Indian stock report - Infosys
Infosys in its biggest weekly gain in 5 months June 15, 2018 15:30 IST
NEWS BITES - BRIC
Infosys Ltd. (NSE:INFY), India's 2nd largest IT consulting & software company by market cap, has lifted Rs41.55 (3.4%) from its last trading session of June 14 to close at Rs1,281.25. Compared with the BSE SENSEX Index which rose 22.3 points (0.06%) in the day, the relative price increase was 3.3%. The rise has been propped up by robust volume of 1.8 times the average daily volume of 5.6 million shares. In the past week the shares have climbed 4.2%, the biggest weekly gain since January 18.
The shares lifted 3.4% in the 1 trading session since the ex-dividend date of June 14. The company paid a dividend of Rs10.0 per share. Based on dividends of Rs43.50 per share for the trailing twelve months and the last price of Rs1,281.25 the dividend yield is 3.4%.
Highlights in today's Report:
SECTION 1 BULLISH SIGNALS
SECTION 2 BEARISH SIGNALS
SECTION 3 RELATED NEWS
SECTION 4 GLOBAL RANKING
SECTION 5 SUMMARY FINANCIALS
SECTION 6 PROFILE
SECTION 1 INFOSYS BULLISH SIGNALS
+ The relative yield of INFY, defined by its yield of 3.4%, divided by average yield of dividend yielding stocks in the BSE SENSEX Index of 1.4% is 251.9%. This suggests Infosys 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 21.1% 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 25.0%. This is computed as net profit margin of 22.7% times asset turnover [sales/assets] of 0.88 times leverage factor [total assets/shareholders' equity] of 1.2. Also, this has improved from 20.8% last year.
|Du Pont Analysis||ROE||Profit Margin||Asset Turnover||Equity Multiplier|
5-years average annualized earnings growth rate of 11.8%
+ Earnings per share growth rate is positive and has seen consecutive rises in recent years. [Year ended, all figures in %]
|Year||Revenue Growth||EPS Growth||EBITDA Growth|
1.2 Undervaluation [compared with sector average]:
+ Price/Earnings of 17.8 [21.6]. We estimate Infosys stock is trading at a current year P/E of 15.9 and a forward year P/E of 14.6.
+ Year-on-Year Earnings Growth of 14.7% [8.0%].
+ Price/Earnings/Growth of 1.7 [2.7].
+ Return on Assets 20.1% [17.2%].
+ Return on Capital Employed 30.8% [8.2%].
+ Dividend yield of 3.4% [1.4%].
Uptrend: The stock rose 3.4% on high volatility today and expanding price range.
+ The price climbed 4.2% in the last week and jumped 9.9% in the last month.
+ Compared with the BSE SENSEX Index which rose 0.5% for the week and 0.2% for the month, this represented a relative price increase for Infosys' stock of 3.7% for the week and 9.7% for the month.
+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 1,227.77 minus the 26-day EMA of 1,202.18 is positive 25.58 suggesting a bullish signal. Both EMA prices are rising, another bullish signal.
+ The present value of Rs1,000 (PV1000) invested one year ago in Infosys is Rs1,453, comprising a capital gain of Rs398 and dividend reinvested of Rs55.
|BSE SENSEX Index||1,006||1,028||1,146|
+ The present value of INR1,000 (PV1000) invested twenty years ago in Infosys is Rs99,268, including a capital gain of Rs86,547 and dividend reinvested of Rs11,721.
+ 20 years Multiplier in INR = 99.268x
+ Compound Annual Growth Rate (CAGR) in INR = 25.9%
Present Value of USD1,000 invested 20 years ago:
+ The present value of USD1,000 (PV1000) invested twenty years ago in Infosys is $US61,643, including a capital gain of $US53,364 and dividend reinvested of $US7,278.
+ 20 years ago USD 1 equalled INR 42.1941
+ 20 years Multiplier in USD = 61.643x
+ Compound Annual Growth Rate (CAGR) in USD = 22.9%
Jun 15, 2018: USD 1 equals INR 67.95
1.4 Open Interest:
+ Open interest hit an 11-day high.
+ Open Interest Trend
Same day trend: The price lifted 3.4% from Rs1,239.70 to Rs1,281.25; Open interest has climbed 4.2% from 36,790,800 to 38,319,600. A price rise combined with an increase in open interest suggests there is new money coming into the market from existing or new buyers. This is a bullish signal.
|Duration||Open Interest change %||Price change %||Interpretation|
+ Top three traded call options [1 contract is 500 shares]
|Exercise Price||Exercise Date||Option Price||Change %||Contracts Traded|
|Rs1,260.0||June 28, 2018||Rs27.55||118.7||9121|
|Rs1,280.0||June 28, 2018||Rs17.75||120.5||5224|
|Rs1,300.0||June 28, 2018||Rs11.25||110.3||3996|
1.5 High Performance Indicators:
|Description||INFY Value||Rank In Market|
|Today's Turnover||Rs12.9 billion (US$189.7 million)||In Top 1%|
|Return on Assets [ROA] %||20.1||In Top 4%|
|Return on Capital Employed [ROCE] %||30.8||In Top 6%|
|Price/MAP200||1.23||In Top 8%|
|Price/MAP50||1.1||In Top 9%|
|Price Change %||3.4||In Top Quartile|
|EBITDA Margin %||28.7||In Top Quartile|
SECTION 2 INFOSYS BEARISH SIGNALS
+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 3.5. Compared with the rest of the market the stock is overvalued and ranks in the bottom 10% of stocks by value of Q Ratio.
2.2 Overvaluation [compared with sector average]:
+ Price to Book of 4.5 [1.5].
+ The 0.8% discount to 12-month high of Rs1,291.50 against the 54.8% premium to 12-month low of Rs827.97 suggests the climb might be peaking.
2.4 Overbought/Bearish/Resistance Signals:
+ At Rs1,281.25 the price has risen above the upper Bollinger band resistance of Rs1,269.0, indicating a downside risk for it to fall back within the band.
+ The Relative Strength Index (RSI) of 76.4 has penetrated the overbought line of 70, suggesting the price gain of 7.9% in the last 14 days is unusually high.
+ The stock is overbought according to the Williams % R indicator of -8.9, suggesting the price is close to its 14-day high of Rs1,291.50.
2.5 Low Performance Indicators:
|Description||INFY Value||Rank In Market|
|Price to Sales||4||In Bottom Quartile|
|EPS Growth %||14.7||In Bottom Quartile|
2.6 Moving Annual Return
Based on a dynamic start date of 5 years ago, the Moving Annual Return has been positive in 4 of the last 5 years. An investment a year ago in INFY would have produced a return of 44.5%.
|INFY||Close (INR)||Dividends (INR)||Capital Gain / (Loss) %||% Yield||Annual Return %|
|1 Yr ago||916.64||25.75||(16.8)||2.3||(14.5)|
|2 Yrs ago||1,102.34||39||25.2||4.4||29.6|
|3 Yrs ago||880.34||22.25||24.9||3.2||28.1|
|4 Yrs ago||704.84||-||33.1||-||33.1|
Close 5 years ago Rs529.67
+ Beta: the Beta of Infosys stock is 0.8. A Beta lower than 1 suggests this is a low risk, low return stock with volatility less than that of the market.
2.8 Aggregate Volumes, Prices and Turnover Period:
[Volume Index or VI in brackets; 1 is average]
+ National Stock Exchange: INFY.NSE 9,978,880 [VI of 1.9] volume 98.09% of aggregate. Price: Rs1,281.25.
+ Bombay Stock Exchange: 500209.BSE 194,266 [VI of 0.6] volume 1.91% of aggregate. Day trader volume: 36.9% for the day; 64.0% for the trailing week and 72.2% for the trailing month. Price: Rs1,280.45.
+ Aggregate volume: there were 10.2 million shares of Infosys worth Rs12.9 billion traded today. The aggregate volume was 1.8 times average trading of 5.6 million shares.
The turnover rate in the 12 months to date was 51.5% (or a turnover period of 1 year 11 months). This average length of ownership of the stock at 0.7 times the average holding period of 2 years 8 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.
+ Infosys Ltd. (NSE:INFY), advanced Rs272.30 (or 27%) year-to-date (YTD) in 2018 to close at Rs1,281.25 today. The stock has a 6-month USD relative strength of 88 which means in USD terms it is outperforming 88% of its 47,576 global peers. A price rise combined with a high relative strength is a bullish signal. Compared with the BSE SENSEX Index which has risen 4.6% YTD, this is a relative price increase of 22.4%.
SECTION 3 INFOSYS RELATED NEWS
3.1 Corporate Wires
Infosys (INFY) issued 2 new Releases this week.
June 13: Infosys: Announcement under Regulation 30 (LODR)-Press Release / Media Release
Infosys and Rhode Island School of Design Launch Pioneering Design Partnership
To view the previous 3 months' Releases in full, click here
3.2 Other News
+ BSS/News Bites:
Infosys Ltd. is placed 497/2534 in BSS News Bites' ranking of Indian performers in the past year, a percentile ranking of 80.
+ Vanguard Total World Stock ETF 7581:
The stock was one of 7581 global stocks selected by Vanguard Total World Stock ETF (VT). As at Apr 30, 2018, the Vanguard Total World Stock ETF held 192,562 shares worth $US3,335,905 or 0.02% by value of the ETF's portfolio [Ranked 877 out of 7581 by value and 8 out of 307 for India].
SECTION 4 INFOSYS GLOBAL RANKING
Global Rank [out of 47,576 stocks] and Rank in the Asia Region [out of 22,829 stocks]
|Description||Value||Global Rank||In Asia Region|
|Total Assets (US$)||11.8B||2,503||887|
|Net Profit (US$)||2.4B||466||131|
|Return on Equity %||25.0||2,733||1,094|
|Net Profit Margin %||22.7||5,121||2,057|
|Price to Book||4.3||28,404||16,896|
|PV$1000 (1Year) US$*||1,380||8,474||4,042|
|US$* Change (1Year) %||27.5||8,867||4,277|
* 1 year ago USD 1 = INR 64.94
Jun 15, 2018: USD 1 equals INR 67.95
SECTION 5 INFOSYS SUMMARY FINANCIALS
5.1 Dividend History
+ Trailing 12 months dividend has improved from Rs22.25 in 2015 to Rs43.50 in 2018.
5.2 Financials Summary
|Year ended||Mar 2018||Mar 2017||Mar 2016|
|Sales (USD B)||10.4||10.6||9.7|
|Pretax (USD B)||3||3||2.8|
|Net (USD B)||2.4||2.1||2|
+ Net profit was up 11.7% from US$2.1 billion in 2017 to US$2.4 billion in 2018.
+ Earnings Per Share (EPS) was up 14.7% from Rs62.77 to Rs72.0.
SECTION 6 INFOSYS PROFILE
Infosys is a global leader in the "next generation" of IT and consulting with revenues of over US$ 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 Top Management
The chief executive officer is Salil S. Parekh.
6.3 Issued Capital
Based on 2,173,310,000 issued shares the market capitalisation is Rs2,784.6 billion (US$41 billion).
Physical Address: Electronics City Plot 44 and 97A Hosur Road Bangalore, 560100 India
Country of Incorporation: India
Exchange: National Stock Exchange
Business Sector: Software & IT Services
Industry Group: Software & IT Services
Industry: IT Services & Consulting
Activity: IT Services & Consulting - NEC*
Economic Sector: Technology
* NEC: Not elsewhere classified
NSE:INFY; BSE:INFY; NS:INFY; IN:INFY; INFY.NS
Infosys Limited, Infosys Ltd