Infosys. 4QFY18 Result Update. Decent quarter; margin guidance disappoints

Similar documents
Infosys. 3QFY19 Result Update. Decent quarter; Strong deal wins. Sector: Technology CMP: ` 684. Recommendation: Buy

Wipro. 4QFY18 Result Update. Still not of the woods, maintain Hold. Sector: Technology CMP: ` 287. Recommendation: Hold

Tech Mahindra. 1QFY18 Result Update. Steps in the right direction, compelling valuation. Sector: Technology CMP: ` 385. Recommendation: Buy

Wipro. 3QFY18 Result Update. Still not of the woods, maintain Hold. Sector: Technology CMP: ` 328. Recommendation: Hold

Mphasis. 1QFY17 Result Update. Muted quarter, Direct business still weak. Sector: Technology CMP: ` 540. Recommendation: Sell

NIIT Technologies. 3QFY19 Result Update. Robust revenue visibility, Outlook robust

NIIT Technologies. 2QFY19 Result Update. Robust revenue visibility, Outlook robust

Wipro. 3QFY17 Result Update. Guidance subdued, maintain Hold. Sector: Technology CMP: ` 474. Recommendation: Hold

Hexaware. 4QCY18 Result Update. Margin miss, rich valuations. Sector: Technology CMP: ` 322. Recommendation: Hold

Mphasis. 1QFY18 Result Update. Margins dip; valuations not supportive. Sector: Technology CMP: ` 614. Recommendation: Sell

Tech Mahindra. 4QFY17 Result Update. Short term blip, compelling valuation. Sector: Technology CMP: ` 429. Recommendation: Buy

Hexaware. 1QCY16 Result Update. Remaining of CY16 to be better, Rich valuations. Sector: Technology CMP: `227. Recommendation: Hold

KPIT. 1QFY18 Result Update. Profitability does it again, looking for sustenance. Sector: Technology CMP: ` 130. Recommendation: Hold

Hexaware. 2QCY17 Result Update. Margin pressure ahead, rich valuations. Sector: Technology CMP: ` 262. Recommendation: Hold

NIIT Technologies. 4QFY17 Result Update. Robust revenue visibility, Margin expansion story intact. Sector: Technology CMP: `471. Recommendation: Buy

Wipro. 1QFY17 Result Update. Disappointing outlook, margin decline negative, Hold. Sector: Technology CMP: ` 549. Recommendation: Hold

Persistent Systems. Analyst Meet Update. Futuristic technologies, short term hazy, Hold. Sector: Technology CMP: ` 655. Recommendation: Hold

NIIT Technologies. Analyst Meet Update. Non-linearity to boost revenues, margins. Sector: Technology CMP: `496. Recommendation: Buy

Zee Entertainment. 1QFY19 Result Update Domestic advertisement to surpass initial estimates

Havells India. Q3FY17 Result Update Positive surprise; Maintain Buy. Sector: Consumer Durable CMP: ` 376. Recommendation: BUY.

Nestlé India. Q4CY16 Result Update. Healthy Sales growth; higher provisions & CSR impacts bottom-line. Sector: FMCG CMP: ` 6,169. Recommendation: BUY

Colgate-Palmolive. Q3FY17 Result Update Steep decline in Sales; EBITDA margin contraction continues. Sector: FMCG CMP: ` 879. Recommendation: HOLD

Havells India. Q4FY16 Result Update In-line result; Consistent improvement in performance. Sector: Consumer Durable CMP: ` 342. Recommendation: BUY

Zee Entertainment. 3QFY17 Result Update Best ever margin, rich valuations. Sector: Media CMP: ` 480. Recommendation: Hold

Zee Entertainment. 4QFY16 Result Update Strong advertisement revenue, maintain Buy. Sector: Media CMP: ` 417. Recommendation: Buy

Zee Entertainment. 1QFY17 Result Update Strong advertisement revenue, maintain Buy. Sector: Media CMP: ` 474. Recommendation: Buy

TTK Prestige. Q2FY18 Result Update Healthy Sales growth; Margins expands. Sector: Consumer Durable CMP: ` 6,145. Recommendation: HOLD

ITC. Q1FY17 Result Update Healthy Operational Performance; Maintain BUY. Sector: FMCG CMP: ` 251. Recommendation: BUY

Colgate-Palmolive. Q2FY18 Result Update Volume pressure continues; Soft A&P aids Margin. Sector: FMCG CMP: ` 1,063. Recommendation: HOLD

Colgate-Palmolive. Q1FY18 Result Update Volume pressure continues; Soft A&P aids Margin. Sector: FMCG CMP: ` 1,083. Recommendation: HOLD

HUL. Q4FY17 Result Update Healthy performance, rich valuations. Sector: FMCG CMP: ` Recommendation: Hold

Symphony. Q3FY18 Result Update Strong performance; valuations expensive. Sector: Consumer Durable CMP: ` 1,970. Recommendation: HOLD

Havells India. Q4FY17 Result Update Strong Sales growth; Margins stable. Sector: Consumer Durable CMP: ` 515. Recommendation: BUY

Hindustan Unilever. Q4FY18 Result Update Strong volume growth on weak base and uptick in rural. Sector: FMCG CMP: ` 1,516. Recommendation: HOLD

KPIT CUMMINS INFOSYSTEMS Ltd.

Havells India. Q1FY18 Result Update Strong Sales growth; Margins decline. Sector: Consumer Durable CMP: ` 467. Recommendation: BUY

Hindustan Unilever. Q1FY19 Result Update Maintaining strong volume trajectory on high base is the key. Sector: FMCG CMP: ` 1,644. Recommendation: HOLD

ITC. 1QFY18 Result Update Higher Excise duty impacts sales; healthy EBITDA margin. Sector: FMCG CMP: ` 289. Recommendation: BUY

Nestlé India. Q2CY17 Result Update. Positives priced in; Downgrade to Hold. Sector: FMCG CMP: ` 6,786. Recommendation: HOLD

Infosys Ltd IT HOLD RETAIL EQUITY RESEARCH. 23 rd January 2019 Q3FY19 RESULT UPDATE. CMP Rs. 744 TARGET Rs. 802 RETURN 8%

Bajaj Corp. Sales inline; soft A&P & higher other income aids PAT. Q3FY17 Result Update. Sector: FMCG. CMP: ` 385 Recommendation: BUY

Tata Consultancy Services (TCS)

Amber Enterprises India Ltd

Dabur India Ltd. Q3FY18 Result Update Strong Volume led Domestic growth; IBD remains weak. Sector: FMCG CMP: ` 356. Recommendation: BUY

'New and Renew' has seen significant progress

Graphite India BUY. Performance Highlights CMP. `93 Target Price `124. 4QFY2012 Result Update Capital Goods. Investment Period 12 Months

Lupin Ltd. RESULT UPDATE 31 st October 2017

Infosys (INFO IN) Strong performance; small miss on margins maintain BUY

KEI Industries BUY. Performance Update. CMP Target Price `433 `508. 4QFY2018 Result Update Cable. Historical share price chart.

HOLD. Deleveraging story playing out RAMCO CEMENTS. Target Price: Rs 503. Q4 performance

TV Today Network BUY. Performance Update CMP. `323 Target Price `498. 3QFY2019 Result Update Media. Investment Period 12 Months

Previous Recommendation: Neutral QUARTERLY PERFORMANCE (INDIAN GAAP)

SpiceJet BUY. Performance Highlights CMP. `32 Target Price `43. 1QFY2013 Result Update Airlines. Investment Period 12 Months.

Adani Ports & SEZ Rating: Target price: EPS:

Mahindra & Mahindra Ltd.

NIIT Technologies Ltd. (NIIT Tech)

Bajaj Corp. Q1FY17 Result Update Weak Sales growth, Margin Expansion continues. Sector: FMCG CMP: ` 404. Recommendation: BUY

ITC ACCUMULATE. Performance Highlights CMP. `257 Target Price `284. 3QFY2017 Result Update FMCG. Investment Period 12 Months

Century Plyboards Ltd

KEI Industries BUY. Performance Update. Target Price. 3QFY2018 Result Update Cable. Historical share price chart. Key Financials

Goodyear India ACCUMULATE. Performance Highlights. CMP Target Price `326 `374. 1QCY2012 Result Update Tyres. Key financials

Parag Milk Foods BUY. Performance Update CMP. `256 Target Price `330. 2QFY2019 Result Update Dairy Products. Investment Period 12 Months

Coal India ACCUMULATE. Performance Highlights CMP. `338 Target Price `380. Outlook and valuation. 2QFY2016 Result Update Mining

KPIT Cummins ACCUMULATE. Performance Highlights CMP. `121 Target Price `132. 2QFY2013 Result Update IT. Investment Period 12 Months

GMM Pfaudler Limited BUY. Performance Update CMP. `945 Target Price ` QFY2019 Result Update Industrial Machinery. Investment Period 12 Months

Jamna Auto Industries

BUY. Efforts on cost cutting paying off RAMCO CEMENTS. Target Price: Rs 435. Key highlights. Key drivers FY15 FY16E FY17E

Graphite India BUY. Performance Highlights. CMP Target Price `88 `109. 1QFY2012 Result Update Capital Goods

Idea Cellular. Company Note. Merger Synergies, compelling valuations. Sector: Telecom CMP: ` 89

Blue Star Ltd BUY. Performance Update. CMP Target Price `754 `867. 4QFY2018 Result Update Cons. Durable. 3-year price chart.

Tata Steel NEUTRAL. Performance Highlights CMP. `226 Target Price - 2QFY2016 Result Update Steel. Investment Period - 3-year price chart

Mahindra & Mahindra Ltd.

Matrimony.com Ltd BUY. Performance Update. Target Price `1,016. 4QFY2018 Result Update Cable. Historical share price chart.

Tech Mahindra ACCUMLATE. Performance Highlights `495 `526. CMP Target Price. 2QFY2018 Result Update IT

TATA CONSULTANCY SERVICES LTD (TCS)

Tech Mahindra. Source: Company Data; PL Research

Inox Wind BUY. Performance Highlights. CMP Target Price `242 `286. 4QFY2016 Result Update Capital Goods. 3 year price chart

Mahindra & Mahindra Ltd.

Garware Wall Ropes ACCUMULATE. Performance Highlights CMP. `550 Target Price `618. 2QFY2017 Result Update Textile. Investment Period 12 months

Simplex Infrastructures

Wipro ACCUMULATE. Performance Highlights CMP. `539 Target Price `582. 1QFY2017 Result Update IT. Investment Period 12 Months

Goodyear India BUY. Company Update. CMP Target Price `515 `631. Company Update Tyres. 3-year Daily Price Chart. Key Financials

Recommendation HOLD Results in line with our expectations CMP (15/10/2010) Rs Target Rs Sector

Near-term pressure, but long-term outlook positive

GAIL India NEUTRAL. Performance Highlights CMP. `363 Target Price - 2QFY2013 Result Update Oil & Gas. Investment Period -

Hindustan Media Ventures

Visaka Industries Ltd

Procter & Gamble Hygiene & Health Care

Hindustan Unilever (RHS)

Inox Wind BUY. Performance Highlights. CMP Target Price `390 `505. 2QFY2016 Result Update Capital Goods. 3 year price chart

Key estimate revision. Financial summary. Year FY16E 29, % 3,583 2, FY17E 26, % 3,478 2,

Mphasis. Increased confidence on margins. Source: Company Data; PL Research

Larsen & Toubro Ltd.

Fineotex Chemical Ltd

Tech Mahindra ACCUMULATE. Performance Highlights. CMP Target Price `659 `693. 3QFY2012 Result Update IT. Key financials (Consolidated, Indian GAAP)

Simplex Infrastructures

Music Broadcast BUY. Performance Update. CMP Target Price `293 `475. 3QFY2019 Result Update Media. Stock Info Sector Market Cap (Rs cr) Media

Bloomberg Code: ATA IN

Mindtree. Source: Company Data; PL Research.

Gillette India. Institutional Equities. 2QFY19 Result Update BUY. Marketing Investments Mask Improved Top-line Performance

Transcription:

Infosys 4QFY18 Result Update Decent quarter; margin guidance disappoints Sector: Technology CMP: ` 1169 Recommendation: Buy Market statistics Current stock price (`) 1169 Shares O/S (cr.) 218.4 Mcap (` cr) 255,323 52W H/L (`) 1,220/862 6m avg. volume 4,901,999 Bloomberg INFO.IN Shareholding pattern Promoters 12.90 Domestic Institution 21.71 Foreign Institution 34.93 Non-institution 30.46 of which more than 1% Infosys vs Nifty 130 120 110 100 90 Infosys Capital efficiency & valuations Nifty 80 Apr-17 Aug-17 Dec-17 Apr-18 Particulars FY18 FY19E FY20E RoE (%) 24.0 23.1 22.5 EPS (`) 73.7 71.9 76.1 CEPS (`) 82.2 80.6 85.8 P/E (x) 15.3 16.2 15.4 P/BV (x) 3.8 3.6 3.3 EV/EBITDA (x) 11.9 11.4 10.2 Income growth (%) 3.0 9.4 9.5 EBITDA growth (%) 2.2 6.2 10.8 PAT growth (%) 12.2 (2.4) 5.8 ANALYST Naushil Shah +91-22 4224 5125 naushil.shah@trustgroup.co.in Infosys delivered a decent quarter in terms of revenue growth and healthy margin beat. Silver Linings in 4Q were (a) Client wins in the large bracket, (2) Continuity in top account mining. Management believes the traditional IT services model is slowly phasing out and a structural change is taking place in the industry with pricing pressure in commoditized services, necessitating newer growth avenues including acquisitions in areas like automation. We maintain a Buy rating on INFO on account of TCV deals won, client wins, client mining momentum, margin levers on account of non-linear initiatives coupled with comforting valuations. 4QFY18 quarter: Infosys reported slightly weak revenue growth but a healthy margin beat, with constant currency revenue growth of 0.6% QoQ and 1.8% QoQ on reported basis to US$2,805mn. Revenue growth was led by overall volume growth of 1.1% (onsite up 0.2% and offshore up 1.5%), while blended pricing remained flattish QoQ. EBIT margin has improved by 46bps QoQ to 24.7%, led by cross currency benefits (20 bps), deduction in onsite mix (30bps), partially offset by higher variable pay, increase in subcontract cost (6.1% vs 5.9% in Q3FY18) and drop in price realization. Excluding one-time provision (impairment loss of Rs118 crore owing to Panaya re-classification in Q4FY18 and reversal of tax provision in Q3FY18), adjusted net income during the quarter increased by 3.0% QoQ. Quarter details: Infosys will acquire Wong Doody Holding Company, Inc. for US$75 million, a US-based digital creative and consumer insights agency. Total number of active clients reached to 1,204 at the end of Q4FY18. Infosys won ten large deals during the quarter. TCV wins for the quarter stood at US$905mn vs US$799mn in Q3FY18. Infosys aims to return US$2bn (Rs130bn) to shareholders in FY19 through either buyback and dividends (of which ~Rs26bn is being distributed as special dividend of Rs10/share). Infosys anticipates completion of sale of Panaya and Skava by Mar 19. Revenue guidance for FY19 at 6-8% in cc terms, but cut in margin guidance disappoints: The management has provided a cc revenue growth guidance of 6-8% YoY (vs NASSCOM s guidance of 7-9% for the industry) for FY19, in-line with our estimates. Despite a decent margin performance in Q4FY18, Infosys has lowered EBIT margin guidance to 22-24% for FY19 from 23-25% earlier. The management stated that the cut in margin guidance is due to a) investment in digital technologies, b) focus on local hires/us talent model, c) acceleration of sales activities and d) re-skilling the employees. CEO lays out roadmap and pins hope on BFSI recovery: Mr. Salil Parekh (CEO & MD) mentioned that the focus remains around the execution of strategy around the four pillars: 1) scaling agile digital business (US$2.8 billion, 25.5% of total revenues in FY18), 2) energizing the core (AI, NIA, automation, etc), 3) reskilling employees, and 4) expanding the localization (in key markets like US, Europe, and Australia). Though softness persists in the tech spending among large US banks owing to higher capital allocation for internal spending, the management hopes its BFSI growth would be better in CY18 on account of its diversified portfolio (including regional banks, small banks and European banks) and shifting of spending from regulatory to growth-related areas. Valuation and Outlook: INFY trades at 16.2/15.4x FY19/20E. We expect USD revenue/eps growth at 9.0/1.6% CAGR over FY18-20E, and maintain a BUY. We have maintained our FY19E/20E earnings. We are positive on account of TCV deals won, client mining momentum, margin levers on account of nonlinear initiatives. Strong capital allocation to act as a downside buffer.

Exhibit 1: Quarterly details ` mn 4QFY17 3QFY18 4QFY18 QoQ (%) YoY (%) Comments Revenue was up 0.6% in cc terms (includes Revenues (in US$mn) 2,569 2,755 2,805 1.8 9.2 1.1% volume growth QoQ) Revenues 171,200 177,940 180,830 1.6 5.6 Blended pricing was falattish QoQ - Operating costs 124,620 129,770 131,530 1.4 5.5 EBITDA 46,580 48,170 49,300 2.3 5.8 EBITDA margin (%) 27.2 27.1 27.3 19bps 6bps - Interest expense - - - - Depreciation 4,460 4,980 4,580 (8.0) 2.7 + Other income, net (incl forex) 7,460 9,620 5,340 (44.5) (28.4) PBT 49,580 52,810 50,060 (5.2) 1.0 - Taxes 13,300 1,520 13,160 765.8 (1.1) EBIT margin increased due to operational efficiencies and cross-currency movements An impairment loss of US$18mn in respect of Panaya recognized in the consolidated P&L Effective tax rate (%) 26.8 2.9 26.3 2,341bps (54)bps Tax rate to remain in the range of ~27-28% PAT 36,280 51,290 36,900 (28.1) 1.7 Net margin (%) 21.2 28.8 20.4 (841)bps (79)bps Reported profits 36,030 51,290 36,900 (28.1) 2.4 Exhibit 2: ` mn Change in estimates FY19E FY20E Old New % Chg Old New % Chg Revenue (US$ mn) 11,846 11,870 0.2 12,951 12,994 0.3 Revenue 769,968 771,521 0.2 841,832 844,627 0.3 EBITDA margin (%) 26.8 26.2 (55)bps 26.9 26.5 (35)bps EPS (`) 71.6 71.9 0.4 76.1 76.1 - Source: Trust Research Geography wise Revenues: Europe was down 0.2% on cc basis QoQ with North America was up 0.1% in cc terms. RoW increased 6.3% QoQ in cc terms. Exhibit 3: Geographical wise Performance Geographical mix Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 North America 61.9 62.0 61.5 62.0 62.3 61.1 60.6 60.4 59.4 Europe 23.4 23.0 22.5 22.2 22.1 22.4 23.2 24.4 24.8 India 3.0 2.7 3.4 3.4 3.2 3.6 3.3 3.0 2.8 RoW 11.7 12.3 12.6 12.4 12.4 12.9 12.9 12.2 13.0 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 2

Exhibit 4: Service offering segmentation Vertical Mix Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Application dev. & maintenance 33.4 33.9 33.7 32.5 32.1 32.1 31.6 31.6 31.1 -----> Application development 13.7 14.4 15.6 15.5 15.3 15.4 15.6 15.4 15.5 -----> Application maintenance 19.7 19.5 18.1 17.0 16.8 16.7 16.0 16.2 15.6 Business process management 5.8 7.0 6.6 6.8 5.1 5.0 5.1 5.3 5.4 Consulting service & PI 33.2 32.1 32.1 32.4 32.6 32.6 32.5 32.8 32.4 Infrastructure management 8.0 8.3 8.4 8.6 8.5 8.4 9.0 8.8 9.3 Product engineering services 3.4 3.5 3.7 3.9 4.0 4.1 4.1 4.0 4.0 Testing services 9.0 9.1 9.2 9.1 9.0 9.3 9.4 9.4 9.8 Others 4.0 3.1 3.3 3.5 3.2 3.1 3.1 2.8 3.1 Total Services 96.8 97.0 97.0 96.8 94.5 94.6 94.8 94.7 95.1 Products 3.2 3.0 3.0 3.2 5.5 5.4 5.2 5.3 4.9 Total revenue 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Vertical wise Performance: RCL (Retail, CPG, Logistics and Life Sciences) declined 0.7% QoQ, while FSI (Financial Services and Insurance) grew 0.1%. ECS (Energy, Utilities, Communications and Services) grew 1.8% respectively. MFG (Manufacturing) increased 1.5%. Exhibit 5: Vertical Segmentation Vertical Mix Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 BFSI 32.8 32.8 32.8 33.3 33.5 33.3 33.4 33.1 33.0 -----> Insurance 5.4 5.6 5.7 6.1 6.1 6.2 6.4 6.8 6.8 -----> Banking & financial services 27.4 27.2 27.4 27.2 27.4 27.1 27.0 26.3 26.2 Manufacturing 22.7 22.8 22.5 22.5 22.4 22.2 22.0 21.8 21.9 Retail 15.0 15.5 14.9 14.6 14.1 14.2 13.8 14.1 13.3 Telecom 8.6 9.4 9.4 9.1 9.9 10.4 10.4 10.5 10.8 Energy & utility 5.2 4.7 4.8 5.0 5.0 5.2 5.5 5.8 5.9 Transportation & logistic 1.8 1.9 1.9 2.0 2.0 1.9 2.0 2.1 2.5 Healthcare & Lifesciences 7.7 6.8 6.7 6.9 6.6 6.6 6.8 6.5 6.6 Others 6.2 6.1 6.7 6.6 6.5 6.2 6.1 6.1 6.0 Total revenue 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0, Trust Research Human Resources: Employee utilisation rate, including trainees stood at 80.8% (82.1% in 3QFY18). Employee utilisation rate, excluding trainees stood at 84.7% (84.9% in 3QFY18). Going forward, Infosys would use utilization as a margin lever. The company s headcount increased by 2,416 (net basis) to take the strength to 204,107. Attrition increased 80bps QoQ to 16.6% in 4Q. Exhibit 6: Employee strength Employees Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Total employees 194,044 197,050 199,829 199,763 200,364 198,553 198,440 201,691 204,107 Software professionals 182,329 184,644 187,595 187,919 188,665 186,882 186,806 189,998 192,179 -----> Billable 171,109 173,154 176,334 178,548 178,474 178,494 180,397 180,842 182,619 -----> Banking product group 5,122 4,910 4,958 4,941 4,753 4,770 4,498 4,367 4,308 -----> Trainees 6,098 6,580 6,303 4,430 5,438 3,618 1,911 4,789 5,252 Sales & support 11,715 12,405 12,234 11,844 11,699 11,671 11,634 11,693 11,928 Gross addition 9,034 13,268 12,717 9,120 9,130 8,645 10,514 12,622 12,329 Net addition 661 3,006 2,779 (66) 601 (1,811) (113) 3,251 2,416 Lateral employees 5,266 5,260 5,752 4,000 3,967 NA NA NA NA 3

Client Concentration: The company added 73 new clients in Q4 taking the total list to 1,204 clients (13 on a net-basis). INFO added 1, 1, 4 and 5 clients in the US$75mn+, US$50mn+, US$25mn+ and US$5mn+ taking the list to 35, 57, 105 and 295 respectively. Exhibit 7: Client details Client metrics Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 Q4FY18 Active clients 1,092 1,126 1,136 1,152 1,162 1,164 1,173 1,191 1,204 Clients added 89 95 78 77 71 59 72 79 73 1 million dollar + 558 574 577 591 598 606 620 630 634 5 million dollar + 268 268 277 275 282 279 286 290 295 10 million dollar + 177 180 186 195 189 190 186 198 198 25 million dollar + 88 87 89 90 91 97 100 101 105 50 million dollar + 52 52 54 54 56 56 55 56 57 75 million dollar + 31 31 30 32 31 31 31 34 35 100 million dollar + 14 17 18 18 19 18 18 20 20 200 million dollar + 6 6 6 6 6 NA NA NA NA 1300 million dollar + 1 1 1 1 1 NA NA NA NA Top client (%) 3.6 3.6 3.5 3.1 3.3 3.3 3.4 3.4 3.6 Top-5 clients (%) 13.7 13.7 13.1 12.3 12.2 NA NA NA NA Top-10 clients (%) 21.8 22.0 21.8 20.1 20.2 20.0 19.5 19.2 19.2 Repeat business (%) 95.8 98.8 97.5 96.7 96.2 99.4 98.7 98.3 97.6 Exhibit 8: 8 Volume growth was as per expectation Volume growth (%, QoQ) Exhibit 9: (Nos) 1,250 New client additions was robust Active client list (LHS) New clients (RHS) (Nos) 100 6 4 1,150 85 2 1,050 70 0 950 55 (2) 850 40, Trust, Trust 4

3Q13 4Q13 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 Exhibit 10: Unbilled revenue increased, DSO days decreased 3 days to 67 QoQ (US$ mn) 700 650 600 550 500 450 400 350 300 250 Unbilled Revenues (LHS) DSO (RHS) (days) 72 70 68 66 64 62 60 58 56 54, Trust Exhibit 11: Utilisation used as a lever this quarter (Nos) Total Headcount Headcount additon (RHS) (Nos) 210,000 10,000 8,000 190,000 6,000 4,000 170,000 2,000 0 150,000 (2,000) Exhibit 12: TCV deals to help volume growth in future 1,400 1,200 1,000 800 600 400 200 TCV deals won, Trust, Trust 5

Financials Income Statement (` mn) Revenues 624,410 684,850 705,220 771,521 844,627 Op. Expenses 453,620 498,800 515,120 569,565 620,908 EBITDA 170,790 186,050 190,100 201,955 223,719 Other Income 31,250 30,790 31,930 32,300 33,216 Depreciation 14,590 17,030 18,620 19,013 21,213 EBIT 187,450 199,810 203,410 215,242 235,722 Interest - - - - - PBT 187,450 199,810 203,410 215,242 235,722 Tax 52,510 55,980 42,420 58,115 69,538 PAT 134,940 143,830 160,990 157,127 166,184 Ex. ordinary 20 300 - - - Adj Pat 134,920 143,530 160,990 157,127 166,184 Key Parameters Per share (`) EPS 58.7 62.5 73.7 71.9 76.1 CEPS 65.1 70.0 82.2 80.6 85.8 BVPS 269.0 300.3 297.3 324.7 352.9 DPS 24.3 25.8 43.5 38.0 41.0 Payout (%) 48.1 48.0 69.8 61.8 63.0 Valuation (x) P/E 20.5 16.4 15.3 16.2 15.4 P/BV 4.5 3.4 3.8 3.6 3.3 EV/EBITDA 14.3 11.4 11.9 11.4 10.2 Dividend Yield (%) 2.0 2.5 3.9 3.3 3.5 Return ratio (%) EBIDTA Margin 27.4 27.2 27.0 26.2 26.5 PAT Margin 21.6 21.0 22.8 20.4 19.7 ROAE 24.0 22.0 24.0 23.1 22.5 ROACE 33.3 30.6 30.4 31.7 31.9 Leverage Ratios (x) Long Term D/E - - - - - Net Debt/Equity (0.6) (0.5) (0.4) (0.4) (0.5) Debt/EBITDA - - - - - Interest Coverage - - - - - Current ratio 3.9 3.8 3.5 3.5 3.5 Growth Ratios (%) Income growth 17.1 9.7 3.0 9.4 9.5 EBITDA growth 14.6 8.9 2.2 6.2 10.8 PAT growth 9.4 6.4 12.2 (2.4) 5.8 Turnover Ratios F.A Turnover x 4.4 4.5 4.9 5.3 5.6 Debtors Days 62 63 65 64 63 Payable days 0 0 0 0 0 Balance Sheet (` mn) Equity Share Capital 11,440 11,440 10,880 10,880 10,880 Reserves & Surplus 606,350 678,380 638,360 698,385 759,800 Total Shareholders Fund 617,790 689,820 649,240 709,265 770,680 Non- current liabilities (1,650) (1,800) (4,210) (4,210) (4,210) Deferred tax liabilities (5,360) (5,400) (12,820) (12,820) (12,820) Other LT liabilities & prov 3,710 3,600 8,610 8,610 8,610 Current Liabilities 132,390 140,130 141,050 164,026 179,290 Trade payables 3,860 3,670 6,940 7,981 9,178 Other cur liabilities & Prov 128,530 136,460 134,110 156,045 170,112 Total Liabilities 748,530 828,150 786,080 869,081 945,760 Assets Non- current Assets 231,580 291,100 285,910 300,831 319,239 Fixed assets 142,940 153,680 143,540 146,527 150,314 Long-term loans & adv 52,300 57,160 60,700 65,526.42 71,735 Other non-current assets 9,850 7,760 81,670 88,778 97,190 Current assets 516,950 537,050 500,170 568,250 626,520 Current investments 750 99,700 64,070 64,070 64,070 Trade receivables 113,300 123,220 131,420 139,508 152,727 Cash & bank balances 326,970 226,250 198,180 254,204 285,971 Short-term loans & adv 75,930 87,880 106,500 110,468 123,753 Total Assets 748,530 828,150 786,080 869,081 945,760 Cash flow Statement PBT 187,440 199,810 203,410 215,242 235,722 Depreciation 10,060 16,540 11,200 19,013 21,213 Others (20) (300) - - - CF before W.cap 197,480 216,050 214,610 234,255 256,935 Inc/dec in W.cap 22,540 19,440 31,130 1,014 25,861 Op CF after W.cap 174,940 196,610 183,480 233,241 231,074 Less Taxes 52,510 55,980 42,420 58,115 69,538 Net CF From Operations 122,430 140,630 141,060 175,126 161,536 Inc/(dec) in F.A + CWIP 27,230 27,600 8,480 22,000 25,000 (Pur)/sale of Investments 3,930 143,140 (40,920) - - CF from Invst Activities (31,160) (170,740) 32,440 (22,000) (25,000) Equity Raised 160 (1,220) (89,169) 0 0 Dividend 68,130 69,390 112,401 97,102 104,769 CF from Fin Activities (67,970) (70,610) (201,570) (97,102) (104,769) Net inc /(dec) in cash 23,300 (100,720) (28,070) 56,024 31,767 Op. bal of cash 303,670 326,970 226,250 198,180 254,204 Cl. balance of cash 326,970 226,250 198,180 254,204 285,971 6

Institutional Equity Team Names Designation Sectors Email ID's Desk-Number Naren Shah Head Of Equity naren.shah@trustgroup.in +91-22-4084-5074 Sales Trading & Dealing Rajesh Ashar Sales Trader rajesh.ashar@trustgroup.in +91-22-4224-5123 Dealing Desk trustfin@bloomberg.net +91-22-4084-5089 Sales Vijay Shah Sales vijay.shah@trustgroup.in +91-22-4084-5090 Mayur Joshi Sales mayur.joshi@trustgroup.in +91-22-4084-5028 Research Team Binyam Taddese Analyst Rates & Credit Research binyam.taddese@trustgroup.in +91-22-4224-5037 Naushil Shah Analyst Technology, Media & Telecom naushil.shah@trustgroup.in +91-22-4224-5125 Tushar Chaudhari Analyst Commodities, Auto & Mid-caps tushar.chaudhari@trustgroup.in +91-22-4224-5119 DISCLAIMER We are committed to providing completely independent and transparent recommendations to help our clients reach a better decision. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Nothing in this document should be construed as investment or financial advice, and nothing in this document should be construed as an advice to buy or sell or solicitation to buy or sell the securities of companies referred to in this document. The intent of this document is not in recommendary nature. The recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Trust Financial Consultancy Services Pvt. Ltd. has not independently verified all the information given in this document. Accordingly, no representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions contained in this document. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. Trust Financial Consultancy Services Pvt. Ltd., its affiliates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or d eal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and independent of each other. The recipient should tak e this into account before interpreting the document. This report has been prepared on the basis of information, which is already available in publicly accessible media or developed through analysis of Trust Financial Consultancy Services Pvt. Ltd. The views expressed are those of analyst and the Company may or may not subscribe to all the views expressed therein. Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. Copyright in this document vests exclusively with Trust Financial Consultancy Services Pvt. Ltd. 7