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Infosys Results Analysis

May 13, 2008

Disclaimer: This is a direct bullet wise analysis of the Infosys results and represents more of an online repository for some of the questions I have raised. With time, as I keep on finding answers, I will update them, and any new analysis which raises the overall value will be added. As of now, this is just a ‘think-out-loud’ blog post and more detailed analysis and comparison may come up soon on Seeking Alpha( and a copy of which may be attached here). But as of now, this is neither exhaustive nor definitive. And yes! did I tell you that I am not a qualified stock analyst? So take any decisions based on your intelligence and the usual disclaimer holds.


So off we start then eh?
Acknowledgements: The blog post was made with the humble Tomboy Notes Software comes pre-packaged with Ubuntu, which is one cool note keeper, I liked it.

Some brainstorming, some brain dump

  • October 1,2007 Infosys BPO acquired 100% of the P-Financial Services Holding B.V for USD 27million[$1 million yet to be paid]. PFS has businesses in Poland,Thailand,India[Chennai]. A BPO erstwhile of Phillips. Interpretation: Is Infosys BPO trying to enter hi-end technology/electronics support business?Seems like there is a huge amount of customer premium being alloted, 11million. Infosys BPO set to have the lions share?Why did Phillips sell it out? Cash, or liability, or difficult times ahead?
  • Revenue stands at 4.17 billion USD, profits at 1.7billion USD
  • In 2005, sold off completely its stake in Yantra Corp, 1 million USD came up in March21,2007
  • Infy has earned a huge huge amount on the fiscal ending 2008, as interest income. A seemingly 293% jump from a poor seemingly petty 38% in fiscal ending 2007.What is giving Infy such a huge interest income? A gold mine in backyard?A debt situation? In mood for some hostile acquisitions?
  • Forex gain is positive, but down. Why?Didnt hedge well? Time to fire the banker?
  • Mutual Fund income is down, why? Again who precisely is advising Infy in this case?
  • A huge surge in taxes being paid. Bigger profits and fantastic earnings. US IT market is literally chewed day in and day out by Infosys, Europe to a certain extent
  • Bulk of the income comes from BFIS, forming a 29.2% change, manufacturing up, telecom up,retail up by 58.1% (it has to, given that India is a retail boom, so leveraging the geographical proximity makes sense for business understanding)
  • Albeit, revenues from recession prone North America has risen, but the identifiable operating expenses have shown a rise. Does it mean, increase in acceptance index? I see more diversification in clients. Had there been, just the same number of clients and same number of human resource applied, then its clear that allocated expenses should remain same, or may even fall in the wake of salary cut or layoff. Does a rise mean, a positive upturn?
  • EPADS [2007-2008]= $2.02
  • Turnover of total operating ratio =Net Sales/Operating Assets ::: Total Revenue/Current Assets :::4176 /3132=1.33
  • Current Assets to Total Debts significantly high, circa 5.38


Updates:

It has been granted for two patents in US for its work on mobile space and holograms. The research is coming from its own intellectual dens of SETLabs which it set up in 2000, to follow and develop disruptive technological innovations, so that Infosys maintains its lead on the software KPO side in the coming days. SETLabs has filed for hundreds of patents in the last eighteen months, reports The Economic Times

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