Presented To:-

Prof.Praneeta Deshmukh

INFOSYS

Presented By:-

Deep Kumar

Founded on 2nd July 1981 with a capital of Rs.10,000

went Public in 1993.

1st Indian Company to be listed on Nasdaq on 11th March 1999.

Global footprint : Over 50 offices and development centers

Employees: 1,73,000(As on 31st oct 2014).

Certified at SEI- CMM Level 5.

Major Clients: British Telecom, Bank Of America, Citigroup,

Wall mart

Infosys Profile

INDUSTRY ANALYSIS

Macro Economic Indicator:-

GDP-annual rate of 5.63% 3rd quarter of 2014

Inflation rate:-last reported 6.3 % in sep-2014

Interest Rate:-reverse repo reported @5.5 %.

Trade deficit 20210.90 Millions in oct-2014

Tax rate India 30% ,less than Spain , France etc

Saving rate -35.7%

PEST AnalysisPolitical Economic• Political stability

• Government owned companies

and PSUs have decided to give

more IT projects to Indian IT

companies.

• Terrorist attack or war.

• Global IT spending

(demand)

• Domestic IT Spending

(Demand)

• Currency Fluctuation

• Real Estate Prices

TechnologicalSocial• Language spoken: English

• Education: A number of

technical institutes and

universities over the

country offer IT education.

• Working age population

• Telephony

• Internet Backbone

• New IT Technologies like

SOA, Web 2.0, High-

definition content, grid

computing, etc

Porter’s Five Forces Model Threat of Substitutes: Medium

1. Other offshore locations such as Eastern Europe, the

Philippines and China

2. Price

Bargaining power of supplier: High to Low

1. Due to slowdown, the job-cuts, the layoffs and bleak IT

outlook.

2. No longer Demand and supply of IT professionals

3. Vast talent pool – fresher's and experienced.

Porter’s Five Forces ModelBarriers to Entry : Low

1. Low capital requirements.

2.Large value chain, space for small enterprises.

Bargaining Power of Customers: Very High

1. Large number of IT companies

2. Huge decline in IT expenditure

Rivalry Among Firms: High

1.'low-cost, little-differentiation' positioning.

2.Strong competitors – few number of large

companies.

SWOT Analysis

STRENGTHS WEAKNESSES

• Trusted Brand & Client Relations

• Proven GDM

• Wide spectrum of Services

• Leadership & Management

• Quality Standards

• Dependence on BFSI Segment for revenues

• Dependence on North America for revenues

• Weak Player in domestic Mkt

• Rising Operating Expenditure

• Low R & D focus

SWOT Analysis

OPPORTUNITIES

• Untapped Domestic

Market

• New Geographies

• Acquisitions

• High End Consulting

• Intense Competition

• High dependency on small

no. of clients

• Currency Fluctuations

THREATS

COMPANY ANALYSIS

Infosys Ratio:-YEAR RATIO March 12 March 13 March 14

Liquidity Ratio:-

Current Ratio 4.91 4.75 3.70

Quick Ratio 4.88 4.69 3.65

Leverage Ratio:-

Return on Total Assets 518.21 627.95 736.64

Profitability Ratio:-

Gross profit Ratio 28.23 30.66 31.04

Net profit Ratio 27.37 27.52 26.31

Financial Ratio:-

Fixed Asset To. Ratio 1.15 1.12 1.13

Debtors To. Ratio 6.50 6.25 6.74

DPS Ratio 35.86 26.45 31.49

Reported EPS147.50 158.75 178.40

Analysis:-Liquidity Ratio:-Use of liquidity ratio is good but comparison of previous year

the ratio is decreased.

Leverage/ Gearing Ratio:-The company is debt free and maintains sufficient cash to meet

its strategic objectives. In the year 2014, Internal Cash flows have

more than adequately covered working capital requirements ,

Capital expenditure , investment in subsidiaries and dividend payments.

Profitability Ratio:- Net profit ratio is decreased in comparison of previous year

but company doing aggressive selling and its not affect to much in company..

Financial Ratio:- Efficiency of Assets utilisation has Increased. All debtors are considered

good and realizable. The ratio has increased largely due to the increase

in the sales.

Dividend per share ratio & EPS is excellent in the comparison of previous year of the company.

Recommendation Intrinsic value =EPS*(P/E Ratio)

EPS=178.40

P/E Ratio=18.40

Intrinsic value=3282.56

Market Value=4295.75

-Market Value>Intrinsic value

Sell shares of infosys

DFO

Strategies : Long Call For aggressive investors who are very bullish about the prospects for a stock /

index, buying calls can be an excellent way to capture the upside potential with

limited downside risk.

When to Use:

Investor is very bullish on the stock / index.

Risk:

Limited to the Premium.

(Maximum loss if market expires at or below the option strike price).

Reward: Unlimited

Breakeven: Strike Price + Premium

LONG CALL

Mr. Amar is bullish on Infosys on 29th Nov, when the market

price at 4356.53. He buys a call option with a strike price of Rs.

4400 at a premium of Rs. 36.35, expiring on 30th Dec. If the

Market price goes above 4436.35, Mr. Amar will make a net

profit (after deducting the premium) on exercising the option.

In case the market price stays at or falls bellow 4400, he can

forego the option (it will expire worthless) with a maximum

loss of the premium.

Analysis This strategy limit the downside risk to the extent of premium

paid by Mr. Amar (Rs. 36.35)

But the potential return is unlimited in case of rise in Market

Price.

A long call option is the simplest way to benefit if you believe

that the market will make an upward move and the most

common choice among first time investors in option.

As the stock price rises the long call moves into profit more and

more quickly.

Strategies: Long Call

The Payoff

Schedule

On expiry Infosys

Close at

Net Payoff from call

Option (Rs.)

4100 -36.65

4200 -36.65

4300 -36.65

4400 -36.65

4436.65 0

4500 63.35

4600 163.35