This Summer Project Report is study of Equity market scenario in May & June 2016 and Growth prospect of IT sector. And includes Infosys company analysis with peer set analysis.

1. WELINGKAR INSTITUTE OF MANAGEMENT
DEVELOPMENT & RESEARCH
SUMMER INTERNSHIP PROJECT REPORT
ON
EQUITY RESEARCH ON IT SECTOR
BY
VARSHA CHAUHAN
MMS 2015 – 17
SEMESTER III
SPECIALISATION: FINANCE
ROLL NO 49

2. pg. 1

3. pg. 2
Table of Contents
EXECUTIVE SUMMARY ..........................................................................................................................3
RESEARCH METHODOLOGY..................................................................................................................4
COMPANY PROFILE .................................................................................................................................5
Product & Services ...................................................................................................................................5
INTRODUCTION ........................................................................................................................................7
Equity research..........................................................................................................................................7
Limitations................................................................................................................................................7
ECONOMIC ANALYSIS ............................................................................................................................8
Current scenario of equity market.............................................................................................................8
Global scenario .......................................................................................................................................10
INDUSTRY ANALYSIS............................................................................................................................12
Global IT scenario...................................................................................................................................12
Indian IT scenario ...................................................................................................................................13
COMPANY ANALYSIS............................................................................................................................21
Infosys.....................................................................................................................................................21
Company overview .............................................................................................................................21
Business model ...................................................................................................................................21
Services...............................................................................................................................................22
Product, Subsidiaries, client base, employees.....................................................................................22
Competitive Advantage.......................................................................................................................23
Corporate governance ratings ............................................................................................................24
Financial Ratio analysis..........................................................................................................................25
Overall performance measure .............................................................................................................25
Profitability Measures.........................................................................................................................25
Test of Investment Utilization.............................................................................................................26
Test of Financial condition..................................................................................................................27
Test of dividend Policy ........................................................................................................................27
Competitive analysis...............................................................................................................................29
Competitor ..........................................................................................................................................29
SUMMARY AND CONCLUSION............................................................................................................31
BIBLOGRAPHY........................................................................................................................................32

4. pg. 3
EXECUTIVE SUMMARY
Report starts with the working of Tradebulls security Pvt. Ltd. which is a financial
institution that facilitates the buying and selling of financial securities between a buyer and a
seller. Firm serve a clientele of investors who trade public stocks and other securities and
entrusted with the responsibility of researching the markets to provide appropriate
recommendations. They offer wide range of products which are mentioned in report.
This report is research on IT sector in respect to equity and potential growth. To research on IT
sector many factors comes into picture such as Economy condition of a country, effect of world
circumstance on Indian market. Global Factors that are driving market like fed rate hike, Brexit.
It answer question such as what is current market scenario. Is economy condition feasible to
invest? Comparison of the condition of global market with Indian market. How Indian IT sector
is performing with respect to world.
For fundamental analyses of stock, research on Economy, Industry, and company is required. In
Sector analysis, the transition of IT sector over past three decade is noted. And major driving
factors such as composition of IT sector, domestic market state, FDI, Export, and GIC are taken
into consideration. Major trend in IT sector are studied. Indian value preposition of IT sector is
shaped. Key decisions of top IT companies that will affect IT sector are reported. Growth driver,
Corporate Investments, government initiatives, NASSCOM initiatives are also covered as it has
focal affects IT sector.
Infosys company overview, its subsidiaries, products, client base, global delivery model, revenue
distribution is enclosed. To proper analyze a company main focus is given on business model,
competitive advantage, operational effectiveness, Management, Corporate governance,
competition. Under corporate governance financial & Information transparency, Stakeholder’s
right, structure of board of director is taken into consideration. And in last part of report the
financial ratio analysis is done to finally arrive at conclusion.

5. pg. 4
RESEARCH METHODOLOGY
The primary research is conducted by taking valuable insights of trade & sales professional at
Tradebulls security Pvt. Ltd. on area such as market condition, erudition of how proper equity
research is to be conducted, and way out of the problem faced in doing the same. Client
Interaction also helped in knowing the perception of clients of equity market.
The secondary research for Industry analysis was carry out through various internet sources such
as NASSCOM (National Association of Software and Services Companies), Databank such as
Ace analyser, CRISIL, CMIE industry outlook. To study recent trend BSE is referred.
Company analysis is conducted based on Company websites, Company financial statement, and
Company press release. And various news articles for factors affecting markets.
Issues such as learning fundamental analysis; procedures to follow; factors to take into
consideration while valuing a mature firm; calculating risk with appropriate aspects of economy,
industry and company was retorted by books and internet sources.

6. pg. 5
COMPANY PROFILE
Tradebulls securities pvt. Ltd. is a financial institution that facilitates the buying and selling
of financial securities between a buyer and a seller. Firm serve a clientele of investors who trade
public stocks and other securities and entrusted with the responsibility of researching the markets
to provide appropriate recommendations. It is a successful combination and outcome of market
intelligence, resource identification, processing technologies, supply chain management, need
identification, marketing methodologies, trading techniques and financial management. They
take pride in their ability to take on difficult, complex projects and deliver effective solutions
quickly and transparently.
Tradebulls offers best-delivering powerful, easy-to-use trading technology, supporting active
traders over a wide range of products, and teaching the world a smarter way to seek risk
management and spot potential opportunities. Tradebulls continue to challenge its clients to learn
more, get smarter and make more informed decisions. Company has a team of dedicated,
experienced stock market professionals committed to deliver world-class services at the most
competitive rates. Tradebulls provides an elite experience of equity trading with blend of pearl of
wisdom research and value added services like depository, online trading, margin funding etc. It
provides end to end solutions for trading and investment with robust technology platform.
Company as a private company and non-hierarchical partnership structure gives them a unique
ability to be decisive, swift and innovative in their transactions. They instill a spirit of 100%
ownership in their team by giving them 100% authority and decisive freedom within a broader
framework of standard systems and processes which maintains fine balance between innovation
and discipline. They provide highest emphasize on leadership development within the
organization and each person is empowered with final authority and flexibility to deal with client
requirement. They customize their approach, systems and processes not only from client to client
but also from assignment to assignment keeping underlying principles common.
Product & Services
Tradebulls offers following Services:
 Equity & derivatives: A derivative is a contract between two or more parties whose value
is based on an agreed-upon underlying financial asset, index or security. The derivative
segment is a highly lucrative market that gives investors an opportunity to earn

7. pg. 6
superlative profits (or losses) by paying a nominal amount of margin. Over past few
years, Future & Options segment has emerged as a popular medium for trading in
financial markets. However, it can also be a very risky proposition due to high risk-return
prevalent in the stock market.
 Commodities Derivative: Commodities Derivative market has emerged as a new avenue
for investors to create wealth. Today, Commodities have evolved as the next best option
after stocks and bonds for diversifying the portfolio. Based on the fundamentals of
demand and supply, Commodities form a separate asset class offering investors,
arbitrageurs and speculators immense potential to earn returns. Tradebulls Commodities
Broking (P) limited is a member of both the exchange (MCX/NCDEX) that allows you to
trade in all the commodities traded on both the exchange.
 Currency: The global increase in trade and foreign investments has led to inter-
connection of many national economies. This and the resulting fluctuations in exchange
rates, has created a huge international market for Forex rendering investors another
exciting avenue for trading. The Forex market offers unmatched potential for profitable
trading in any market condition or any stage of the business cycle.
Benefits:
 Low Commissions: Brokerage fees are very low as the market is highly
competitive.
 Standardized Lot Size: In the futures markets, exchanges determine lot or contract
sizes which are fixed in nature. This allows traders to trade in multiple lots.
 Low Transaction Cost: The retail transaction cost (the bid/ask spread) is typically
less than 0.1% under normal market conditions. In large deals, the spread could be
as low as 0.07%.
 High Liquidity: With an average trading volume of over $4 trillion per day, Forex
market has high liquidity. It means that a trader can enter or exit the market at will
in almost any market condition.
 Instant Transactions: This is a very advantageous by-product of high liquidity.
 Low Margin, High Leverage: These factors increase the potential for higher
profits (and losses).
 Internet Trading
 Depository Participant: Tradebulls is registered as a Depository Participant with CDSL.
In the times of T+2 having a Demat account linked to your trading account becomes
more convenient. You receive regular account reports and an efficient service at all times.
 IPO (Initial Public offering):
 Availability of all IPO forms.
 Guidance for all new IPO’s by experienced professionals
 Distribution and collection of forms up to 5 pm
 Facility of HNI funding.
 Prompt New Demat account opening for IPO investors Facility to inform about
allotment in Demat a/c through SMS
 Facility of telephonic inquiry of demat balance
 Competitive service tariff in the industry

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INTRODUCTION
Equity research
The sole purpose of investor while buying stocks is gain. And to make that chances bright
there are two tools to use: Fundamental analysis & Technical Analysis, both comes under Equity
research. Fundamental Analysis is all about finding the valuation of a listed company. It is
studying company in qualitative as well as quantitative aspect. Fundamental Analysis is split into
three parts research, reporting & projection. Once you have the company under consideration,
you look at the economic aspects like GDP, growth rates, market size of the industry and the
competition aspects etc. Once you understand the economics behind the business, perform the
financial statement analysis of the historical balance sheet, cash flows and income statement to
form an opinion on how the company did in the past. Based on management’s expectation,
historical performances and industry competition, project the financial statements like the BS, IS
and CFs of the company. (also called as Financial Modeling in Equity Research). Use the Equity
valuation models like Discounted Cash Flows, Relative valuations; sum of parts valuation the
company, Gordon growth method. Calculate the Fair price based on the above models and
compare the fair price with the Current Market Price (stock exchange).
Technical Analysis is based on 3 assumptions
1) The market discounts everything.
2) Price moves in trends.
3) History tends to repeat itself.
Technical analysis uses trend, channels, trendlines, length of trendline to predict stock price it
consist of analyzing stock through bar chart, line chart, candlestick chart, point& figure chart.
And define moving averages, indictors, osclillator.
Limitations
Efficient market hypothesis (EMH):
This theory says that the market's price is always the correct one - any past trading information is
already reflected in the price of the stock and, therefore, any analysis to find undervalued or
overvalued securities is useless.
(EMH) is an idea partly developed in the 1960s by Eugene Fama. It states that it is impossible to
beat the market because prices already incorporate and reflect all relevant information. This is
also a highly controversial and often disputed theory. Supporters of this model believe it is
pointless to search for undervalued stocks or try to predict trends in the market through
fundamental or technical analysis.
Under the efficient market hypothesis, any time you buy and sell securities, you're engaging in a
game of chance, not skill. If markets are efficient and current, it means that prices always reflect
all information, so there's no way you'll ever be able to buy a stock at a bargain price.

9. pg. 8
ECONOMIC ANALYSIS
Current scenario of equity market
India is fastest growing emerging market with GDP of 7.6%. Bullish investors preferred to
ignore the adage 'Sell in May and go away' on a slew of positive domestic triggers. At month-
end, benchmarks S&P BSE Sensex and Nifty 50 rose 4.14% and 3.95%, respectively, over April
Local indices in May
Fig.1: Local indices in may
Source: Ace Analyser
Hopes of a good monsoon received another boost in May with private forecaster Skymet
predicting a 92% chance of India receiving above normal rainfall. The India Meteorological
Department had already forecast above-normal monsoon at 104-110% of the long-period
average. Bountiful rains are expected to inject new life in the ailing rural economy after two
consecutive years of drought, reviving rural demand, especially for fast-moving consumer goods
and automobiles.
Sentiment improved further after the Rajya Sabha passed the vital Insolvency and Bankruptcy
Code Bill. The 'big bang reform' legislation will strengthen creditor rights and facilitate lending,
replacing multiple insolvency laws and enabling greater ease of doing business.

10. pg. 9
Investors also cheered the release of better-than-expected January-March earnings. In particular,
Larsen and Toubro (L&T) posted strong results with net profit surging 19% year on year,
underscoring the gradual uptick in the economy.
However, the amendment to the Double Tax Avoidance Treaty with Mauritius, which allows
India to tax capital gains made by Mauritius-based companies, was taken negatively and capped
the gains. Concerns over the Securities and Exchange Board of India's revised norms on
investments through participatory notes (P-notes) also cast a cloud, as did the deteriorating asset
quality of banks. Weak domestic industrial production data for March and a jump in April's
consumer inflation added to the negatives, as did talk of quicker funds rate hike by the Fed.
Inflows from FIIs were a mere $0.2 billion compared with $1.3 billion in April. Buzz of quicker
rate hike by the US Federal Reserve and Brexit fears roiled global market. There is added
volatility due to Brexit in June but according to Shaktianand Das, Secretary of Ministry of
Economic affairs. As far India is concerned there are three major factors which give us an edge
over other economies to deal with this situation. Our real economy is strong, the growth
prospects are very positive and the macroeconomic numbers are very robust; current account
deficit, fiscal deficit. Two, India was and will continue to be an attractive destination, both for
FII as well as FDI flows. Three, the reserves with the central bank, about $360 billion, which is
quite robust. So the real economy is very strong. Therefore, India is well placed to deal with the
challenge.
Performance of benchmark domestic indicators since May 2010
Fig.2: Domestic Indices
Sectoral performance
The S&P BSE Capital Goods index was the top gainer, increasing 9.56% over April. This was
due to the government approving the first National Capital Goods Policy, which seeks to reduce

11. pg. 10
reliance on imported equipment by incentivizing domestic production. Banking stocks advanced,
posting 3% average monthly returns following the passage of the bankruptcy code Bill. The S&P
BSE Auto index increased 0.7% on an average following some robust quarterly earnings.
However, the S&P BSE Oil & Gas index fell 0.7% on profit-booking.
Sectoral performance in May
Fig.3: Sectoral performance in May
Global scenario
Downcast performance in global markets
Global markets were fairly flat, with a small positive return for the Nikkei after trading in
negative territory for two months even as the S&P 500 headed south. Mixed economic data
released in May stagnated the markets. Despite strong US home sales data released in May,
markets remained cautious on the expectation of a possible rate hike by the Fed in mid-June.
Expressing optimism for the strong growth rate of the country, Economic Affairs Secretary
Shaktikanta Das has said that the country's GDP growth is likely to touch 8 per cent in the
current fiscal 2016-17, on the back of above normal monsoon. Das expressed hope that the likely
passage of Goods and Services Tax (GST) bill in Parliament would add to the business sentiment
and will further help in country’s growth.
There are signs of recovery in the global economy, but the traction required to ascend the growth
curve is yet to be found. The United States, Eurozone and Japan have all expanded at a faster rate
in the first quarter of 2016.However, inflation remained below target in all advanced economies
notwithstanding easy monetary conditions.

12. pg. 11
Global indices in May
Fig.4: Global indices in may
Source: Ace Analyser

13. pg. 12
INDUSTRY ANALYSIS
Global IT scenario
Global spends on IT and related business services rose at a steady rate in 2014 as global
economic conditions improved.
Over the past four years, spending on various segments has increased steadily. Spending
on hardware has been the highest, rising to $1.02 trillion in 2014 from $599 billion in 2010,
which is a CAGR of 14.3%.
Fig.5: Spending on IT services
Source: Ace Analyser
The global IT industry comprises hardware, software, IT services and BPO, with hardware
accounting for a major chunk of revenue, followed by IT/ITeS and software. According to
National Association of Software and Services Companies (NASSCOM), revenue of the global
information technology (IT) industry, comprising hardware, software, IT services and business
process outsourcing, stood at $2,275 billion in 2014, an increase of 4.6% over the previous year.
Hardware accounted for the largest share at 45%, followed by IT/ITeS and software at around
37% and 18%, respectively.
As global sourcing of services increased 10% in 2014, India continues to command a substantial
edge over competitors, with its share in the global IT services outsourcing market reaching 68%
in 2014.

14. pg. 13
Indian IT scenario
The Indian IT industry has moved up the value chain over the past three decades. During this
period it has transitioned into becoming a global player.
Fig.6: Transition of IT sector
Source: Ace Analyser
In terms of quality as well, Indian companies have gained ground. Initially, companies
focused on work products, which then moved to process improvement. Thereafter, project
orientation took root. Indian companies were quick to align their quality management systems
(QMS) with the ISO 9000 standards. This ensured consistent and orderly execution of customer
engagements and provided a framework for measurable improvement. The next stage was
associated with a focus on software engineering, which was often achieved by aligning the QMS
with the capability maturity model (CMM) framework, and undergoing one or more assessments
at increasing levels of maturity. Quality was a key differentiating feature of Indian players as
they moved from low cost, low quality to medium cost, high quality.
The US accounts for two-thirds of India's total IT export revenue. Due to this high
concentration, the industry's fortunes are tied to the rupee's fluctuation against the dollar. In an
effort to reduce this dependence, Indian IT companies are looking to expand into other
geographies. The financial services sector, including securities, banking and insurance services,
remains the largest customer for IT services.
The domestic IT/ITeS industry saw an improvement in 2014-15 as corporates increased
IT spends due to an improved economy. As the domestic IT/ITeS industry is still at a nascent
stage, hardware continues to account for a large portion of overall domestic IT/ITeS spends.
Recognizing the IT sector's export potential and employment generating opportunity, the
Indian government has taken several initiatives to promote this industry. Amendments to the IT
policy of 2000 and provisions in the National IT Policy, 2011 aim at maximizing the available
potential and enabling IT proliferation within India. In addition, strengthening laws related to
violations of privacy and confidentiality could aid conducive development of the industry.

15. pg. 14
Indian Information Technology (IT) industry has emerged as one of the most important
industries, contributing significantly to the growth of the economy. The structure of the industry
is quite different from other industries in the Indian economy. The Industry has played a key role
in putting India on the global map. The industry has also helped India transform from a rural and
agriculture-based economy to a knowledge based economy, and also created significant demand
in the Indian education sector, especially for engineering and computer science. The industry is
hugely dependent on skilled manpower. Thus creating employment opportunity nationally as
well as globally.
Software products, IT services, ecommerce, BPM and Hardware are the major segment
of the industry. Software products segment is being driven by increased adoption of SaaS and
cloud and availability of verticalised solutions. IT services growth is on account of demand from
IS outsourcing and cloud services as also the GoI’s Digital India and eGovernance agenda. BPM
is being driven by BFSI, telecom ecommerce. Also growing consumption pattern in Tier II/III
cities and rural areas is translating into opportunity for value-added services. Industry’s domestic
revenues (including ecommerce) are likely to grow at 15-18 percent to $55-57 billion in the
current financial year as compared to last financial year.
Fig.7: Domestic market size of Indian IT industry
Source: Ace Analyser
Rising Exports
In the current financial year, the exports of IT and BPM industry is expected to be $112
billion as compared to $98.5 billion last financial year. In the growth term, the industry is
expected to cloak a double-digit growth of over 13 per cent on account of growing digital
technology and consumer economy in the country. Further, it is also expected that the Industry
will maintain same growth trade in the financial year 2017. In the year 2015 India comprised of
around 500 BPM players generating revenue of $23 billion, which is expected to rise and reach
$50 billion in 2020.

16. pg. 15
Fig.8: Export of IT and BPM
Source: Ace Analyser
Increasing number of GIC’s in India
Global In-House Centers (GIC), also known as captive centers, are one of the major
growth drivers of the IT-BPM sector in India. They also operate in engineering services and
software product development. In 2015, there were more than 1025 GICs operating out of India,
across multiple locations accounting for $19.4 billion of export revenues, almost 20 per cent of
the industry export revenues, and employing >25 per cent of the total manpower. The impact of
the segment goes beyond revenue and employment, as it helped in developing India as a R&D
hub and creates an innovation ecosystem in the country. Companies from North America and
Europe are major investors in the captive segment in India, accounting for over 90 per cent of
captives in the country.
Fig.9: Number of GIC’s in India
Source: Ace Analyser

17. pg. 16
Rising foreign direct investment (FDI)
In the first six month of current financial year, foreign direct investment in Hardware and
Software surged by around eight folds at Rs 19504 crore as compared to Rs 2532 crore in the
same period of last year. The contribution to the sector in the overall FDI remained at 7 per cent.
Fig.10: Foreign direct investment in IT Industry
Source: Ace Analyser
Profit performance in Mar 2016
The software industry witnessed a buoyant profit performance in the quarter ended March
2016. The industry posted a healthy double-digit growth in profits after showcasing subdued
profit performance for six consecutive quarters. The industry’s operating profit surged by 32.2
per cent (y-o-y) and net profits increased by 26.8 per cent. This was aided by a slower rise in
expenses vis-a-vis sales.
Aggregate net sales of the 154 companies that announced their results for the March 2016
quarter grew by 13.8 per cent y-o-y. This was acceleration when compared with the 9.5 per cent
growth in sales posted by the industry in the preceding quarter. Top seven software companies in
our sample account for around 90 per cent of the industry’s aggregate sales. During the quarter,
most of these companies delivered a healthy performance on the sales front.
Among the major operating heads, wage costs rose by a slower 5.1 per cent as compared
to sales. Wage costs as a proportion of sales too fell to 42.1 per cent from 45.4 per cent a year
ago. This restricted the rise in operating expenses to 7.9 per cent. Resultantly, operating profit of
the industry surged and operating margin expanded by 354 basis points to 26.1 per cent.
A healthy operating performance trickled down at the net level too. Among the post-
operating expenses, while interest expenses dipped by 1.7 per cent, depreciation charges rose by
a meager 0.8 per cent. Consequently, the industry’s net margin expanded by 250 basis points to
20.4 per cent. However, growth in the industry’s PAT was marred by other income which
declined by 6.8 per cent during the quarter. Had this not been the case, net profits would have
soared too.

18. pg. 17
Corporate investments
 Wipro has signed a definitive agreement to acquire Viteos Group, a BPaaS provider for
the Alternative Investment Management Industry for a purchase consideration of $130
million.
 Infosys has made an investment of $3 million in WHOOP, an early stage company
offering a performance optimization system for elite professional sports teams.
WHOOP's system includes a device worn by athletes on their wrist that continuously
measures key strain and recovery variables, and actionable analytics powered by
proprietary algorithms that generate intensity and recovery scores.
 Wipro has signed a definitive agreement to acquire HealthPlan Services from Water
Street Healthcare Partners, a strategic investor focused exclusively on the health care
industry. As part of the agreement, Wipro will acquire 100% of HealthPlan Services’
shares for a purchase consideration of $460 million.
 HCL Technologies has acquired 100% stake in Point to Point and Point to Point Products
(jointly referred to as P2P), the companies incorporated in UK, being a niche provider of
complex workplace engineering services in the UK for cash of GBP 8.0 million.
 Infosys, a global leader in consulting, technology, outsourcing and next-generation
services, has made an investment of $4 million in Waterline Data Science, a leading
provider of data discovery and data governance software.
Growth drivers
 Increasing adoption of technology and telecom by consumers and focused government
initiatives - leading to increased ICT adoption.
 High-value client additions bigger than $ 1 Million - the highest in the last five years,
registering 13.5% growth.
 More than 50,000 employees are skilled in analysis, 30,000 people in enterprise mobility.
Government initiatives
 Information technology research and advisory company Gartner has said that the
governments in India are likely to spend $7 billion on IT products and services, which
include consulting, software support, business process outsourcing, IT outsourcing,
implementation, and hardware support, an increase of 3.1 percent over 2015.
 The forecast includes spending on internal services, software, IT services, data center,
devices and telecom services by state governments as well as the central government,
which essentially refers to salaries and benefits paid to the information services staff of
an organization. IT services which includes consulting, software support, business

19. pg. 18
process outsourcing, IT outsourcing, implementation, and hardware support is expected
to grow 8.8 per cent in 2016 to reach $1.6 billion, also the business process outsourcing
sub-segment will grow by 22 per cent.
 As per Gartner, government spending on software will total $938 million in 2016, a 9.9
percent increase from 2015, Telecom services will be at $1.5 billion, with the mobile
network services sub-segment recording the fastest growth of 3.5 percent in 2016 to reach
$793 million.
 Driven by the Digital India initiative, government spending on IT has been increasing
since last couple of years. The ‘Digital India’ focuses on building digital infrastructure,
providing government service on the web and mobile platforms to digitally empower
citizens, with an estimated investment of Rs 1.13 lakh crore over the next three to five
years.
 The government is planning to develop five Internet of Things (IoT) - which allows a set
of connected devices running on software and sensors to exchange data - start-up
incubation centres. Of which at least two centres would come up in rural areas to develop
solutions for smart agriculture.
 The government is expected to increase its spending on information technology (IT)
products and services by 5.2 per cent to $ 6.88 billion in financial year 2016.
NASSCOM Initiatives
 The National Association of Software and Services Companies (NASSCOM) has asked
that startups be exempted from direct and indirect taxes including MAT, a move that will
reduce compliance burden and reduce cash outflows.The industry body said there is a
need to rationalise tax rates for investors as investments in early-stage startups are high
risk.
 Further there is an urgent need to remove angel tax that serves to tax the capital receipts,
when the availability of financing from recognized sources such as Banks and Venture
Capital Funds is unavailable and angel funds is the only available source. Similarly, it
recommended that companies may be allowed to carry forward losses even if there is
change in ownership structure, if it for capital infusion in the entity. In June 2016 angel
tax was removed.
 Nasscom has proposed a high-level committee to evaluate emerging trends and
technologies, which should be institutionalized to provide inputs and triggers for policy
roadmaps
 Industry body FICCI has asked that the government should provide explicitly in the Act
that the benefits of weighted deduction under section 35(2AB) of the Act are also
available to companies engaged in the manufacture of 'computer software’. The definition
of computer software for the purpose of this section should be the same as provided
under Explanation 2 to section 10A of the Act.
 In order to promote skill development in the IT sector, weighted deduction on skill
development expenditure incurred by IT companies should be made eligible for
deduction under section 35CCD of the Act.

20. pg. 19
India Value Proposition
India’s unique value proposition as the world’s No. 1 outsourcing destination rests on 4 strong
pillars:
Fig.11: Indian value preposition

21. pg. 20
Growth in BSE IT index:
Fig.12: BSE IT INDEX monthly
Source: BSE
Fig.13: BSE IT INDEX yearly
Source: BSE
Above trend show India IT sector is lucrative option to invest in as every year its growing.
0
2000
4000
6000
8000
10000
12000
2010 2011 2012 2013 2014 2015 2016
BSE IT INDEX
BSE IT INDEX
10800
10900
11000
11100
11200
11300
11400
11500
11600
11700
11800
11900
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16
BSE IT INDEX
BSE IT INDEX

22. pg. 21
COMPANY ANALYSIS
Infosys
Company overview
Infosys Limited (NASDAQ: INFY) was started in 1981 by seven people with $250. Today, we
are a global leader in the 'next generation' of IT and consulting with revenues of $6.35 billion
(LTM Q1-FY12). Infosys defines designs and delivers technology-enabled business solutions
that help Global 2000 companies win in a Flat World. Infosys also provides a complete range of
services by leveraging their domain and business expertise and strategic alliances with leading
technology providers.
Infosys' offerings span business and technology consulting, application services, systems
integration, product engineering, custom software development, maintenance, re-engineering,
independent testing and validation services, IT infrastructure services and business process
outsourcing. Infosys pioneered the Global Delivery Model (GDM), which emerged as a
disruptive force in the industry leading to the rise of offshore outsourcing. The GDM is based on
the principle of taking work to the location where the best talent is available, where it makes the
best economic sense, with the least amount of acceptable risk.
Infosys takes pride in building strategic long-term client relationships. Over 97% of their
revenues come from existing customers. Infosys has global presence through its 50 offices and
development centers spread across India, China, Australia, the Czech Republic, Poland, the UK,
Canada and Japan. Infosys’s Finacle is Universal banking solution that caters to core banking, e-
banking, Islamic banking, treasury, wealth management and CRM requirements of retail,
corporate and global banks. It is used by over 106 banks across 61countries,namely UK US,
China, Taiwan, Hong Kong, India, Zimbabwe, Saudi Arabia, Maldives, Nepal, etc
Software Engineering & Technology Labs (SETLabs) is the research arm of Infosys. It is at the
forefront of anticipating and shaping the evolution of technology and its impact on business.
Infosys SETLabs undertakes targeted R&D to address your business problems. Our researchers
are engaged in cutting-edge research to share insights with clients. We focus on research areas
such as Malleable Architecture, Pervasive Access, Flexible Processes and Personalized
Information. These areas constitute the fundamental business technology components of a
progressive, information-centered enterprise.
Business model
Business model can be studied through Services & product offered by Infosys. Company offers
IT services, Engineering Services, BPO services as mentioned below. Widely used Product
offered by Infosys is Finacle. Finacle is a core banking product developed by Indian
corporation Infosys that provides universal banking functionality to banks.Finacle is used by
banks across 84 countries that serve over 450 million customers.

23. pg. 22
Services
Product, Subsidiaries, client base, employees
Segmental
revenue
Fig.14: Segmental Revenue
Source: Infosys
IT Services
•Application Services
•Architecture Services
•Enterprise Quality Services
•Independent Validation
Services
•Information Management
Services
•Infrastructure Services
•Packaged Application
Services
•SOA Services
•Systems Integration Services
Engineering Services
•Product Engineering
•Manufacturing Process and
Plant Solutions
•Lifecycle Management
•Consulting Services
•Information & Technology
Strategies
•Product Innovation
•Next Generation Commerce
•Core Process Excellence
•Learning & Complex Change
BPO Services
•Business Platforms
•Customer Service
Outsourcing
•Finance and Accounting
•Human Resource
Outsourcing
•Knowledge Services
•Legal Services
•Order Management
•Sourcing and Procurement
Outsourcing
Product and Platforms
•Collaborative Analytics
•Finacle
•Infosys ActiveDesk
•Infosys mConnect
•Infosys Unified
Communications and
Collaboration (UC)
Subsidiaries of the
company:
•Infosys BPO
•Infosys Consulting
•Infosys Australia
•Infosys China
•Infosys Mexico
Client Base & employee
•New client :221
•total client: 950
•Employee strength:
176,168
•Attrition rate 18.9%
•35% women
•122 nationalities working
from 32 countries
63%
23%
2%
12%
Geographic segmental Revenue 2016
North America
Europe
India
Rest of the world

24. pg. 23
As from above fig. it can be interpreted that revenue from India is around 2% of total revenue. Its major
source of revenue is North America with 63%, then Europe with 23%. So any, adversities in that part of
world have a major effect on revenue of Infosys. So when there is not so feasible condition in north
America Infosys stock see a volatile in share prices.
Competitive Advantage
Key competitive advantages are:
• Extensive domain knowledge and expertise
• Comprehensive offerings
• Long-term relationships with blue chip clients
• Proven Global Delivery Model
• Execution excellence
• Competent leadership and management team
Fig.15: Global Delivery Model
Source: Infosys

25. pg. 24
Corporate governance ratings
CRISIL
For several years now, CRISIL has consistently assigned Infosys the ‘CRISIL Governance and
Value Creation (GVC) Level 1’ rating.
ICRA
ICRA assigned the ‘Corporate Governance Rating (CGR) 1’ rating to Infosys practices. The
rating is the highest on ICRA's scale of CGR 1 to CGR 6. Infosys is first company in India to be
assigned the highest CGR by ICRA. The rating reflects transparent shareholding pattern, sound
Board practices, interactive decision-making process, high level of transparency, disclosures
encompassing all important aspects of our operations and excellent track record in investor
servicing.

26. pg. 25
Financial Ratio analysis
Overall performance measure
The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative to
its per-share earnings.
Ratios Formula 2012 2013 2014 2015 2016
Price/ Earnings ratio MPS/EPS 20.47 19.04 19.58 22.86 19.08
Company’s P/E ratio has decreased, due to global economy slowdown. As Infosys is listed in NYSE and its major
revenue comes from foreign countries.
Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets. ROA gives an idea as
to how efficient management is at using its assets to generate earnings.
Ratios Formula 2012 2013 2014 2015 2016
Return On Asset
(Net Income + Interest(1-Tax rate))
Total asset
0.87 0.85 0.84 0.77 0.74
Company is better at converting its investment into profit.
Return on equity measures a company profitability by revealing how much profit a company generates with money
shareholder has invested
Ratios Formula 2012 2013 2014 2015 2016
Return On Shareholders
Equity
Net income
Shareholder's Equity 28.46% 25.28% 24.22% 25.31% 27.62%
Company is generating a steady return on shareholders equity @ 27% which is increasing every year.
Profitability Measures
Profit margin shows how much of each rupee earned by the company is translated into profits.
Ratios Formula 2012 2013 2014 2015 2016
Profit margin
Net income
Net sales revenue
27.10% 24.80% 22.99% 25.72% 29.24%
As profit margin of current year is 29.24% which has been increasing from last 3 years, shows company is profitable.
And shows growth prospect.

27. pg. 26
The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serve as
an indicator of a company's profitability.
Ratios Formula 2012 2013 2014 2015 2016
Earnings per
share
Net income
No. of share outstanding
INR
37.00
INR
39.82
INR
44.53
INR
53.13
INR
68.95
Company’s earnings per share has increased year on year which is a positive sign for investors to purchase its shares.
Test of Investment Utilization
Asset turnover ratio is the ratio of the value of a company’s revenues generated relative to the value of its assets.
Ratios Formula 2012 2013 2014 2015 2016
Asset Turnover
sales revenue
Total Asset
0.24 0.21 0.19 0.20 0.22
Major asset of Infosys are Buildings, computer and equipments like server etc. which are of high cost.
So Infosys have high Asset base hence Asset turnover ratio is Low
Equity turnover is a ratio that measures the proportion of a company's sales to its stockholders' equity.
Ratios Formula 2012 2013 2014 2015 2016
Equity Turnover
sales revenue
Shareholder's fund
0.28 0.25 0.24 0.25 0.28
Infosys has zero debt, so its financing mainly comes from Equity. Which is much higher that revenue earned by
company.
The current ratio is a financial ratio that measures whether or not a firm
has enough resources to pay its debts over the next 12 months.
Ratios Formula 2012 2013 2014 2015 2016
Current ratio
Current asset
Current Liabilities
4.88 4.82 3.83 3.12 2.97
Current ratio evaluate short term solvency of business. It can easily pay its current liabilities and also contingent
liabilities. Futher if compare to previous Year it has reduced by 5% because current asset increased by constant rate
but current liabilities Increased with greater percentage as provisions for proposed dividend, Taxes, post-scale client
support got increased. As in 2015 infosys invested in few subsidaries to expand business.
Working Capital turnover indicates a company's effectiveness in using its working capital.
Ratios Formula 2012 2013 2014 2015 2016
working capital turnover
Revenue
Working Capital
0.9 4.8 3.8 3.1 3.0
Its revenue is 3 times its working capital, so company is efficient in doing day to day business.

28. pg. 27
Test of Financial condition
The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt
used to finance a company's assets.
Ratios Formula 2012 2013 2014 2015 2016
Debt/Equity ratio
Total Liabilities
Shareholders fund
0% 0% 0% 0% 0%
Infosys debt is zero while it has main source of finance as Equity
Times interest earned (TIE) or interest coverage ratio is a measure of a company's ability to honor its debt payments.
Ratios Formula 2012 2013 2014 2015 2016
Times Interest Earned
OI + Interest
Interest
6234 4437.66672517.1667 2213.875 5452
As main source of finance of company is equity. It has very less Debt which results in less interest.
Test of dividend Policy
A financial ratio that indicates how much a company pays out in dividends each year relative to its share price.
Ratios Formula 2012 2013 2014 2015 2016
Dividend yield
Dividend per share
Market price per share
3.99% 3.57% 5.35% 5.06% 2.06%
Dividend yield has reduced because proposed dividends are less this year. Though revenue of company grew double by
company is taking measures to expand through investing in subsidiaries.
The dividend payout ratio measures the percentage of net income that is distributed to shareholders
Ratios Formula 2012 2013 2014 2015 2016
Dividend payout
Dividends
Net income
31.87% 26.46% 35.49% 42.02% 35.28%
Dividend payout has reduced over previous year. But overall 35.28% is show good investment option.

29. pg. 28
Dupont Analysis
DuPont analysis tells us that ROE is affected by three things:
- Operating efficiency, which is measured by profit margin
- Asset use efficiency, which is measured by total asset turnover
- Financial leverage, which is measured by the equity multiplier
ROE = Profit Margin (Profit/Sales) * Total Asset Turnover (Sales/Assets)* Equity
Multiplier (Assets/Equity)
Ratios Formula 2012 2013 2014 2015 2016
Dupont Analysis
Profit Margin (Profit/Sales) 0.27 0.25 0.23 0.26 0.29
Total Asset Turnover (Sales/Assets) 0.87 0.85 0.84 0.77 0.74
Equity Multiplier (Assets/Equity) 1.22 1.20 1.26 1.30 1.30
ROE 28.74% 25.48% 24.38% 25.61% 28.18%
ROE is growing every year which is good sign.

30. pg. 29
Competitive analysis
Competitor
Top 20 company in IT sector
Source: NASSCOM
In this report, Competitive analysis of Infosys is comparing it with top players i.e. TCS, Wipro.
Key financial ratios
WIPRO TCS INFOSYS
Year Mar 16 Mar 16 Mar 16
Debt-Equity Ratio 0.17 0 0
Current Ratio 1.95 2.07 2.97
Turnover Ratios
Year Mar 16 Mar 16 Mar 16
Fixed Assets 4.52 5.42 3.91
Debtors 5.3 4.76 5.86
Interest Cover Ratio 20.86 2145.08 4415.25
ROCE (%) 24.69 54.83 33.54
RONW (%) 21.45 43.89 25.6
Valuation Ratio
Year Mar 16 Mar 16 Mar 16
Price Earning (P/E) 17.87 23.35 19.08
Market Cap/Sales 3.11 5.77 5.18

31. pg. 30
 Debt-Equity ratio measure the long-term solvency of a company. These types of ratios
take into account long-term debt and any equity investments. IT sector mostly have
funding from Equity. And it can be seen from above table, TCS & Infosys have zero Debt
while wipro have some of their funds from debt.
 In the technology industry, it is important to have a high current ratio since the business
normally needs to fund all of its operations from current assets such as the cash received
from investors, Which is highest for Infosys i.e. 2.97.
 Fixed Asset turnover ratio is the ratio to the value of a company’s revenues generated
relative to the value of its fixed assets. Higher the better. Infosys have high asset base and
revenue is relatively low. While TCS and Wipro have high fixed asset turnover.
 Debtor turnover and Interest coverage ratio is highest for Infosys comparatively which is
a good sign
 Return on capital employed (ROCE) is a financial ratio that measures a company's
profitability and the efficiency with which its capital is employed. Which is highest for
TCS, that shows TCS efficiently manage its Capital employed. Same is with Return on
Net working Capital.
 In essence, the price-earnings ratio indicates the amount an investor can expect to invest
in a company in order to receive one rupee of that company’s earnings. It shows how
much investors are willing to pay per dollar of earnings. In general, a high P/E suggests
that investors are expecting higher earnings growth in the future compared to companies
with a lower P/E. A low P/E can indicate either that a company may currently
be undervalued or that the company is doing exceptionally well relative to its past trends.
 P/E ratio is highest for Infosys it means that investor are expecting higher earnings
growth in the future.
 Market capital of TCS is highest amongst all and Market cap/ sale is also high for TCS.
 Overall Infosys is performing very well compare to other players though TCS is market
leaders, Investing in Infosys is still a good option

32. pg. 31
SUMMARY AND CONCLUSION
Domestic equity markets rallied in the month of May, with all key indices registering
positive monthly returns on average. The performance has been chiefly led by positive cues on
the domestic front --a good monsoon forecast, passage of The Insolvency and Bankruptcy Code,
and better-than-expected fourth quarter results of key corporate. However, amendment to
Mauritius treaty, weakening asset quality of banks, concerns over SEBI's revised norms on P-
notes, and on a possible Fed rate hike capped the gains. Bull-run continues in Indian equity
markets. Domestic equities continue to score solid gains. Passage of bankruptcy code Bill and
forecast of normal monsoon offset weak buying by foreign institutional investors (FIIs). But in
June due to Brexit the market plunged and again stabilizes within few days. As India is fastest
emerging market, growth prospect is high for India.
Considering IT sector, amid sluggish growth in global tech spending, Indian IT-BPM
industry’s exports are expected to grow in double digits in the current financial year.
Government initiatives for digitization of India will be driving activity in the domestic market.
Further, industry’s major players are adopting multiple business models
(partnerships/collaboration/Mergers and acquisitions (M&A)) to address the digital opportunity.
Besides, it is expected that IT-BPM sector’s total revenue (domestic exports) will reach $200-
225 billion by 2020 and between $350-400 billion by 2025. This shows expansion of IT sector
on global front.
This year Infosys showed double digit growth in revenue. Key financial ratios show
investing in Infosys as a good option though it dividend yield and dividend payout ratio got
reduced compare to previous year but it’s still profitable to invest as compare to other
companies. It shows great opportunity to bear fruits in future by investing in INFY for long term
as company has always outstand the commitments due to increase in revenue every year and
management of vishal sikka is proving good prospect to invest as results of 2016 outperformed.

33. pg. 32
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