Monday, June 2, 2025
  • Login
  • Register
STOCKS-PROFILE
  • Blog
  • Market
  • Web Stories
  • Finance
  • Investing
  • IPO
  • World
  • Technology
  • Politics
  • Sports
  • Crypto
  • Insurance
No Result
View All Result
STOCKS-PROFILE
  • Blog
  • Market
  • Web Stories
  • Finance
  • Investing
  • IPO
  • World
  • Technology
  • Politics
  • Sports
  • Crypto
  • Insurance
No Result
View All Result
STOCKS-PROFILE
No Result
View All Result
Home Blog

Infosys Analysis and Information : Unlocking the Full Picture

by ARVIND KUMAR MISHRA
2 March 2024
in Blog
2
77
SHARES
1.3k
VIEWS
Share on FacebookShare on Twitter

In the present steadily developing  technology environment, Infosys sparkles as a worldwide forerunner in computerised benefits and counseling.We should investigate Infosys from the inside out, learning about its incredible journey and the exciting opportunities it presents to investors.

You might also like

Market Crash Today: Sensex Plummets Over 1,200 Points,  Nifty breaches 200 DEMA as Banking and Metal Stocks Tumble

MobiKwik Shares Surge 88% on Debut: A Detailed Analysis of the IPO Success and What It Means for Investors

DLF Q2 FY25 Results: A Comprehensive Analysis of India’s Leading Realty Giant

Infosys Importance in Digital Transformation

Infosys is crucial in a time when digital transformation is the norm. Organisations from all areas are moving rapidly towards mechanisation , digitization, and information driven navigation. This extends the market for Infosys mastery altogether.

A Global Presence 

Company flaunts a worldwide impression, a critical benefit. Because Infosys has customers all around the world, they can work in many different markets and adjust to what people need in those places. They get even more growth by having the power to be everywhere.

Infosys Analysis and Information
Infosys Analysis and Information

Adapting to Market Trends

Infosys constantly evolves its service portfolio to align with market trends. Company faces the problems happening right now and also prepares for what might come next. This could mean improving man-made brainpower, thinking of more secure ways for organisations to work, or viewing ways as more eco-accommodating

Recent collaboration and Innovation

Coordinated efforts with tech goliaths, new businesses, colleges, and hyper-scalers upgrade Company’s abilities.These affiliations increase its presence in emerging fields and offer access to the latest developments.

Infosys Analysis and Information
Infosys Analysis and Information

Prioritising Risk Management

Infosys puts serious areas of strength for overseeing gambles, guaranteeing dependability and flexibility. By distinguishing and alleviating possible difficulties, the organisation advances development while shielding the interests of financial backers.

In the unique universe of IT administrations, Infosys stands tall, offering a thrilling and open door for financial backers to be a piece of this groundbreaking excursion. It’s in excess of an organisation; it’s an accomplice for ventures around the world, driving computerised development and moulding the fate of innovation.

Estimating Company’s Intrinsic Value: The Path to Success

Since the IT industry has recently seen its fair share of difficulties, it is a good time for long-term investors to think about solid stocks.Among the frontrunners in this sector, TCS and Infosys automatically come into focus. However, their substantial size warrants careful consideration. To truly benefit, these stocks must be acquired at an advantageous valuation, as capital growth may otherwise fail to surpass the market index.

This article means to disentangle the inborn worth of Infosys, giving experiences that reach out past the surface. 

We won’t just gauge its characteristic worth yet additionally investigate the specialised perspectives, laying out a potential purchase level in case of market rectifications before long. 

Company has a foundation of the IT business, proceeds to develop and adjust, settling on it a convincing decision for financial backers looking for long haul development.

infosys 90 days chart

Currently, Company stocks are trading at around Rs.1496.15. If there’s a correction of about 10-12%, the stock price could reach around Rs.1265, which was its level back in April 2023 before it bounced back strongly. It seems like Rs.1265 serves as a reliable support level for Infosys.

So, based on these price trends, buying Infosys at Rs.1265 levels could provide a solid 10% advantage. Considering that this stock is expected to rise in the long term, a 10% correction from the current levels could make Rs.1265 a good entry point.

However, it’s crucial not to invest in any stock solely based on price trends without assessing its fundamentals. Regardless of what technical analysis suggests, if the company’s fundamentals don’t support the stock price, it could eventually decline.

Now, let’s move on to the next step, where we’ll evaluate the price of Infosys based on its financial performance.

We’ll determine the company’s free cash flow by examining the numbers in both the cash flow report and the profit and loss account. But before we dive into the financial reports, let’s take a look at Infosys’s performance over the past decade.

DescriptionFY 2023FY 2014Growth(CAGR)
Revenue (Rs.Cr.)1,49,46885,5575.74%
EBITDA (Rs.Cr.)37,83123,052.005.08%
PAT (Rs.Cr.)24,10815,410.004.58%
Reserves (Rs.Cr.)73,33844,2445.18%
Total Assets (Rs.Cr.)1,25,8161,17,8850.65%
Net Cash FromOperations (Rs.Cr.)22,4679,825.008.62%

The organisation hasn’t shown noteworthy development numbers over the course of the last ten years. In view of this verifiable information, it’s sensible to guess that the organisation profit will probably increase at a pace of roughly 6% throughout the following five years. 

With this initial understanding of the company’s performance, let’s now dive into the analysis of free cash flow.

Free Cash Flow To Firm (FCFF)

Let’s talk about financial health. We got our numbers from Infosys’ latest annual report for FY 2023-2024. To understand the company’s Free Cash Flow To Firm (FCFF), we’ll need some key figures, which you can see in the table below:

DescriptionFY 2023FY 2022
Net Profit (PAT)24,10822,146
Net Cash From Operations22,46723,885
Operating Cash Flow as % PAT93.2%107.9%
Capex2,5792,161
Free Cash Flow To Firm (FCFF)19,88821,724

Before we move on, let’s check how effectively Infosys converts its “Net Profit (PAT)” into actual “cash” each year. Here’s a comparison of “PAT” with “Net Cash from operation” for the last 20 years:

Infosys Fundamental Analysis - Quality of Cash Flow

[Graph: PAT vs. Net Cash from operation]

As you can see, even during tough times, Infosys managed to convert nearly 50% of its PAT into cash flows. Since 2011, this conversion has improved, and today, about 90% of its PAT turns into cash flows. That’s a strong indicator of financial health. So, we’ll use the FCFF value calculated earlier without applying any discounting factor.

Now, let’s explore another method to calculate FCFF.

FCFF Calculation Method 2:

FCFF = Net Profit + Depreciation & Amortisation (D&A) – Capex – Increase In Working Capital.

Here’s how the numbers stack up for Infosys:

DescriptionFY 2023FY 2022
Net Profit (PAT)24,10822,146
Depreciation (D&A)4,2253,476
Capex2,5792,161
Net Current Assets70,88167,185
Net Current Liability39,18633,603
Working Capital31,69533,582
Increase in WC-1,887–
FCFF27,641–

These are two reliable methods to calculate Infosys’ Free Cash Flow To Firm (FCFF). We’ll use the weighted average of these two values as our final FCFF figure for Infosys, which is Rs. 22,834 Crore.

FCFE (Free Cash Flow To Equity)

Now, let’s calculate the Free Cash Flow To Equity (FCFE) based on FCFF. The formula for FCFE looks like this:

FCFE = FCFF + Net New Debt – Interest * (1 – Effective Tax Rate)

Here are the specifics for Infosys:

DescriptionFY 2023
FCFF22,834
Net New Debt0.00
Interest284
Effective Tax Rate27.65%
FCFE22,629

Infosys is a debt-free company, so the value of “net new debt” is zero. To estimate the effective tax rate, we’ve used the formula: Tax Paid / Profit Before Tax (PBT).

Using these formulas, we find that Infosys’ FCFE for onward estimation of intrinsic value is Rs. 22,629 Crore.

Sustainable Growth Rate (SGR)

Now, let’s talk about estimating the future growth rate of Infosys’ Free Cash Flow To Equity (FCFE). We’ll use the Sustainable Growth Rate (SGR) formula:

SGR = Return on Equity (ROE) * (1 – Dividend Payout Ratio)

Here’s what it looks like for Infosys:

DescriptionFY 2023FY 2022
Net Profit (PAT)24,10822,146
Shareholder’s Equity75,79575,736
ROE31.81%29.24%
Dividend Paid13,63112,652
Dividend Payout Ratio56.5%57.1%
SGR13.82%12.54%

We also calculated Infosys’ projected growth rate based on the company’s last ten years of financial data. 

We also evaluated Infosys’ projected growth rate using the company’s most recent decade financial data.

Based on this, it seems that the company could grow at around 6% per annum. So, as an informed guess, we’ll use a weighted average future growth rate of 7% per annum for Infosys.

Future Free Cash Flow

Now, we have two crucial numbers: FCFE (Rs. 22,629 crore) and the Future Growth Rate (7% per annum) for the next five years. Beyond that, we assume the company will grow at a sustainable rate of 4% per annum.

We’ll also use a weighted average cost of capital (WACC) of 12% per annum for Infosys. 

Now we’re going to determine the intrinsic value of Infosys, a prominent company, using a method called Discounted Cash Flow (DCF) analysis. This approach helps us gauge the true worth of the company based on its future cash flows.

Step 1: Calculating Free Cash Flow To Firm (FCFF)

We start by calculating FCFF, which measures the cash available to all of the company’s investors. Here are the key numbers for Infosys in FY 2023:

DescriptionFY 2023FY 2022
Net Profit (PAT)24,10822,146
Net Cash From Operations22,46723,885
Capex2,5792,161
FCFF19,88821,724

Infosys has a strong track record of converting its profits into cash flows, indicating good financial health. So, we’ll use the FCFF value without applying any discounting factor.

Step 2: An Alternative Method to Calculate FCFF

We can also calculate FCFF using an alternative formula that considers depreciation, changes in working capital, and capital expenditure (Capex). Here are the details for Infosys:

DescriptionFY 2023FY 2022
Net Profit (PAT)24,10822,146
Depreciation (D&A)4,2253,476
Capex2,5792,161
Increase in Working Capital-1,887–
FCFF27,641–

We’ll use the weighted average of these two FCFF values, which is Rs. 22,834 Crore.

Step 3: Calculating Free Cash Flow To Equity (FCFE)

Next, we calculate FCFE, which measures the cash available to the company’s equity shareholders. For Infosys:

DescriptionFY 2023
FCFF22,834
Net New Debt0.00
Interest284
Effective Tax Rate27.65%
FCFE22,629

Infosys doesn’t have any net new debt, making it debt-free. The estimated effective tax rate is 27.65%. So, Infosys’ FCFE for intrinsic value estimation is Rs. 22,629 Crore.

Step 4: Estimating Sustainable Growth Rate (SGR)

To estimate the company’s future growth rate, we use the Sustainable Growth Rate (SGR) formula:

SGR = Return on Equity (ROE) * (1 – Dividend Payout Ratio)

For Infosys:

DescriptionFY 2023FY 2022
ROE31.81%29.24%
Dividend Payout Ratio56.5%57.1%
SGR13.82%12.54%

We’ll use a weighted average future growth rate of 7% per annum for Infosys based on historical data and our analysis.

Step 5: Forecasting Future Cash Flows

Now, we project Infosys’ FCFE for the next five years at a 7% annual growth rate. Beyond that, we assume a sustainable growth rate of 4% per annum.

Step 6: Present Value of Future Cash Flows

To determine the intrinsic value, we calculate the present value of all future cash flows. We use a discount rate of 10% per annum to account for the time value of money. This rate reflects the company’s risk level and potential for growth.

The sum of all future cash flows for Infosys is estimated at Rs. 3,40,175 Crores.

Step 7: Intrinsic Value Per Share

With the present value of all future cash flows determined, we need to calculate the intrinsic value per share. As of now, Infosys has about 414.85 Crore shares outstanding in the market.

DescriptionAmount
Sum of PV3,40,175
Number of Shares414.86
Intrinsic Value/Share819.98

The estimated intrinsic value of Infosys is approximately Rs. 820 per share based on the DCF Model.

Infosys fundamental Conclusion

Infosys exhibits strong financial fundamentals, with a consistent history of converting profits into cash flows. 

Looking at its Price to Earnings (PE) history, it appears that a fair PE for the company is around the PE20 mark. With a current EPS of Rs. 59.23, the fair price of Infosys comes out to be about Rs. 1,195 per share.

Using the DCF method, we’ve estimated the intrinsic value at Rs. 820 per share. An average of the PE20 and DCF methods suggests an intrinsic value of about Rs. 1,000 per share.

Considering these factors and technical analysis, it seems that buying Infosys stock at levels between Rs. 1,000 and Rs. 1,270 could potentially yield a 12.5% CAGR capital appreciation over 3-5 years. It’s a strong stock worth considering for investment.

infosys

Disclaimer: The information in this “Stock Profile” blog post is for informational purposes only. It is not financial advice. Always consult a qualified expert before making investment decisions.

Share31Tweet19

Recommended For You

Market Crash Today: Sensex Plummets Over 1,200 Points,  Nifty breaches 200 DEMA as Banking and Metal Stocks Tumble

by ARVIND KUMAR MISHRA
7 January 2025
0
Market Crash: Sensex Plummets Over 1,200 Points, Nifty breaches 200 DEMA as Banking and Metal Stocks Tumble

Market Crash Today: The Indian stock market had a significant decline, with the Nifty dropping below 23,600 and the Sensex dropping more than 1,400 points. The market's dip...

Read more

MobiKwik Shares Surge 88% on Debut: A Detailed Analysis of the IPO Success and What It Means for Investors

by ARVIND KUMAR MISHRA
18 December 2024
0
MobiKwik Shares Surge 88% on Debut: A Detailed Analysis of the IPO Success and What It Means for Investors

Shares of MobiKwik soared 88% on their debut day to give the company a market valuation of nearly Rs 40 billion. The successful $67 million IPO, oversubscribed by...

Read more

DLF Q2 FY25 Results: A Comprehensive Analysis of India’s Leading Realty Giant

by ARVIND KUMAR MISHRA
25 October 2024
0
DLF Q2 FY25 Results: A Comprehensive Analysis of India's Leading Realty Giant

DLF Q2 FY25 results: In the second quarter of fiscal year 2025, India’s largest property development company, DLF Ltd has registered a robust performance with a consolidated net...

Read more

Stock Market Live Updates: 7 Key Highlights and Analysis of the market today

by ARVIND KUMAR MISHRA
23 September 2024
1
Stock Market Live Updates: 7 Key Highlights and Analysis of the market today

Stock Market Live Updates: The opening of Indian stock markets on Monday witnessed a positive turn with the factors such as strong global cues and resurgence of investor...

Read more

50 Basis Points Federal Reserve rate cut impacts on IT sector and Stock Prices Development

by ARVIND KUMAR MISHRA
20 September 2024
1
50 Basis Points Federal Reserve rate cut impacts on the IT sector and Stock Prices Development

Known as one of the most influential economic events, this decision was unexpected by many. In fact, most analysts did not foresee such an action from the Fed...

Read more

Related News

Metal Stocks Plunge After Supreme Court Allows States to Levy Tax and Collect Past Dues

Metal Stocks Plunge After Supreme Court Allows States to Levy Tax and Collect Past Dues

15 August 2024
Should investors consider purchasing Reliance Power shares given their 52-week high, massive 30% return in just four days, and 900% increase in three years?

Reliance Power shares given their 52-week high, massive 30% return in just four days, and 900% increase in three years.

2 March 2024
A Strong Outlook for Tata Motors Q2 Results

Stock Market Basics: A Beginner’s Guide

2 March 2024

Browse by Category

  • Blog
  • Crypto
  • Finance
  • Health
  • Investing
  • IPO
  • Market
  • Politics
  • Sports
  • Sports
  • Technology
  • World

Welcome to Stock-Profile, your trusted source for financial news. We are committed to delivering timely, accurate, and insightful updates on stocks, investments, and market trends. Our dedicated team of experts is passionate about providing you with the knowledge you need to navigate the ever-changing landscape of finance. Whether you’re a seasoned investor or just getting started, Stock Profile is here to empower you with information that drives confident financial decisions.

stocks-profile

CATEGORIES

  • Blog
  • Crypto
  • Finance
  • Health
  • Investing
  • IPO
  • Market
  • Politics
  • Sports
  • Sports
  • Technology
  • World

Disclaimer

Only educational and informational purposes are served by the information on Stock-Profile. No financial advice or recommendation to purchase, sell, or hold any securities is intended by our content.No assurance is given or implied as to the correctness of the information, despite the fact that it was gathered from sources we consider to be trustworthy.Before making any decisions, customers are advised to complete their research and consult with financial advisors, because stock market investments have inherent risks. Content and information on Stock-Profile are subject to change without prior notice.

  • About Us -Stocks Profile
  • Cookies Policy
  • Disclaimer
  • Home
  • IPO
  • Privacy Policy
  • Terms and Conditions

© 2023-2024 |Managed by, STOCKS-PROFILE.

  • Blog
  • Market
  • Web Stories
  • Finance
  • Investing
  • IPO
  • World
  • Technology
  • Politics
  • Sports
  • Crypto
  • Insurance
No Result
View All Result

© 2023-2024 |Managed by, STOCKS-PROFILE.

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms bellow to register

*By registering into our website, you agree to the Terms & Conditions and Privacy Policy.
All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.