSI space and two consulting deals in the manufacturing space.

Exhibit 6: Growth trend in industry segments (Reported basis)

Particulars FSI Banking and financial services Insurance Manufacturing RCL Retail and CPG Transport and logistics Life Sciences Healthcare ECS Energy and utilities Communication and services Others
Source: Company, Angel Research

% to revenue 35.3 28.2 7.1 20.2 22.9 15.6 1.7 3.8 1.8 21.6 5.7 10.4 5.5

% growth qoq 4.2 4.9 1.6 3.5 5.4 1.2 (1.3) 7.3 71.0 4.5 4.5 2.5 8.4

% growth yoy 16.3 22.2 (2.5) 24.7 32.4 26.4 9.1 44.5 137.5 (1.0) 6.0 (9.0) 9.6

In terms of geographies, revenue growth was led by Rest of the World, which posted 7.3% qoq growth in CC terms. Revenue from North America and Europe grew by 6.3% and 2.1% qoq in CC terms, respectively. The company added 10 new clients in Europe in 2QFY2012.

Exhibit 7: Growth trend in geographies (CC basis)

16 12 8
(%)

15.6

9.7 7.5 4.7 4.2 3.7 1.6 2.1 5.1 2.4 2.1 6.3 7.3

4 0

(0.5) (4) 2QFY11 3QFY11 North America

Source: Company, Angel Research

(2.6) 4QFY11 Europe 1QFY12 Rest of the world 2QFY12

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Infosys | 2QFY2012 Result Update

Hiring spree continues

Infosys added 15,352 gross employees in 2QFY2012, of which only 2,318 were lateral additions. The net addition number stood at 8,262. Attrition, on LTM basis, declined slightly to 15.6% in 2QFY2012 from 15.8% in 1QFY2012. The company maintained its gross hiring target of 45,000 employees in FY2012. Also, the company plans to hire ~8,000 employees in 3QFY2012. The company has made campus offers of 23,000 for FY2013 (27,000 for FY2012).

Exhibit 8: Employee metrics

2QFY11 Gross addition Net addition Lateral employees Attrition LTM basis (%)
Source: Company, Angel Research

3QFY11 11,067 5,311 5,212 17.5

4QFY11 8,930 3,041 3,591 17.0

1QFY12 9,922 2,740 4,044 15.8

2QFY12 15,352 8,262 2,318 15.6

14,264 7,646 4,138 17.1

Utilisation rate, including trainees, inched up by 60bp qoq to 70.2%, as trainees hired a couple of quarters back turned billable in this quarter. Utilisation rate, excluding trainees, also increased by 240bp qoq to 77.3% during the quarter.

Exhibit 9: Trend in utilisation

85 80 75.2
(%)

81.2

80.7 77.3 74.9

75 74.3 70 65 60 2QFY11 3QFY11 Including trainees 4QFY11 1QFY12 Excluding trainees 2QFY12 72.6 68.4 69.6 70.2

Source: Company, Angel Research

Margins decline
The companys EBITDA and EBIT margins improved by 197bp and 209bp qoq to 31.0% and 28.2%, respectively, as the effect of wage hikes given in 1QFY2012 (1012% for offshore employees and 23% for onsite employees) got absorbed and depreciating INR aided margins.

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Infosys | 2QFY2012 Result Update

Exhibit 10: Trend in EBITDA margin

300 200 100 167 33.3 33.3 32.1 197 31.0 29.1 (298) 34 33 32 31 (120)

(BP)

(100) (200) (300) (400) 2QFY11

29 28 27 26 2QFY12

3QFY11

4QFY11

1QFY12

Margin movement (qoq)

Source: Company, Angel Research

EBITDA margin (%)

For FY2012, management had previously guided for a 250bp yoy decline in EBIT margin, which now has been changed to just 85bp yoy, taking into account the INR movement against USD (the companys assumed rate is `48.98).

Client pyramid enhances

Infosys added 45 new clients during the quarter. Of this, 10 clients were added in the manufacturing vertical and 19 were added in the energy and utilities, life sciences and healthcare verticals. The most remarkable development during the quarter was the addition of a client in the US$300mn plus revenue bracket for the first time after 4QFY2009. Also, three clients shifted from the US$20mn-50mn bracket to higher revenue bracket of US$50mn-100mn. The company added three new clients in the US$10mn-20mn bracket and two new clients in the US$5mn-10mn bracket. The active client base of the company increased to 647 in 2QFY2012 from 628 in 1QFY2012.

Exhibit 11: Client metrics

Particulars Top client (% of revenue) Client addition Active client US$1mn5mn US$5mn10mn US$10mn20mn US$20mn50mn US$50mn100mn US$100mn200mn US$200mn-300mn 2QFY11 4.7 27 592 164 60 47 39 17 8 2 3QFY11 4.6 40 612 170 59 53 39 18 9 2 4QFY11 4.7 34 620 179 61 53 45 17 9 2 1QFY12 4.5 26 628 191 58 45 48 21 9 2 2QFY12 4.6 45 647 200 60 48 45 24 9 1 1

US$300mn plus
Source: Company, Angel Research

October 12, 2011

(%)

(7)

30

Infosys | 2QFY2012 Result Update

Guidance
The company decreased its FY2012 USD revenue growth guidance to 17.1191% yoy to US$708bn7.20bn mainly due to cross-currency movement. However, on the positive side, the company increased its USD EPS guidance to US$3.023.06 from US$2.882.92 given during 1QFY2012 results, 15.316.8% yoy growth vs. the previous guidance of 10.011.5% yoy growth. For 3QFY2012, management has guided for 3.25.4% qoq growth in USD revenue to US$1.802bn1.840bn, which is in-line with our expectations and indicates that management is looking at back-ended growth (in 2HFY2012) in FY2012. On the EBIT margin front, Infosys was previously expecting a 250bp yoy decline in its margin, but now this has been changed to only a 50-100bp yoy decline after adjusting for INR movement against USD. The major factors of the 50100bp yoy decline are: 1) 80bp negative impact due to utilisation coming off by 200bp yoy on account of 75% fresher hiring in 1HFY2012 to undertake pyramid rationalisation, 2) 110bp negative impact due to uncovered impact of annual wage hikes as well as promotions and 3) 90-140bp positive impact due to INR depreciation against USD assuming average rate of 47.56 for FY2012 (previously taking 80bp negative impact due to INR appreciation against USD assuming average rate of 44.5 for FY2012).

Exhibit 12: 3QFY2012 and FY2012 guidance

Guidance (IFRS) Revenue (` cr) EPS (`) Revenue (US$bn) Basic EPADS (US$) 3QFY2012 8,826-9,012 38.51-39.20 1.802-1.840 0.79-0.80 FY2012-Previous (As on 1QFY2012) 31,777-32,311 128.20-130.08 7.13-7.25 2.88-2.92 FY2012-Revised (As on 2QFY2012) 33,501-34,088 143.02-145.26 7.08-7.20 3.02-3.06

Source: Company, Angel Research

Exhibit 13: Assumptions for change in FY2012 EBIT margin guidance

Factors FY2012 INR/USD assumed Utilisation decline (bp) Employee costs (bp) INR/USD movement (bp) Total EBIT impact (yoy) SoP 1QFY12 44.50 -100 -120 to -130 -70 to -80 -290 to -310 SoP 2QFY12 44.50 -100 -70 -80 -250 SoP 3QFY12 47.56 -80 -110 +90 to +140 -50 to -100

Source: Company, Angel Research; Note: SoP Start of period

October 12, 2011

Infosys | 2QFY2012 Result Update

Outlook and valuation

Cross-currency volatility has increased over the past few weeks. During 2QFY2012, currencies like AUD, GBP and Euro depreciated by 8.4%, 2.5% and 6.2%, qoq, respectively, against USD. Hence, management has cut the annual revenue guidance for FY2012 by 0.9% from 1820% yoy to 17.119.1% yoy primarily due to these adverse cross-currency movements but not due to any changes in the IT spending landscape. Management has guided for US$1,802mn1,840mn revenue for 3QFY2012, which implies growth of 3.25.4% qoq. This guidance for 3QFY2012 instills confidence that management is on track to achieve annual revenue guidance of 17.119.1% yoy growth in FY2012. We have built in a revenue CQGR of 5.5% in 2HFY2012 vis--vis 4.5% in 1HFY2012. The recent results by Oracle and Accenture, which recorded robust licence sales, further corroborates the fact that FY2012 will not be affected by the global turmoil as Indian IT companies enjoy the implementation work for these licences with a lag of two quarters. However, we are cautious about the outcome of CY2013 budgets to be finalised by early January 2012. In September 2011, Accenture guided for revenue growth of 7-10% yoy (August end for FY2012) vis--vis 15% yoy growth in FY2011. Also, Infosys management commentary has turned cautious for next years budgets as currently the decision-making cycles have elongated from 23 weeks in 1QFY2012 to 23 months. This may defer spend on IT initiatives by more than a quarter and, hence, we have already assumed moderation in IT budgets in CY2013. We expect the company to record USD revenue growth of 19.3% and 14.1% yoy in FY2012 and FY2013, respectively. We have revised our INR assumption downwards following a steep 10% depreciation against USD over one month for FY2012 and FY2013 from 45.0 and 44.5 to 46.0 for both, respectively. This has led to INR revenue growth to be higher than USD revenue growth at 20.7% yoy for FY2012 and 14.0% yoy for FY2013. On the EBIT front, for FY2012, we expect margins to take a hit by 146bp as we have assumed rates of 47.0 and 46.0 for 3QFY2012 and 4QFY2012, respectively. Over FY201113E, we expect a CAGR of 13.5% and 14.8% in EBITDA and PAT, respectively. At the CMP of `2,681, the stock is trading at 19.2x FY2012E and 17.0x FY2013E EPS. We value the company at 18x FY2013E (10% discount to its five-year average of 20x and at a PEG of 1.25x) of `157.5 and recommend Accumulate with target price of `2,836.

Exhibit 14: Key assumptions

Parameters Revenue growth USD terms (%) USDINR rate Revenue growth INR terms (%) EBITDA margin (%) Tax rate (%) EPS growth (%)
Source: Company, Angel Research

FY2012 19.3 46.0 20.7 30.9 28.4 16.7

FY2013 14.1 46.0 14.0 30.6 28.0 13.0

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Infosys | 2QFY2012 Result Update

Exhibit 15: Change in estimates

FY2012 Parameter (` cr) Net revenue EBITDA Other income PBT Tax PAT Earlier estimates 32,659 10,096 1,736 10,862 3,044 7,819 Revised estimates 33,187 10,270 1,835 11,129 3,164 7,965 Variation (%) 1.6 1.7 5.7 2.5 3.9 1.9 Earlier estimates 36,674 11,103 1,912 11,924 3,339 8,585 FY2013 Revised estimates 37,821 11,558 2,047 12,498 3,499 8,999 Variation (%) 3.1 4.1 7.0 4.8 4.8 4.8

Source: Company, Angel Research

Exhibit 16: One-year forward PE (x)

4,700 4,100 3,500 2,900

(`)

2,300 1,700 1,100 500

Apr-07

Apr-08

Apr-09

Apr-10

Oct-07

Oct-08

Oct-09

Oct-10

Apr-11

Price
Source: Company, Angel Research

26x

22x

18x

14x

10x

Exhibit 17: Recommendation summary

Company HCL Tech Hexaware Infosys Infotech Enterprises KPIT Cummins Mahindra Satyam MindTree Mphasis NIIT Persistent TCS Tech Mahindra Wipro Reco Buy Neutral Accumulate Accumulate Neutral Accumulate Accumulate Accumulate Buy Buy Accumulate Buy Accumulate CMP (`) 420 88 2,681 113 148 74 368 340 44 305 1,079 584 351 Tgt. price (`) 558 2,836 122 79 414 382 57 357 1,179 734 374 Upside (%) 32.8 5.8 8.3 6.8 12.4 12.5 30.4 17.1 9.2 25.7 6.6 Target P/E (x) 15.0 11.0 18.0 8.0 10.0 11.0 10.0 11.5 8.2 10.0 20.0 9.0 15.3 FY2013E EBITDA (%) 17.2 15.3 30.6 15.1 15.3 14.6 13.9 15.5 13.8 19.0 28.5 16.3 18.3 FY2013E P/E (x) 11.1 11.1 17.0 7.6 9.6 10.4 9.0 8.6 6.3 9.0 18.3 7.2 14.4 FY2011-13E EPS CAGR (%) 24.3 66.0 14.8 8.8 16.5 30.4 28.4 0.4 11.2 (1.2) 15.1 28.5 6.1 FY2013E RoCE (%) 20.3 16.2 24.1 9.0 18.7 10.8 17.1 13.4 12.4 15.4 29.1 13.6 12.9 FY2013E RoE (%) 22.4 18.0 22.5 8.1 16.4 13.5 15.5 14.5 16.6 13.9 30.2 20.2 18.7

Source: Company, Angel Research

October 12, 2011

10

Oct-11

Infosys | 2QFY2012 Result Update

Profit and loss statement (IFRS, consolidated)

Y/E March (` cr) Net sales Cost of revenue Gross profit % of net sales Selling and marketing expenses % of net sales General and admin expenses % of net sales EBITDA % of net sales Dep. and amortization % of net sales EBIT % of net sales Other income Profit before tax Provision for tax % of PBT PAT Minority interest Adj. PAT EPS (`) FY2009 21,693 11,765 9,928 45.8 1,104 5.1 1,629 7.5 7,195 33.2 761 3.5 6,434 29.7 475 6,909 919 13.3 5,990 5,990 104.6 FY2010 22,742 12,078 10,664 46.9 1,184 5.2 1,628 7.2 7,852 34.5 942 4.1 6,910 30.4 990 7,900 1,681 21.3 6,219 6,219 109.5 FY2011 27,501 15,054 12,447 45.3 1,512 5.5 1,971 7.2 8,964 32.6 862 3.1 8,102 29.5 1,211 9,313 2,490 26.7 6,823 6,823 119.5 FY2012E 33,187 18,590 14,597 44.0 1,849 5.6 2,479 7.5 10,270 30.9 976 2.9 9,294 28.0 1,835 11,129 3,164 28.4 7,965 7,965 139.4 FY2013E 37,821 21,442 16,379 43.3 2,108 5.6 2,713 7.2 11,558 30.6 1,106 2.9 10,452 27.6 2,047 12,498 3,499 28.0 8,999 8,999 157.5

October 12, 2011

11

Infosys | 2QFY2012 Result Update

Balance sheet (IFRS, consolidated)

Y/E March (` cr) Current assets Cash and cash equivalents Available for sale financial assets Investment in certificates of deposit Trade receivables Unbilled revenue Derivative financial instruments Prepayments and other current assets Total current assets Non-current assets Property, plant and equipment Goodwill Intangible assets Available for sale financial assets Deferred income tax assets Income tax assets Other non-current assets Total non-current assets Total assets Current liabilities Trade payables Derivative financial instruments Current income tax liabilities Client deposits Unearned revenue Employee benefit obligations Provisions Other liabilities Total current liabilities Non-current liabilities Deferred income tax liabilities Employee benefit obligations Other liabilities Total non-current liabilities Total liabilities Equity Share capital Share premium Retained earnings Other components of equity Total equity Total liabilities and equity 286 2,944 15,972 (8) 19,194 22,201 286 3,047 20,668 72 24,073 27,622 286 3,082 23,826 109 27,303 31,263 286 3,120 29,454 103 32,963 36,855 286 3,120 36,449 53 39,908 43,457 39 187 56 282 3,007 124 171 61 356 3,549 259 60 319 3,960 260 61 321 3,893 260 61 321 3,549 27 114 581 5 331 104 92 1,471 2,725 10 724 8 531 131 82 1,707 3,193 44 817 22 518 140 88 2,012 3,641 30 820 25 528 140 90 1,939 3,572 20 737 25 540 140 80 1,685 3,228 4,665 692 35 447 274 262 6,375 22,201 4,439 829 56 356 667 347 6,694 27,622 4,844 825 48 23 378 993 463 7,574 31,263 5,068 830 60 23 400 1,000 613 7,994 36,855 5,162 840 60 23 500 1,200 717 8,502 43,457 10,993 3,672 750 411 15,826 12,111 2,556 1,190 3,494 841 95 641 20,928 16,666 21 123 4,653 1,243 66 917 23,689 20,468 30 25 5,637 1,455 85 1,162 28,861 25,369 30 50 6,424 1,658 100 1,324 34,955 FY2009 FY2010 FY2011 FY2012E FY2013E

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12

Infosys | 2QFY2012 Result Update

Cash flow statement (IFRS, consolidated)

Y/E March (` cr) Pre-tax profit from operations Depreciation Pre tax cash from operations Other income/prior period ad Net cash from operations Tax Cash profits (Inc)/dec in current assets Inc/(dec) in current liabilities (Inc)/dec in net trade WC Cashflow from operating activities (Inc)/dec in fixed assets (Inc)/dec in investments (inc)/dec in sale of financial assets (Inc)/dec in deferred tax assets Inc/(dec) in other non-current liab. (Inc)/dec in other non-current ass. Cashflow from investing activities Inc/(dec) in debt Inc/(dec) in equity/premium Dividends Cashflow from financing activities Cash generated/(utilised) Cash at start of the year Cash at end of the year FY2009 6,434 761 7,195 475 7,670 919 6,751 (664) 547 (117) 6,635 (1,372) 71 (213) 115 (77) (1,475) (758) 1,574 (2,331) 2,829 8,164 10,993 FY2010 6,910 942 7,852 990 8,842 1,681 7,161 (238) 468 230 7,391 (716) (3,746) (302) 74 (243) (4,933) 333 1,673 (1,340) 1,118 10,993 12,111 FY2011 8,102 862 8,964 1,211 10,175 2,490 7,685 (1,808) 448 (1,360) 6,325 (1,267) 3,602 (23) (348) (37) (104) 1,823 (1,256) 2,337 (3,593) 4,555 12,111 16,666 FY2012E 9,294 976 10,270 1,835 12,105 3,164 8,941 (1,460) (69) (1,529) 7,412 (1,200) 89 (29) 2 (167) (1,305) 32 2,337 (2,306) 3,802 16,666 20,467 FY2013E 10,452 1,106 11,558 2,047 13,604 3,499 10,105 (1,167) (344) (1,511) 8,594 (1,200) (25) (300) (114) (1,639) (50) 2,004 (2,053) 4,901 20,467 25,369

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Infosys | 2QFY2012 Result Update

Key ratios
Y/E March Valuation ratio (x) P/E P/CEPS P/BVPS Dividend yield (%) EV/Sales EV/EBITDA EV/Total assets Per share data (`) EPS Cash EPS Dividend Book value DuPont analysis Tax retention ratio (PAT/PBT) Cost of debt (PBT/EBIT) EBIT margin (EBIT/sales) Asset turnover ratio (sales/assets) Leverage ratio (assets/equity) Operating ROE Return ratios (%) RoCE (pre-tax) Angel RoIC RoE Turnover ratios (x) Asset turnover (fixed assets) Receivables days 3.4 74 3.4 70 3.6 78 4.2 78 4.4 78 29.0 57.4 31.2 25.0 58.7 25.8 25.9 56.1 25.0 25.2 56.9 24.2 24.1 58.0 22.5 0.9 1.1 0.3 1.0 1.2 31.2 0.8 1.1 0.3 0.8 1.1 25.8 0.7 1.1 0.3 0.9 1.1 25.0 0.7 1.2 0.3 0.9 1.1 24.2 0.7 1.2 0.3 0.9 1.1 22.5 105 118 23.5 336 109 125 25.0 421 119 134 34.9 477 139 156 34.9 576 158 177 29.9 698 25.6 22.7 8.0 0.9 6.6 19.8 6.4 24.5 21.4 6.4 0.9 6.0 17.5 5.0 22.4 20.0 5.6 1.3 5.0 15.2 4.4 19.2 17.1 4.7 1.3 4.0 12.9 3.6 17.0 15.2 3.8 1.1 3.4 11.1 2.9 FY2009 FY2010 FY2011 FY2012E FY2013E

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Infosys | 2QFY2012 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Infosys No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

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