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Infosys: A Good Performance - Views on News from Equitymaster
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Infosys: A Good Performance
Jan 14, 2016

India's second largest software firm Infosys has announced its third quarter results for FY16. The company has reported a 1.7% QoQ growth in sales and a 2% QoQ growth in the net profit. Here is our analysis of the results.

Performance summary

  • In rupee terms, consolidated sales increased by 1.7% QoQ during 3QFY16. In US dollar terms, revenues were up 0.6% QoQ.
  • Operating profits were down 0.9% QoQ. The operating margin came in at 24.9%.
  • The other income was higher by 1.3% QoQ. The profit before tax (PBT) was down 0.5% QoQ in-line with the muted operating performance.
  • The consolidated net profit came in at Rs 34.65 bn an increase of 2% QoQ.

Consolidated Financial Snapshot (IFRS)

(Rs m) 2QFY16 3QFY16 Change 9MFY15 9MFY16 Change
Sales 156,350 159,020 1.7% 399,080 458,910 15.0%
Expenditure 116,420 119,430 2.6% 295,250 344,910 16.8%
Operating profit (EBIT) 39,930 39,590 -0.9% 103,830 114,000 9.8%
Operating profit margin (%) 25.5% 24.9%   26.0% 24.8%  
Other income 7,920 8,020 1.3% 25,460 23,510 -7.7%
Profit before tax 47,850 47,610 -0.5% 129,290 137,510 6.4%
Tax 13,870 12,960 -6.6% 36,970 38,570 4.3%
Profit after tax/(loss) 33,980 34,650 2.0% 92,320 98,940 7.2%
Net profit margin (%) 21.7% 21.8%   23.1% 21.6%  
No. of shares         2,296.9  
Diluted earnings per share (Rs)*         56.6  
P/E ratio (x)*         20.0  

*On a trailing 12 months basis

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Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group. Equitymaster is a SEBI registered Research Analyst under the SEBI (Research Analysts) Regulations, 2014 with registration number INH000000537.

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An independent research initiative, Equitymaster is committed to providing honest and unbiased views, opinions and recommendations on various investment opportunities across asset classes.

DISCIPLINARY HISTORY:
There are no outstanding litigations against the Company, it subsidiaries and its Directors.

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DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
  1. 'subject company' is a company on which a buy/sell/hold view or target price is given/changed in this Research Report.
  2. Equitymaster has financial interest in the subject company.
  3. Equitymaster's investment in the subject company is as per the guidelines prescribed by the Board of Directors of the Company. The investment is however made solely for building track record of its services.
  4. Equitymaster's Associates and Research Analyst or his/her relative doesn't have any financial interest in the subject company.
  5. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one percent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report.
  6. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any other material conflict of interest at the time of publication of the research report.
  7. Equitymaster's technical team/other research service(s) have given a 'Buy' view on Infosys Ltd.
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  1. The Research Analyst has not served as an officer, director or employee of the subject company.
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