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Infosys (INFY)
NYSE:INFY
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Infosys
(NYSE:INFY)
75Outperform
Positive Factors
Digital Transformation
Digital projects’ robust growth driven by cloud service.
Financial Performance
INFY revised its FY25F revenue guidance upwards to 4.5-5.0%, slightly above consensus.
Market Share
Rising global market share of INFY as outsourcing and offshoring pickup.
Negative Factors
Client Dependency
Dependence on a small number of key clients increases the company's risk of revenue loss.
Economic Outlook
Potential weakening of the US economy.
Revenue Concerns
Increased scrutiny on third-party revenue contribution and uncertain growth sources weigh on sentiment.
Infosys (INFY) vs. S&P 500 (SPY)
Market Cap
$72.86B
Dividend Yield2.39%
Average Volume (3M)12.17M
Price to Earnings (P/E)21.7
Beta (1Y)0.72
Revenue Growth3.08%
EPS Growth11.92%
CountryUS
Employees323,379
SectorTechnology
Sector Strength43
IndustryInformation Technology Services
Share Statistics
EPS (TTM)0.80
Shares Outstanding4,153,263,700
10 Day Avg. Volume11,134,308
30 Day Avg. Volume12,170,551
Financial Highlights & Ratios
PEG Ratio1.82
Price to Book (P/B)N/A
Price to Sales (P/S)16.66
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
$23.45Price Target Upside41.44% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Infosys Business Overview & Revenue Model
Company DescriptionInfosys Limited, together with its subsidiaries, provides consulting, technology, outsourcing, and next-generation digital services in North America, Europe, India, and internationally. It provides digital marketing and digital workplace, digital commerce, digital experience and interactions, metaverse, data analytics and AI, applied AI, generative AI, sustainability, blockchain, engineering, Internet of Things, enterprise agile DevOps, application modernization, cloud, digital process automation, digital supply chain, Microsoft business application and cloud business, service experience transformation, energy transition, cyber security, and quality engineering solutions; Oracle, SAP, and Saleforce solutions; API economy and microservices; and Topaz, an AI-first set of services, solutions, and platforms using generative AI technologies. The company's products and platforms include Finacle, a core banking solution; Edge suite of products; Panaya platform, Infosys Equinox, Infosys Helix, Infosys Applied AI, Infosys Cortex, and Stater digital platforms; and Infosys McCamish, an insurance platform. It serves aerospace and defense, agriculture, automotive, chemical manufacturing, communication, consumer packaged goods, education, engineering procurement and construction, healthcare, high technology, industrial manufacturing, information services and publishing, insurance, life science, logistics and distribution, media, entertainment, mining, oil and gas, private equity, professional, public, retail, travel, hospitality, utilities, and waste management industries. The company was formerly known as Infosys Technologies Limited and changed its name to Infosys Limited in June 2011. Infosys Limited was incorporated in 1981 and is headquartered in Bengaluru, India.
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 | ||||
| 3.55B | 3.43B | 2.32B | 3.23B | 3.70B | 3.08B | Total Assets |
| 6.15B | 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 |
| -2.70B | -771.00M | -471.00M | -1.58B | -2.75B | -1.85B | Total Liabilities |
| 787.00M | 5.92B | 6.09B | 5.56B | 4.32B | 3.56B | Stockholders Equity |
| 5.36B | 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
16.58
Price Trends
20.09
Negative
21.27
Negative
21.37
Negative
Market Momentum
-0.60
Negative
32.81
Neutral
28.62
Neutral
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 16.58 is below the 20-day moving average (MA) of 18.36, below the 50-day MA of 20.09, and below the 200-day MA of 21.37, indicating a bearish trend. The MACD of -0.60 indicates Negative momentum. The RSI at 32.81 is Neutral, neither overbought nor oversold. The STOCH value of 28.62 is Neutral, 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 (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $188.72B | 24.88 | 27.26% | 1.94% | 4.10% | 9.78% | |
75 Outperform | $72.86B | 21.73 | 33.16% | 2.39% | 3.08% | 11.92% | |
72 Outperform | $36.24B | 16.26 | 16.21% | 1.76% | 1.98% | 7.16% | |
68 Neutral | $31.43B | 27.26 | 16.59% | 2.10% | -3.41% | 67.87% | |
67 Neutral | $225.78B | 37.89 | 24.14% | 2.74% | 1.45% | -20.56% | |
57 Neutral | $20.94B | 10.43 | -13.41% | 2.52% | 4.53% | -23.34% | |
51 Neutral | $39.47B | 52.55 | 4.65% | 2.12% | -17.38% | ― |
* Technology Sector Average
Performance Comparison
INFY
Infosys
16.58
-0.79
-4.55%
ACN
Accenture
285.06
-41.30
-12.65%
CTSH
Cognizant
68.74
-1.22
-1.74%
FIS
Fidelity National Info
69.90
-1.81
-2.52%
IBM
International Business Machines
227.48
43.84
23.87%
WIT
Wipro
2.79
0.03
1.09%
Infosys Earnings Call Summary
Earnings Call Date: Jan 16, 2025 | % Change Since: -27.57% | 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.