Indian stock report - Infosys

INDIA

UPDATE: Infosys falls for a second consecutive day, a two-day fall of 1.6% October 18, 2017 15:30 IST

NEWS BITES - BRIC

Infosys Ltd. (NSE:INFY), India's 2nd largest IT consulting & software company by market cap, has fallen Rs6.15 (0.7%) for a second consecutive day on Wednesday. This brought its two-day fall to Rs14.65 (1.6%), compared with the BSE SENSEX Index which fell 49.3 points (0.2%) in the two days for a relative price change of -1.4%. Cumulative volume in the 2 days was 0.7 times the average 2-day volume of 5 million shares. The stock last traded at Rs924.35.

INFOSYS ISSUED NEW PATENT IN THE WEEK OF OCTOBER 17, 2017

Methods for controlling software usage [9,792,417]

Methods for controlling software usage are described. Methods comprise receiving a request for at least one software application license, wherein the request comprises a user count, generating, by the computing apparatus, one or more sets of license data in response to the request, wherein a set of license data comprises at least one of the user count and a corresponding sequence number, signing each of the one or more sets of license data digitally with a private key, embedding a set of signed license data into the software application, receiving user identification data from a user through an input interface associated with the computing apparatus, and validating the user identification data. Additional embodiments incorporate mechanisms for license renewal, user registration and user authentication by means of associating a range of user identification data with the license data.

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Highlights in today's Report:

SECTION 1 BEARISH SIGNALS

Fundamentals, Overvaluation [compared with sector average], Technicals, Overbought/Bearish/Resistance Signals, Open Interest, Low Performance Indicators

SECTION 2 BULLISH SIGNALS

Fundamentals, Undervaluation [compared with sector average], Technicals, High Performance Indicators

SECTION 3 PRICE VOLUME DYNAMICS

Volatility, Moving Annual Return, Beta, Aggregate Volumes, Prices and Turnover Period

SECTION 4 RANKING

Global, Independent Ratings

SECTION 5 FINANCIALS

Financials Summary, Trailing 12 Months Dividends

SECTION 6 PROFILE

Activities, Industry & Sector, Top Management, Issued Capital

SECTION 7 STOCK BUZZ

Latest Buzz, Corporate Wire

SECTION 1 INFOSYS BEARISH SIGNALS

1.1 Fundamentals:

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 2.5. Compared with the rest of the market the stock is overvalued and ranks in the bottom quartile of stocks by value of Q Ratio.

+ Net Profit growth has shown signs of deterioration in recent quarters. [Quarter ended, all figures in %]

QtrRevenue GrowthNet Profit GrowthNet Profit Margin
Jun 17-4.4-3.320.4
Mar 173.4-2.821
Dec 16-0.22.821.5
Sep 163.14.920.8

1.2 Overvaluation [compared with sector average]:

+ Return on Equity 20.8% [31.8%].

+ Year-on-Year Earnings Growth of 6.4% [41.5%].

+ Price/Earnings/Growth of 1.4 [0.3].

+ Return on Assets 17.2% [22.6%].

1.3 Technicals:

+ The price decreased 0.7% in the last week.

+ In the last three months the stock has hit a new 52-week low thrice.

+ The present value of Rs1,000 (PV1000) invested one year ago in Infosys is Rs937, comprising a capital loss of Rs87 and dividend reinvested of Rs24.

PV10001-week1-month1-year
INFY.NSE9931,017937
BSE SENSEX Index1,0241,0461,162

1.4 Overbought/Bearish/Resistance Signals:

+ The Stochastic indicator of 81.7 has broken through the overbought line of 80; this indicates the price is close to its 14-day high and is likely to revert to a downtrend.

1.5 Open Interest:

Open Interest Trend

Same day trend: The price decreased 0.7% from Rs930.50 to Rs924.35; Open interest has lifted 2.6% from 59,619,500 to 61,147,500. A fall in price combined with an increase in open interest suggests there is new money coming into the market from short sellers. This is a bearish signal.

DurationOpen Interest change %Price change %Interpretation
1-day2.6-0.7Weak Market
1-week10.1-0.7Weak Trend

Top three traded put options [1 contract is 500 shares]

Exercise PriceExercise DateOption PriceChange %Contracts Traded
Rs900.0October 26, 2017Rs6.2031.91258
Rs920.0October 26, 2017Rs13.1528.91171
Rs880.0October 26, 2017Rs2.5025.0544

1.6 Low Performance Indicators:

DescriptionValueRank In Market
EPS Growth %6.4In Bottom Quartile
% Prem to Vol Wtd Price1.4In Bottom Quartile

SECTION 2 INFOSYS BULLISH SIGNALS

2.1 Fundamentals:

+ The relative yield of the stock, defined by its yield of 2.8%, divided by average yield of dividend yielding stocks in the BSE SENSEX Index of 1.4% is 202.2%. This suggests the stock is undervalued in dividend yield terms.

+ Total Liabilities/EBITDA of 0.7 is comfortably below the Joseph Piotroski benchmark of 5.

+ Net profit margin has averaged 21.3% in the last 3 years. This is considered superior and suggests a high margin of safety.

+ As per the Du Pont analysis, Return on Equity is high at 20.8%. This is computed as net profit margin of 20.1% times asset turnover [sales/assets] of 0.86 times leverage factor [total assets/shareholders' equity] of 1.2.

2.2 Undervaluation [compared with sector average]:

+ Price to Book of 3.3 [4.7]. We estimate Infosys stock is trading at a current year Price to Book of 2.8 and a forward year Price to Book of 2.4.

+ Dividend yield of 2.8% [2.1%].

2.3 Technicals:

+ The present value of INR1,000 (PV1000) invested twenty years ago in Infosys is Rs105,794, including a capital gain of Rs92,744 and dividend reinvested of Rs12,050.

+ 20 years Multiplier in INR = 105.794x

+ Compound Annual Growth Rate (CAGR) in INR = 26.2%

Present Value of USD1,000 invested 20 years ago:

+ The present value of USD1,000 (PV1000) invested twenty years ago in Infosys is $US59,030, including a capital gain of $US51,306 and dividend reinvested of $US6,724.

+ 20 years ago USD 1 equalled INR 36.2319

+ 20 years Multiplier in USD = 59.03x

+ Compound Annual Growth Rate (CAGR) in USD = 22.6%

Oct 18, 2017: USD 1 equals INR 64.94

2.4 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverRs3.5 billion (US$54.3 million)In Top 1%
Volatility %0.8In Top 5%
Return on Assets [ROA] %17.2In Top 9%
Return on Capital Employed [ROCE] %28.8In Top Quartile
EBITDA Margin %30.3In Top Quartile

SECTION 3 PRICE VOLUME DYNAMICS

3.1 Volatility:

+ Infosys is at a discount of 10.2% to its 12-month high of Rs1,029.25 on August 17. It is also at a premium of 7.5% to the 12-month low of Rs860.0 on August 22.

3.2 Moving Annual Return

Based on a dynamic start date of 5 years ago, the Moving Annual Return has been positive in 3 out of 5 years.

INFYClose (INR)Dividends (INR)Capital Gain / (Loss) %% YieldAnnual Return %
Oct 18924.3525.75(8.7)2.5(6.2)
1 Yr ago1,012.514.25(4.0)1.4(2.6)
2 Yrs ago1,054.6539.518.34.422.7
3 Yrs ago891.617.518.8119.7
4 Yrs ago750.8210.540.4242.4

Close 5 years ago Rs534.76

3.3 Beta:

+ Beta: the Beta of Infosys stock is 0.7. A Beta lower than 1 suggests this is a low risk, low return stock with volatility less than that of the market.

3.4 Aggregate Volumes, Prices and Turnover Period:

[Volume Index or VI in brackets; 1 is average]

+ National Stock Exchange: INFY.NSE 3,615,926 [VI of 0.8] volume 95.113% of aggregate. Price: Rs924.35.

+ Bombay Stock Exchange: 500209.BSE 185,791 [VI of 0.6] volume 4.887% of aggregate. Day trader volume: 56.0% for the day; 44.0% for the trailing week and 49.4% for the trailing month. Price: Rs924.45.

+ Aggregate volume: there were 3.8 million shares of Infosys worth Rs3.5 billion traded today. The aggregate volume was 0.8 times average trading of 5 million shares.

The turnover rate in the 12 months to date was 47.9% (or a turnover period of 2 years 33 days). This average length of ownership of the stock at 0.7 times the average holding period of 2 years 9 months for stocks in the BSE SENSEX Index suggests a slightly larger number of speculators on the share register, making it less safe for long-term investors.

SECTION 4 RANKING

4.1 Global Rank [out of 47,797 stocks] and Rank in the Asia Region [out of 22,255 stocks]

DescriptionValueGlobal RankIn Asia Region
MCap (US$)32.5B452104
Total Assets (US$)12.8B2,303792
Revenue (US$)11B1,228371
Net Profit (US$)2.2B460108
Return on Equity %20.83,9351,770
Net Profit Margin %20.15,7332,371
Price to Book3.323,68913,152
Price/Earnings14.88,9474,769
Yield %2.89,0053,618
PV$1000 (1Year) US$*96825,84212,134
US$* Change (1Year) %-3.525,96812,267

* 1 year ago USD 1 = INR 66.67

Oct 18, 2017: USD 1 equals INR 64.94

4.2 Independent Ratings

Infosys Ltd. is the 323rd largest by revenue in the FT Global 500.

It is the 1055th largest by revenue in the Forbes Global 2000.

It is placed 1788/2480 in BSS News Bites' ranking of Indian performers in the past year, a percentile ranking of 28.

SECTION 5 INFOSYS FINANCIALS

5.1 Financials Summary

Year endedMar 2017Mar 2016Mar 2015
Sales (USD B)1110.18.7
Pretax (USD B)3.12.92.7
Net (USD B)2.22.11.9
EPS (INR)62.7759.0254.13

Net profit was up 6.4% from US$2.1 billion in 2016 to US$2.2 billion in 2017. Earnings Per Share (EPS) was up 6.4% from Rs59.02 to Rs62.77.

5.2 Trailing 12 Months Dividends

Trailing 12 Months ToValue (Rs)
18 Oct 201725.75
18 Oct 201614.25
18 Oct 201539.5
18 Oct 20147.5
18 Oct 201310.5

SECTION 6 INFOSYS PROFILE

6.1 Activities

Infosys is a global leader in the "next generation" of IT and consulting with revenues of over US$ 4 billion. Infosys defines, designs and delivers technology-enabled business solutions that help Global 2000 companies win in a Flat World. Infosys also provides a complete range of services by leveraging it's domain and business expertise and strategic alliances with leading technology providers. Infosys' service offerings span business and technology consulting, application services, systems integration, product engineering, custom software development, maintenance, re-engineering, independent testing and validation services, IT infrastructure services and business process outsourcing

6.2 Industry & Sector

Classification LevelName of Sector
Economic SectorTechnology
Business SectorSoftware & IT Services
Industry GroupSoftware & IT Services
IndustryIT Services & Consulting
ActivityIT Services & Consulting - NEC*

* NEC: Not elsewhere classified

6.3 Top Management

The chief executive officer is Vishal Sikka.

6.4 Issued Capital

Based on 2,285,650,000 issued shares the market capitalisation is Rs2,112.7 billion (US$32.5 billion).

SECTION 7 STOCK BUZZ

To view the Stock BUZZ on Infosys, click here

7.1 Latest Buzz

News DateHeadlinePublisher
Oct 18, 2017KONE Settles On Infosys Ltd (NSE:INFY) To Help With The marketexclusive.com

7.2 Corporate Wire

To view Recent Company Headlines, click here

October 10: Infosys: Buyback Offer

Kotak Mahindra Capital Company Limited & J.P. Morgan ("Manager to the Offer") has submitted to BSE a copy of Public Announcement for the attention of Eligible Shareholders of Infosys Ltd ("Target Company") for Buyback of Equity Shares through Tender Offer under the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998, as amended.

October 09: Infosys: Listing of further issue

In pursuance of Regulation 3.1.1 of the National Stock Exchange (Capital Market) Trading Regulations Part A, it is hereby notified that the list of securities further admitted to dealings on the National Stock Exchange (Capital Market segment) with effect from October 10, 2017 the designated security codes thereof shall be as specified in Annexure.

October 04: Infosys: Press Release / Media Release

KONE Selects Infosys to support its IT Transformation

October 03: Infosys: Press Release / Media Release

Infosys: Press Release / Media Release

September 28: Infosys: Press Release / Media Release

Infosys: Press Release / Media Release

Contact: 080-28520261

Physical Address: Electronics City Plot 44 and 97A Hosur Road Bangalore, 560100 India

State/Province/Country: India

Country of Incorporation: India

Exchange: National Stock Exchange

ISIN: INE009A01021

NSE:INFY; BSE:INFY; NS:INFY; IN:INFY; INFY.NS

PermID: 4295872682

Infosys Limited, Infosys Ltd

Source: www.BuySellSignals.com