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COMPANY PROFILE

Built in the year 1981 in Bangalore, Infosys Limited is an Indian multinational technology company that provides business consulting, information technology and outsourcing services. Infosys is the second-largest Indian Information Technology organization. The credit rating of the business is A− as given by Standard & Poor's credit rating agency. The company changed its name to Infosys Technologies Private Limited in April 1992 and to Infosys Technologies Limited when it became a public limited company in June 1992 and was later renamed to Infosys Limited in June 2011. One of its popular products is a universal banking solution Finacle which is widely used across the Indian Banking industry.

INFORMATION TECHNOLOGY INDUSTRY IN INDIA

India is the leading sourcing destination across the world, accounting for approximately 55% market share of the US$ 200-250 billion (approx) global services sourcing business in 2019-20. 

Indian Information Technology companies have set up over 1,000 global delivery centres in about 80 countries across the world. It has become the digital potential hub of the world with around 75% of global digital talent present in the country.

The industry’s revenue is growing at 7.7% year-on-year. It is estimated to reach US$ 350 billion (approx) by 2025. 

The computer software and hardware sector in India attracted cumulative foreign direct investment (FDI) inflows worth US$ 62.47 billion (approx) between April 2000 and September 2020. 

Post Covid-19, virtual hiring of IT talents and working from home have become the new norm. For efficient collaboration and communication, investments have started to pour in newer technologies that are contributing to making the model more functional, productive and encrypted.

IT industry is in the middle of a digital transformation where cloud adoption, data applications and robust cyber security are being used as tools to continue business efficiently and effectively.

Note: Prices from February 2020 has been considered to chart the graph.

COMPANY PERSPECTIVE AND REVIEW

The Company’s revenues grew by 9.8% in constant currency in the year 2019-20. Their digital work grew by 38% which comprised of 42% of their overall revenue in Q4 of 2019-20.

It’s earnings per share grew by 8.3% in US dollar terms. The operating cash flow was US$2.6 billion (approx), which grew at 15.4% for the year and it ended the year with US$3.6 billion in cash their balance sheet (approx). 

Infosys has an Asset Utilisation Ratio of 1.01, which is way higher than the industry average of 0.74, signifying that the company is more efficient. 

During the FY 2020; the company has won Asia IP Elite Award 2019, for developing innovative Intellectual Property functions and also received ET Now Business Leader of the Year Award for Finance transformation and Best Financial Reporting. The company has been recognized and awarded Top Employers Global 2021 certification in 20 countries globally.

In the first three quarters of this FY, in spite of the global pandemic challenge, Infosys has already signed contracts totalling nearly $12 billion and with the business of the fourth quarter to add, it is expected to touch a historic high.

In October 2020 Infosys declared an interim dividend of 240.00% amounting to Rs.12.00 per share. The company has a good dividend track report and has consistently declared dividends for the last 5 years. The overall scenario suggests the company to be a very good buy.