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Infosys Net Income surged on 15.8% in 2015 and EBITDA Margin increased slightly on 0.76 pp from 26.3% to 27.1%

24-04-2015 • About Infosys ($INFY) • By InTwits

Infosys reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Infosys is a growth stock: FY2015 revenue growth was 6.4%, 5 year revenue CAGR was 18.6% at FY2015 ROIC 25.1%
  • Infosys has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.9%. At the same time it's a lot of higher than industry average of 3.5%.
  • CAPEX is quite volatile: 1,813 in FY2015, 2,841 in FY2014, 1,695 in FY2013, 1,434 in FY2012, 923 in FY2011
  • The company has highly profitable business model: ROIC is at 25.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Infosys ($INFY) key annual financial indicators

mln. INR201120122013201420152015/2014
Gross Profit124,470139,260395,750179,920204,36013.6%
Net Income68,35083,16094,290106,480123,29015.8%
Balance Sheet
Short Term Debt00000
Long Term Debt00000
Cash flow
Revenue growth20.9%22.7%19.6%24.2%6.4%
EBITDA growth14.1%19.5%5.7%16.9%9.4%
Gross Margin45.3%41.3%98.1%35.9%38.3%2.4%
EBITDA Margin32.5%31.6%27.9%26.3%27.1%0.8%
Net Income Margin24.9%24.7%23.4%21.2%23.1%1.9%
SG&A, % of revenue12.7%12.3%4.9%11.9%12.4%0.5%
CAPEX, % of revenue4.7%4.9%5.2%5.5%4.2%-1.3%
Net Debt/EBITDA-1.9x-1.9x-1.9x-2.0x-2.1x-0.1x

Revenue and profitability

The company's Revenue increased on 6.4% in FY2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 0.76 pp from 26.3% to 27.1% in FY2015.

Gross Margin increased on 2.4 pp from 35.9% to 38.3% in FY2015. SG&A as a % of Revenue increased slightly on 0.52 pp from 11.9% to 12.4% in FY2015.

Net Income marign increased slightly on 1.9 pp from 21.2% to 23.1% in FY2015.

Capital expenditures (CAPEX) and working capital investments

Infosys's CAPEX/Revenue was 4.2% in FY2015. The company showed small CAPEX/Revenue decline of 0.65 pp from 4.9% in FY2012 to 4.2% in FY2015. It's average CAPEX/Revenue for the last three years was 5.0%.

Return on investment

The company operates at high and attractive ROIC (25.07%) and ROE (24.11%). ROIC decreased on 2.1 pp from 27.2% to 25.1% in FY2015. ROE decreased slightly on 0.80 pp from 24.9% to 24.1% in FY2015.

Leverage (Debt)

The company has no debt. Cash jumped on 17.0% in FY2015.

Management team

The company's CEO is Vishal Sikka. Vishal Sikka has 4 years tenure at the company.

Appendix 1: 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, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Tech Mahindra ($TECHM)-85.8%6.8%25.2%174.0%
Tata Consultancy Services ($TCS)31.0%28.8%29.9%15.7%
Mindtree ($MINDTREE)26.6%23.2%28.8%17.0%
Infinite Computer Solutions (India) ($INFINITE)-57.9%19.5%31.7%24.6%
Sqs India Bfsi ($SQSBFSI)46.4%32.9%20.4%10.1%
Median (21 companies)-41.6%22.9%20.6%14.0%14.2%
Infosys ($INFY)22.7%19.6%24.2%6.4%

Top companies by Gross margin, %

Top  FY2011 FY2012 FY2013 FY2014 FY2015
Tata Consultancy Services ($TCS)47.4%42.4%
Mindtree ($MINDTREE)32.8%31.5%36.2%34.8%
Wipro ($WIPRO)31.5%29.2%30.4%32.0%31.6%
Median (3 companies)32.8%31.5%33.3%39.7%34.8%
Infosys ($INFY)45.3%41.3%98.1%35.9%38.3%

Top companies by EBITDA margin, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Oracle Financial Services Software ($OFSS)37.4%35.3%35.2%37.4%
Tata Consultancy Services ($TCS)29.9%29.5%28.6%30.7%26.1%
Wipro ($WIPRO)21.1%19.1%20.9%22.4%22.3%
Tech Mahindra ($TECHM)19.5%16.7%20.7%22.2%
Mindtree ($MINDTREE)11.8%15.1%19.8%20.6%20.3%
Median (18 companies)18.0%15.1%16.5%18.3%19.1%
Infosys ($INFY)32.5%31.6%27.9%26.3%27.1%

Top companies by CAPEX/Revenue, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Ramco Systems ($RAMCOSYS)16.4%22.1%15.3%12.4%
Niit Technologies ($NIITTECH)4.1%5.9%4.6%6.1%
Mindtree ($MINDTREE)5.6%2.5%4.5%5.0%5.6%
Tech Mahindra ($TECHM)3.0%5.4%2.6%5.0%
Geometric ($GEOMETRIC)3.8%3.5%4.2%4.0%
Median (17 companies)4.0%3.7%3.2%2.6%3.0%
Infosys ($INFY)4.7%4.9%5.2%5.5%4.2%

Top companies by ROIC, %

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
Tata Consultancy Services ($TCS)47.1%48.6%48.4%50.2%40.5%
Tech Mahindra ($TECHM)19.2%15.4%20.1%43.0%
Geometric ($GEOMETRIC)19.6%29.9%46.4%41.1%
Mindtree ($MINDTREE)14.9%24.9%34.6%36.2%32.0%
Cmc ($CMC)31.5%26.2%33.2%35.3%26.0%
Median (30 companies)16.0%19.1%20.4%22.9%23.4%
Infosys ($INFY)32.1%32.4%28.3%27.2%25.1%

Top companies by Net Debt / EBITDA

Top 5 FY2011 FY2012 FY2013 FY2014 FY2015
3I Infotech ($3IINFOTECH)3.5x8.5x20.3x27.7x
Ramco Systems ($RAMCOSYS)4.0x8.8x27.6x4.2x
Starcom Information Technology ($STARCOM)17.4x
Onward Technologies ($ONWARDTEC)2.7x2.4x2.2x4.1x
Kpit Technologies ($KPIT)-0.7x0.3x0.5x0.7x
Median (23 companies)-0.1x-0.0x-0.2x-0.2x-0.7x
Infosys ($INFY)-1.9x-1.9x-1.9x-2.0x-2.1x