X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Infosys: Its secret potion - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Aug 17, 2004

    Infosys: Its secret potion

    The most important and authentic source of information about a company's financial performance is its annual report. But, these reports serve many other important purposes as well, apart from just elucidating on the finances. One such purpose is to indicate to investors what is the macro environment in which the company is operating in a particular year. More often than not, a few statements or paragraphs speak out the entire story.

    However, if one were to go through the last four annual reports of the software major, Infosys, there is a quotable quote every year - one that indicates the theme of the annual report and the overall environment that the company is performing in. Let us understand the import of the quotes that appeared in Infosys' last four annual reports, starting from FY01.

    Annual Report 2000-01: The future depends on what we do in the present. - Mahatma Gandhi (Sales growth-115.4%; Profits growth-119.8%; OPM-40.2%)

    This annual report was released in the aftermath of the dotcom bust. The central idea as represented by the above thought, rightly captures the spirit of that time for Indian software companies. What this quote indicates is the Infosys has to improve upon its present (2000-01 at that time) for if it does so, what comes later would be better. The quote rightly captures that the company would have to take initiatives that would help it to come out of the slowdown and help it move towards higher and sustainable growth in the future (post 2000-01).

    Annual Report 2001-02: Adversity has the effect of eliciting talents, which in prosperous circumstances would have lain dormant. - Horace
    (Sales growth-37.0%; Profits growth-28.5%; OPM-39.9%)

    This quote signifies the changes going through Infosys during the period concerned that were to help the company in facing adverse times, as global technology spending was on a downturn. The company was rapidly evolving its global delivery model, building up physical infrastructure to accommodate its large manpower base in the future and trying to derisk its revenues from a single large geography and some particular domains. In short, Infosys was trying to build up a base from where it can launch for a higher and sustainable growth in the future. While the company is still in the process of building up the much important base, 2001-02 can be said to be the year when the company began aggressively in its pursuits towards higher growth.

    Annual Report 2002-03: I must govern the clock, not be governed by it. - Golda Meir
    (Sales growth-39.8%; Profits growth-18.2%; OPM-34.9%)

    This quote emphasizes the core advantage that India in general and Infosys in particular have with regards to the fast growing IT outsourcing space. It indicates the importance of time difference that India enjoys over the US, the largest market for Indian software services. Being a pioneer of the global delivery model (GDM) whose basis lies in providing seamless round-the-clock services across all geographies, Infosys has gained global recognition in its abilities on the project execution and project delivery fronts. Fascinated by this aspect (and others like cost arbitrage) of the GDM, the global technology majors are trying to replicate the Indian offshoring model.

    Annual Report 2003-04: One cannot manage change. One can only be ahead of it. - Peter Drucker
    (Sales growth-33.3%; Profits growth-30.3%; OPM-32.9%)

    Now, this thought represents how Indian software companies like Infosys are trying to fight off the challenges posed and changes brought about by the global technology majors replicating the Indian outsourcing model. The Indian companies are doing this through a counter-attack in the form of penetrating the high-end domains of these global MNCs. Infosys, for instance, is continuously increasing revenue contribution from high-end services like IT consulting, systems integration and package implementation. And it has to continuously do so, for its growth to attain higher speed and sustainability. Moving up the value chain would also ensure closer and long-term ties with clients.

    What say next?

    Over the past decade, Infosys has performed brilliantly on almost all quantitative and qualitative factors like revenue growth and profitability, management competency, project delivery and execution and managing scale. The company has indeed outperformed the industry in all these aspects. However, the company's growth momentum seems to have gathered some speed only post 2000, the year when excessive euphoria and worthless investments had left the global technology industry in a state of turmoil.

    Now, as Infosys tries to consolidate its position as the domestic market leader, builds up scale and competitive advantages, and continuously moves up the value chain, the annual report for FY05, to be released next year, might very well capture an idea that could be something like this - "When I dare to be powerful, to use my strength in the service of my vision, then it becomes less and less important whether I am afraid." Audre Lorde.

     

     

    Equitymaster requests your view! Post a comment on "Infosys: Its secret potion". Click here!

      
     

    More Views on News

    Infosys: A Decent Start to FY18 (Quarterly Results Update - Detailed)

    Jul 14, 2017

    Infosys starts FY18 on an encouraging note with a stable performance.

    Infosys: A Flat End to FY17 (Quarterly Results Update - Detailed)

    Apr 13, 2017

    Infosys ends FY17 with a 7% QoQ fall in net profit for the March quarter.

    Infosys: A Decent Quarter (Quarterly Results Update - Detailed)

    Jan 13, 2017

    Infosys has reported a 0.2% QoQ decrease in the topline and an increase of 4.6% QoQ in the bottomline for the quarter ended December 2016.

    Tech Mahindra: Our Revised View (Quarterly Results Update - Detailed)

    Aug 2, 2017

    A better than expected turnaround in performance results in a change in view.

    Wipro: A Decent Start to the Year (Quarterly Results Update - Detailed)

    Jul 27, 2017

    Digital services drive growth for Wipro in 1QFY18.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    INFOSYS LTD SHARE PRICE


    Aug 22, 2017 10:57 AM

    TRACK INFOSYS LTD

    • Track your investment in INFOSYS LTD with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    INFOSYS LTD 8-QTR ANALYSIS

    Detailed Quarterly Results With Charts

    COMPARE INFOSYS LTD WITH

    MARKET STATS