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Infosys (INFY)
NYSE:INFY
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Infosys
(NYSE:INFY)75Outperform
Positive Factors
Market Share
Infosys has significantly expanded its global market share in IT services over the past 12 years, going from 0.8% in 2012 to ~3.5% in 2023.
Revenue Guidance
INFY revised its FY25F revenue guidance upwards to 4.5-5.0%, slightly above consensus.
Negative Factors
Client Dependence
Infosys derives 34% of its revenue from its top 25 clients, increasing the company's risk of revenue loss if one of these clients decides to stop doing business.
Infosys (INFY) vs. S&P 500 (SPY)
Market Cap
$80.41B
Dividend Yield2.1%
Average Volume (3M)10.47M
Price to Earnings (P/E)24.7
Beta (1Y)0.61
Revenue Growth3.08%
EPS Growth11.92%
CountryUS
Employees317,240
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)0.80
Shares Outstanding4,152,734,000
10 Day Avg. Volume11,818,769
30 Day Avg. Volume10,473,420
Financial Highlights & Ratios
PEG Ratio2.07
Price to Book (P/B)N/A
Price to Sales (P/S)18.04
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$24.93Price Target Upside24.28% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering8
Infosys Business Overview & Revenue Model
Company DescriptionFounded in 1981, Infosys Ltd. is a global leader in next-generation digital services and consulting, with it providing end-to-end business solutions in North America, Europe, and India. It provides application development and management, independent validation, product engineering and management, infrastructure management, enterprise application management, and support and integration services.
How the Company Makes MoneyInfosys generates revenue through a diversified business model that primarily includes IT services and consulting. The company earns money by delivering end-to-end business solutions that leverage technology and analytics to help clients improve efficiency and achieve business goals. Key revenue streams include application development and maintenance, enterprise solutions, business process management, and digital transformation services. Infosys also partners with leading technology firms to enhance its service offerings, ensuring it remains competitive in the fast-evolving tech landscape. Additionally, strategic acquisitions and investments in innovation and research contribute to its growth and revenue generation.
Infosys Financial Statement Overview
Summary
Infosys presents a highly favorable financial profile with strong revenue and profit margins, efficient cash flow management, and a stable, low-leverage balance sheet. These factors contribute to its robust financial health and position within the software industry, supporting ongoing growth and operational efficiency.Income Statement
Infosys has demonstrated strong revenue growth over the years, with a TTM revenue of $18.84 billion, reflecting consistent upward momentum. The company maintains a healthy gross profit margin of approximately 30.2% and a net profit margin of 17.2%, indicating solid profitability. EBIT and EBITDA margins are also robust at 20.9% and 24.5% respectively, showcasing efficient operational management. The revenue growth rate from the previous year is 1.48%, suggesting steady, albeit modest, expansion.85
Very Positive
Balance Sheet
The balance sheet of Infosys is strong, with a debt-to-equity ratio of 0.07, indicating low leverage and a strong equity base. Return on Equity (ROE) stands at 29.96%, reflecting effective use of shareholders' funds to generate profit. The equity ratio is 63.7%, highlighting a well-capitalized structure with substantial equity in comparison to total assets. These factors suggest financial stability and low risk.82
Very Positive
Cash Flow
Infosys exhibits impressive cash flow metrics, with a free cash flow growth rate of 22.3%, indicating significant cash generation capacity. The operating cash flow to net income ratio is 1.16, underscoring strong cash conversion efficiency. Additionally, the free cash flow to net income ratio of 1.09 confirms effective cash management and sustainability of operations. These metrics highlight the company's ability to generate and manage cash effectively.88
Very Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 18.84B | 18.56B | 18.21B | 16.31B | 13.56B | 12.78B | Gross Profit |
| 5.68B | 5.47B | 5.50B | 5.32B | 4.73B | 4.23B | EBIT |
| 3.94B | 3.83B | 3.83B | 3.75B | 3.33B | 2.72B | EBITDA |
| 4.62B | 4.21B | 4.71B | 4.12B | 4.05B | 3.05B | Net Income Common Stockholders |
| 3.23B | 3.17B | 2.98B | 2.96B | 2.61B | 2.33B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 3.76B | 3.43B | 2.32B | 3.23B | 3.70B | 3.08B | Total Assets |
| 11.87B | 16.52B | 15.31B | 15.55B | 14.82B | 12.26B | Total Debt |
| 0.00 | 1.00B | 1.01B | 722.00M | 627.00M | 612.00M | Net Debt |
| -2.36B | -771.00M | -471.00M | -1.58B | -2.75B | -1.85B | Total Liabilities |
| 2.55B | 5.92B | 6.09B | 5.56B | 4.32B | 3.56B | Stockholders Equity |
| 9.31B | 10.56B | 9.17B | 9.94B | 10.44B | 8.65B |
| Cash Flow | Free Cash Flow | ||||
| 3.52B | 2.88B | 2.53B | 3.06B | 2.97B | 2.15B | Operating Cash Flow |
| 3.75B | 3.15B | 2.85B | 3.35B | 3.26B | 2.61B | Investing Cash Flow |
| -265.07M | -708.00M | -218.00M | -1.00B | -1.13B | -242.00M | Financing Cash Flow |
| -2.76B | -2.12B | -3.29B | -3.33B | -1.32B | -2.51B |
Infosys Technical Analysis
Negative
20.06
Price Trends
21.80
Negative
22.02
Negative
21.21
Negative
Market Momentum
-0.54
Positive
30.09
Neutral
15.14
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For INFY, the sentiment is Negative. The current price of 20.06 is below the 20-day moving average (MA) of 21.15, below the 50-day MA of 21.80, and below the 200-day MA of 21.21, indicating a bearish trend. The MACD of -0.54 indicates Positive momentum. The RSI at 30.09 is Neutral, neither overbought nor oversold. The STOCH value of 15.14 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for INFY.
Infosys Risk Analysis
Infosys disclosed 58 risk factors in its most recent earnings report. Infosys reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Infosys Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $216.28B | 28.99 | 27.10% | 1.60% | 2.75% | 10.53% | |
75 Outperform | $80.41B | 24.69 | 29.99% | 2.10% | 3.08% | 11.92% | |
69 Neutral | $11.26B | 25.25 | 12.52% | ― | 0.80% | 10.05% | |
68 Neutral | $33.55B | 30.07 | 14.73% | 1.91% | -3.41% | 67.87% | |
67 Neutral | $1.27B | 22.42 | 5.71% | 0.38% | -6.34% | -0.89% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
47 Neutral | $3.26B | 267.98 | -2.51% | ― | -5.65% | 78.20% |
* Technology Sector Average
Performance Comparison
INFY
Infosys
20.06
1.26
6.70%
ACN
Accenture
348.26
-26.32
-7.03%
CTS
CTS
43.37
-1.11
-2.50%
EPAM
Epam Systems
200.15
-109.86
-35.44%
WIT
Wipro
3.32
0.32
10.67%
DXC
DXC Technology
18.22
-2.16
-10.60%
Infosys Earnings Call Summary
Earnings Call Date: Jan 16, 2025 | % Change Since: -12.36% | Next Earnings Date: Apr 17, 2025
Earnings Call Sentiment Positive
The earnings call reflected a generally positive outlook with strong revenue growth, significant large deal wins, and robust cash flow. Despite some sector-specific challenges, especially in the automotive and communication sectors, the company's overall performance and strategic initiatives, particularly in AI, suggest a strong position moving forward.Highlights
Revenue Growth
The company's revenue grew 1.7% quarter-on-quarter and 6.1% year-on-year in constant currency terms in Q3.
Large Deals
Large deal total contract value (TCV) for the quarter was $2.5 billion, with 63% being net new, which is an increase of 57% in net new deal TCV.
Operating Margin and Cash Flow
Operating margin at 21.3%, with free cash flow for the quarter at an all-time high of $1.26 billion, an increase of 90% year-on-year.
Headcount and Attrition
Headcount grew by over 5,000 sequentially to 323,000 employees worldwide, with attrition remaining low at 13.7%.
European and U.S. Growth
Double-digit growth in Europe at 12.2% and improvement in the U.S. financial services sector.
Generative AI Initiatives
Infosys Topaz, their generative AI-powered services and solutions, is being actively deployed with over 100 new AI agents being developed.
Lowlights
Automotive Sector Slowdown
The automotive sector in Europe continues to remain slow.
Communication Sector Challenges
The communication sector faces a volatile macro environment, leading to growth challenges and rising operating expenses.
Top 5 Client Decline
The top 5 clients saw a more than 6% decline quarter-on-quarter in dollar terms, primarily due to furloughs and currency impacts.
Company Guidance
During the Q3 FY '25 earnings call for Infosys Limited, key financial and operational metrics were highlighted, demonstrating robust performance and strategic advancements. Revenue increased by 1.7% quarter-on-quarter and 6.1% year-on-year in constant currency terms, with significant growth in Europe and India. The company reported large deal wins totaling $2.5 billion, with 63% being net new. Operating margin stood at 21.3%, and free cash flow reached a record $1.26 billion. The headcount rose by over 5,000, reaching 323,000 employees globally. Financial services in the U.S. maintained strong growth, and there was a revival in the European financial services sector. Infosys also revised its revenue growth guidance to 4.5% to 5% in constant currency, while maintaining its operating margin guidance at 20% to 22%. The company is leveraging generative AI, with over 100 new AI agents under development, showcasing its commitment to innovation and efficiency in client operations.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.