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Infosys's three year revenue growth was 22.2% and EBITDA growth was 13.9% per year

22-04-2014 • About Infosys ($INFY) • By InTwits

Infosys is a growth stock in IT Consulting & Software industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.

Growth story

Infosys showed fast growth in the last financial year. Infosys's revenue surged on 24.2% in FY2014. At the same time Infosys well managed its profitability and also showed EBITDA growth of 16.9% for the same period.

In the last 3 years the company showed fast revenue growth of 22.2% from FY2011 to FY2014 annually. EBITDA surged on 13.9% from FY2011 to FY2014 annually.

Infosys ($INFY) financials for the last 5 years

mln. INR FY2010 FY2011 FY2012 FY2013 FY2014
Revenue growth, %20.9%22.7%19.6%24.2%
Gross margin, %42.7%45.3%41.3%98.1%35.9%
SG&A, %12.4%12.7%12.3%4.87%11.9%
EBITDA growth, %14.1%19.5%5.7%16.9%
EBITDA margin, %34.4%32.5%31.6%27.9%26.3%
Net Income62,19068,35083,16094,290106,480
Net Income margin, % 27.3%24.9%24.7%23.4%21.2%
CAPEX/Revenue, %3.72%4.75%4.86%5.19%5.48%
Net Debt/EBITDA-1.5x-1.9x-1.9x-1.9x-2.0x
ROIC, %32.2%32.1%32.4%28.3%27.2%
ROE, %29.4%27.3%28.0%26.4%24.9%

Profitability and return on investment

EBITDA margin declined slightly from 27.9% in FY2013 to 26.3% in FY2014. In the longer period EBITDA margin dropped on 6.20 pp from 32.5% in FY2011 to 26.3% in FY2014.

We call Infosys an attractive growth stock as together with the growth it delivers high ROIC at 27.2%. During the last three years it dropped - it was 32.1% in FY2011. It's average level of ROIC for the last three years was 29.3%.

Infosys's Net Income margin decreased on 2.20 pp from 23.4% to 21.2% in FY2014. If we look for the longer period the company showed big decline in Net Income margin of 3.70 pp from 24.9% in FY2011 to 21.2% in FY2014.

Infosys operates at ROE of 24.9%. It's average ROE for the last three years was 26.4%.

Capital expenditures (CAPEX)

To fuel this fast growth Infosys had to invest in CAPEX.In FY2014 the company had CAPEX/Revenue of 5.48%. CAPEX/Revenue surged on 0.730 pp from 4.75% in FY2011 to 5.48% in FY2014. For the last three years the average CAPEX/Revenue was 5.18%.

Leverage (Debt)

The company has negative net debt at -2.0x Net Debt/EBITDA - at the same time with high growth. In the longer period the company showed fast leverage growth of 0.10x from -1.87x in FY2011 to -1.97x in FY2014.

Peers in IT Consulting & Software

Below we provide Infosys benchmarking against other companies in IT Consulting & Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Cmc ($CMC)-65.2%35.5%31.1%15.8%
Median (1 company)-65.2%35.5%31.1%15.8%
Infosys ($INFY)20.9%22.7%19.6%24.2%

Top companies by EBITDA margin, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Cmc ($CMC)5.6%19.4%15.3%16.5%18.0%
Median (1 company)5.6%19.4%15.3%16.5%18.0%
Infosys ($INFY)34.4%32.5%31.6%27.9%26.3%

Top companies by CAPEX/Revenue, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Cmc ($CMC)0.9%9.2%8.1%4.4%4.0%
Median (1 company)0.9%9.2%8.1%4.4%4.0%
Infosys ($INFY)3.7%4.7%4.9%5.2%5.5%

Top companies by ROIC, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Cmc ($CMC)32.0%31.5%26.2%33.2%35.3%
Median (1 company)32.0%31.5%26.2%33.2%35.3%
Infosys ($INFY)32.2%32.1%32.4%28.3%27.2%

Top companies by Net Debt / EBITDA

 FY2010 FY2011 FY2012 FY2013 FY2014
Cmc ($CMC)-0.1x-0.2x-0.2x-0.4x-0.3x
Median (1 company)-0.1x-0.2x-0.2x-0.4x-0.3x
Infosys ($INFY)-1.5x-1.9x-1.9x-1.9x-2.0x