Infosys LTD INFY (XNSE) : We Expect CEO Sikka To Reinvigorate Infosys' Morale and Strategic Direction

Morningstar Equity Analyst Report | Report as of 21 Jul 2015 | Page 1 of 8
Infosys Ltd INFY (XNSE)

Morningstar Rating
Last Price
underreview 1,116.35 INR

21 Jul 2015
Fair Value Estimate
Price/Fair Value
Dividend Yield %
Market Cap (Bil)
Industry
Stewardship
1062.00 INR
1.05
3.70
2,564.19
Information Technology Services
Standard
21 Jul 2015
21 Jul 2015
21 Jul 2015
Morningstar Pillars
Analyst
Quantitative
Economic Moat
Valuation
Uncertainty
Financial Health
Narrow
underreview
Medium
Wide
Fairly Valued
Low
Strong
Source: Morningstar Equity Research
INFY
a
Undervalued
Fairly Valued
Price/Quant Fair Value

Price/Earnings
Forward P/E
Price/Cash Flow
Price/Free Cash Flow
Dividend Yield %
Andrew Lange, Analyst, 21 July 2015
Investment Thesis
Quantitative Valuation
IND
We expect CEO Sikka to reinvigorate Infosys' morale and strategic

direction.
Overvalued
Current
5-Yr Avg
0.96
17.9
13.5
20.5
25.9
3.70
0.98
20.0
20.0
24.6
1.36
Sector Country
0.88
21.7
15.5
14.5
20.5
1.79
0.83
18.3
20.2
8.9
10.6
1.05
Source: Morningstar
Bulls Say
OInfosys has many long-standing client
relationships, a well-managed global delivery
model, and a comprehensive services portfolio.
ONew CEO Sikka could inspire a new direction
for Infosys and improve the firms competitive
position and operational performance.
OContinental Europes increasing enthusiasm for
offshore outsourcing could act as a growth
opportunity, and Infosys acquisition of consultancy
Lodestone could cement a good foothold in the
region.
Bears Say
OTop-line growth and attrition are concerns the
company needs to address. While measures have
been taken to improve these metrics, more
improvement is needed in order to enthuse the
investment community.
OA number of high-profile client-facing executive
departures could negatively affect the firms
standing with legacy clients.
OCommodification of outsourcing services could
significantly pressure revenue and margins
(roughly 25% of the firms revenue is exposed to
a high degree of commodification).
Infosys historically has been viewed as one of Indias most

pre-eminent providers of consulting and IT services.
Recently, however, the company has suffered from its
slow-moving legacy past (smaller, more discretionary
projects) and out-of-date go-to-market strategy, resulting
in low revenue growth relative to peers, margin
compression, leadership churn, and high employee
attrition. In light of these issues, Infosys has launched a
number of initiatives to improve its performance. We think
the company has some way to go before rectifying its
position, but early signs are promising, with revenue
growth and margins improving. In addition, we expect the
appointment of well-respected CEO Vishal Sikka to
reinvigorate the companys morale and strategic direction.
Infosys benefits from high switching costs, thanks to its
commitment to building lasting client relationships,
embedded systems and processes, and intimate
knowledge of clients IT infrastructure. Such switching
costs ensure a certain level of operational consistency,
and the companys good financial health reflects this. As
a result, Infosys will look to leverage its financial stability
and increase its top line while improving its competitive
performance relative to peers such as Wipro and Tata.
While it is early days, we expect Infosys performance to
improve modestly through a number of initiatives. To
reinvigorate revenue growth, the company is pursuing
larger outsourcing opportunities rather than smaller
discretionary deals. Infosys plans to hire 300-400 new
salespeople to open more client opportunities, while
offering greater differentiation in contract proposals and
using greater process automation (via new partnerships
such as IPsoft). In terms of operating margins,
management has aggressively reduced costs and
launched some optimization initiatives. It will also look to
increase its offshore business mix and improve utilization
rates. Finally, Infosys has sought to reduce its high attrition
rate by giving compensation increases, restructuring
salaries, and offering more promotions. Consequently, we
forecast a steadier operating performance.
Analyst Note
Infosys reported a strong start to fiscal 2016. Sequential

revenue and volume growth were the highest in 15 and
19 quarters, respectively. Though it is still early, we think
managements focus on changing Infosys into a deeply
client-centric organization that solves next-generation
service requirements is starting to resonate with new and
existing customers. This can be highlighted by six large
deals signed during the first quarter, two clients moving
into the $200 million range, and Infosys largest client
moving into the $300 million bucket. Platforms and
products such as the Infosys Information Platform,
EdgeVerve, and Finacle continue to show good demand as
clients seek to cut costs, improve processes, increase
time-to-market, and gain better analytical insights. Given
the positive start to the year, management increased the
midpoint of its USD revenue growth guidance to 8.2% from
7.2%. We have adjusted our financial model accordingly
but maintain our $16.55 fair value estimate and reiterate
our narrow economic moat rating. We've raised our INR
fair value to INR 1,062 based on an updated INR/USD
exchange rate. With the company now trading slightly
above our fair value estimate, we would recommend a
wider margin of safety before committing capital.
For the quarter, revenue rose 5.7% to $2.26 billion year
over year (increased 10.9% in constant-currency terms).
Better execution during the quarter was a primary driver
for the company. A recently realigned senior management
team, combined with a redesigned request for proposal
process, helped the company attract 79 gross clients. We
think the firms commitment to Design Thinking
(next-generation thinking) will help it make the transition
from traditional headcount-led services to the next era of
digital-led outsourcing (or Outsourcing 2.0). Already,
Infosys has trained more than 39,000 employees in Design
Thinking, which sits it in good stead for the future.
Economic Moat
Infosys narrow economic moat results from high

switching costs (roughly 97% of revenue is from repeat
business and has been around these levels for many
years). The companys commitment to building lasting
relationships, embedded systems and processes, and
intimate knowledge of clients IT infrastructure means
customers are averse to switching between vendors.
Infosys continually adds over 200 clients per year, which
2015 Morningstar. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. Data as originally reported. The information contained
herein is not represented or warranted to be accurate, correct, complete, or timely. This report is for information purposes only, and should not be considered a solicitation to buy or sell any security. Redistribution is prohibited without
written permission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. See last page for important disclosures.
Morningstar Equity Analyst Report |Page 2 of 8

Morningstar Rating
Last Price

21 Jul 2015
Fair Value Estimate
Price/Fair Value
Dividend Yield %
Market Cap (Bil)
Industry
Stewardship
1062.00 INR
1.05
3.70
2,564.19
Standard
21 Jul 2015
21 Jul 2015
21 Jul 2015
Close Competitors
Currency (Mil)
Market Cap
TTM Sales
Operating Margin
TTM/PE
Accenture PLC ACN
USD
65,507
32,817
13.47
22.78
Cognizant Technology Solutions Corp CTSH
USD
36,930
10,752
17.91
25.19
Wipro Ltd WIT
USD
30,024
7,670
20.32
21.98
Computer Sciences Corp CSC
USD
9,284
12,173
-1.12
0.00
Risk
is an encouraging sign and cements further long-dated

business given switching costs. Such switching costs
ensure a certain level of operational consistency and the
companys exemplary financial health reflects this. We
forecast Infosys to easily generate a return on invested
capital in excess of its cost of capital for the foreseeable
future, and we believe its lower-cost offshore delivery
model allows for this assumption.
Infosys has highlighted issues regarding relatively low

revenue growth, margin compression, leadership churn,
and high employee attrition. Management has taken steps
to remedy this, but it is still early--the company thinks its
at the end of the first year in a three-year turnaround
plan--and there is the risk that these problems become
inflated. Poor macroeconomic conditions, competitive
threats, and foreign exchange movements are also
external risks that could generate further downside for the
company. Finally, the firm must differentiate itself to avoid
commodification of its services (roughly 25% of the firms
revenue is exposed to a high degree of commodification).
Valuation
Management
Andrew Lange, Analyst, 15 May 2015
Given Infosys' first-quarter results, we have adjusted our

financial model accordingly but maintain our $16.55 fair
value estimate. We've raised our INR fair value to INR
1,062 based on an updated INR/USD exchange rate--this
also reflects the company's June 2015 2-for-1 stock split.
Our updated fair value estimate implies forward
fiscal-year price/earnings of 17.9 times, an enterprise
value/EBITDA of 12.5 times, and a free cash flow yield of
4.8%. We forecast a five-year revenue compound annual
growth rate of 10.6% and expect a broad-based
contribution from the company's four major industry
segments. We think the firm will actively pursue top-line
growth and use its significant financial flexibility to
achieve this. Infosys already is targeting larger
outsourcing deals and plans to hire a raft of new
salespeople, which should help improve win rates. In
addition, with clients increasingly investing in
compliance, infrastructure modernization, digital transformation,
and analytics and cloud, Infosys has established the
Center of Innovation for Tomorrow's Enterprise to help
develop relevant next-generation products and services.
Furthermore, the acquisition of Lodestone signifies a
bigger focus on European growth, and we think the firm
will attract more business from this region. Operating
margins are forecast to remain at current levels for the
next year, and going forward, we think margins will
marginally improve because of cost reduction and process
optimization initiatives. Our discounted cash flow model
assumes a return on invested capital that comfortably
surpasses the company's 10.5% weighted average cost
of capital.
We think Infosys equity stewardship is Standard.

Cofounder and executive chairman N.R. Narayana Murthy
came out of retirement in 2013 to help right the Infosys
ship. His return resulted in improved financial
performance, although it has been marked by numerous
high-profile executive resignations. Murthy again stepped
down and re-entered retirement to make way for CEO
Vishal Sikka in August 2014. Sikka is a 12-year SAP veteran
and is the companys first ever nonfounding leader. His
appointment signifies a greater emphasis on proprietary
software product development and a shift away from
increasingly commodified outsourcing services. Sikka is
expected to drive further transformational initiatives at
the firm and he sees the current environment as an
opportunity to learn new skills and to develop new
products and services and processes and economics.
Still, given changes to management and the early stage
of the firms turnaround efforts, we are taking a
conservative view on the companys equity stewardship,
which leads to our Standard rating. We will continue to
closely monitor Sikkas vision and strategy for the firm.
The company has a prudent approach to capital allocation,
with no debt on the balance sheet. The firm also generates
significant free cash (averaged $1.3 billion per year over
the past five years), which it can reinvest in growth
opportunities. Over the past five years, the company spent
roughly $600 million on acquisitions and returned $3.2
billion in dividends to shareholders. Recently, Infosys
raised its dividend payout ratio to 40% of post-tax profits
from 30%, and rumors of a buyback have emerged.
However, the buyback remains speculation at this point

Morningstar Rating
Last Price

21 Jul 2015
21 Jul 2015
Fair Value Estimate
Price/Fair Value
Dividend Yield %
Market Cap (Bil)
Industry
Stewardship
1062.00 INR
1.05
3.70
2,564.19
Standard
21 Jul 2015
21 Jul 2015
and we think the funds would be better suited to organic

and acquisition-related growth opportunities. We expect
the firm to generate a return on invested capital in the
midteens for the foreseeable future.

Morningstar Rating
Last Price

21 Jul 2015
21 Jul 2015
Fair Value Estimate
Price/Fair Value
Dividend Yield %
Market Cap (Bil)
Industry
Stewardship
1062.00 INR
1.05
3.70
2,564.19
Standard
21 Jul 2015
21 Jul 2015
Analyst Notes Archive

Infosys Reports Strong Start to Year; Better
Execution Is Key, but Shares Slightly Above Fair
Value
Infosys reported a strong start to fiscal 2016. Sequential

revenue and volume growth were the highest in 15 and
19 quarters, respectively. Though it is still early, we think
managements focus on changing Infosys into a deeply
client-centric organization that solves next-generation
service requirements is starting to resonate with new and
existing customers. This can be highlighted by six large
deals signed during the first quarter, two clients moving
into the $200 million range, and Infosys largest client
moving into the $300 million bucket. Platforms and
products such as the Infosys Information Platform,
EdgeVerve, and Finacle continue to show good demand
as clients seek to cut costs, improve processes, increase
time-to-market, and gain better analytical insights. Given
the positive start to the year, management increased the
midpoint of its USD revenue growth guidance to 8.2%
from 7.2%. We have adjusted our financial model
accordingly but maintain our $16.55 fair value estimate
and reiterate our narrow economic moat rating. We've
raised our INR fair value to INR 1,062 based on an updated
INR/USD exchange rate. With the company now trading
slightly above our fair value estimate, we would
recommend a wider margin of safety before committing
capital.
For the quarter, revenue rose 5.7% to $2.26 billion year
over year (increased 10.9% in constant-currency terms).
Better execution during the quarter was a primary driver
for the company. A recently realigned senior management
team, combined with a redesigned request for proposal
process, helped the company attract 79 gross clients. We
think the firms commitment to Design Thinking
(next-generation thinking) will help it make the transition
from traditional headcount-led services to the next era of
digital-led outsourcing (or Outsourcing 2.0). Already,
Infosys has trained more than 39,000 employees in Design
Thinking, which sits it in good stead for the future.
Revenue came in below our expectations, but earnings

per share were in line with our forecast. Volatility from
currency, energy, and technology shifts affected the firm's
performance. Still, management was quick to call out
these issues as nonstructural, and the company sees
plenty of opportunity to increase sales above
industry-average levels over the long term. Infosys' growth
aspirations will be backed by a concerted emphasis on
M&A in order to alleviate pricing pressure (management
mentioned increasing commodification in the traditional
outsourcing business) via next-generation services and
platforms. Recent acquisitions include Panaya, a provider
of automation technology, and Kallidus, a digital retail
provider.
We think this M&A strategy is appropriate as Infosys will
have to ramp up productivity through automation and
provide differentiation in large engagements to survive
the shift to Outsourcing 2.0. CEO Vishal Sikka provided
some context around this shift: "I believe that the recent
model of IT services is dying, yet business has continued
to look for partners who can help them grow and innovate,
who can help them renew their operations and their
business." We think Infosys can meet the challenges of
the industry and provide the next level of required services
surrounding social, mobile, analytics, and cloud
technologies, automation, robotics, and artificial
intelligence.
We retain our fair value estimate of $33.10 (our local share
fair value estimate falls to INR 2,070 from INR 2,100 using
an updated exchange rate of $1/INR 63.8) and narrow
economic moat rating. The stock is trading slightly below
our fair value estimate, at a price/fair value of 0.96.
However, we would recommend investors seek a wider
margin of safety before committing capital.
Infosys Reports Mixed Full-Year Result; Short-Term

Pressure, but Long-Term Position Intact
Andrew Lange, Analyst, 24 April 2015
Infosys reported a mixed full-year fiscal 2015 result.
Page
Page
5 of1 8of 1
Quantitative Equity Report | Release Date: 21 July 2015 | Reporting Currency: USD | Trading Currency: INR
Infosys Ltd INFY

Last Close
Quantitative Fair Value Estimate
Market Cap (Bil)
Sector
Industry
1,112.65
1,046.58
2,299.8
a Technology
Information Technology
Services
Infosys Ltd provides end-to-end business solutions, including

consulting, design, development, software re-engineering,
maintenance, systems integration, package evaluation and
implementation and infrastructure management services.
Country of Domicile
IND India
Price Versus Quantitative Fair Value

2011
2012
2013
2014
2015
2016
Sales/Share
Forecast Range
Forcasted Price
Dividend
Split
Quantitative Fair Value Estimate

1,400
Total Return
Quantitative Scores
1,120
Scores
Momentum:
Standard Deviation: 30.52
All Rel Sector Rel Country
Quantitative Moat
Wide
100
Valuation
Fairly Valued 25
Quantitative Uncertainty Low
100
Financial Health
Strong
97
100
27
100
92
840
100
9
100
98
560
812.25
52-Wk
1,168.00
515.14
5-Yr
1,168.00
280
INFY
IND
Undervalued
Fairly Valued
Overvalued
Valuation
Sector
Median
Country
Median
0.98
20.0
20.0
24.6
1.36
5.0
4.9
0.88
21.7
15.5
14.5
20.5
1.79
2.2
1.5
0.83
18.3
20.2
8.9
10.6
1.05
1.1
0.9
Current 5-Yr Avg
Sector
Median
Country
Median
11.5
6.2
355.3
10.1
3.5
6,549.3
Current 5-Yr Avg
Price/Quant Fair Value

Price/Earnings
Forward P/E
Price/Cash Flow
Price/Free Cash Flow
Dividend Yield %
Price/Book
Price/Sales
0.96
17.9
13.5
20.5
25.9
3.70
4.1
4.1
Profitability
Return on Equity %
Return on Assets %
Revenue/Employee (K)
24.1
20.0
49.4
25.0
21.4
48.2
Score
100
Quantitative Moat
80
60
40
20
0
2008
2009
2010
2011
2012
2013
2014
Financial Health
Current 5-Yr Avg
Distance to Default
Solvency Score
Assets/Equity
Long-Term Debt/Equity
2015
Sector
Median
Country
Median
0.6
460.2
1.6
0.1
0.6
558.7
1.9
0.2
0.9
1.2
0.8
1.2
1-Year
3-Year
5-Year
10-Year
5.6
14.1
15.0
51.3
10.4
43.7
7.6
3.9
5.5
17.4
10.0
28.5
12.6
9.1
8.9
19.5
10.2
11.7
18.5
17.4
16.5
36.3
20.7
16.2
Growth Per Share

Revenue %
Operating Income %
Earnings %
Dividends %
Book Value %
Stock Total Return %
-18.6
-5.1
-14.5
-31.7
52.4
36.2
15.3
18.5
15.8
9.5
1.26
18.7
4.5
1.60
13.9
3.3
1.35
19.2
4.1
1.85
18.3
4.2
3.70
17.9
4.1
Total Return %
+/ Market (Morningstar World
Index)
Dividend Yield %
Price/Earnings
Price/Revenue
Undervalued
Fairly Valued
Overvalued
Monthly Volume (Thousand Shares)

Liquidity: High
16,209
2011
2012
2013
2014
2015
TTM
6,041
25.7
6,994
15.8
7,398
5.8
8,249
11.5
8,711
5.6
8,711
0.0
Financials (Fiscal Year in Mil)

Revenue
% Change
1,779
21.8
1,499
2,013
13.2
1,716
1,909
-5.2
1,725
1,979
3.7
1,751
2,258
14.1
2,013
2,258
0.0
2,013
Operating Income
% Change
Net Income
1,298
-285
1,013
16.8
1,681
-320
1,361
19.5
1,738
-384
1,354
18.3
2,003
-451
1,552
18.8
1,756
-367
1,389
15.9
1,756
-367
1,389
15.9
Operating Cash Flow

Capital Spending
Free Cash Flow
% Sales
0.66
13.9
19.79
0.75
14.5
28.16
0.76
0.7
31.90
0.77
1.3
37.89
0.88
15.0
54.26
0.88
0.0
38.73
EPS
% Change
Free Cash Flow/Share
0.14
119.00
2,286
0.19
131.24
2,286
0.17
162.18
2,286
0.20
188.40
2,286
0.30
223.67
2,297
0.30
243.13
2,297
26.1
22.8
24.8
0.92
1.1
27.0
23.6
24.5
0.96
1.1
24.8
21.5
23.3
0.92
1.2
22.9
19.4
21.2
0.91
1.2
24.1
20.0
23.1
0.87
1.2
24.1
20.0
23.1
0.87
1.2
Profitability
Return on Equity %
Return on Assets %
Net Margin %
Asset Turnover
Financial Leverage
42.1
29.4
41.1
28.8
37.3
25.8
35.9
24.0
38.3
25.9
38.3
25.9
Gross Margin %
Operating Margin %
Long-Term Debt
6,122
5.8
6,576
6.5
7,331
6.6
7,933
6.6
8,762
6.3
8,762
6.3
Quarterly Revenue & EPS

Revenue (Mil)
Jun
Sep
2015
2,133.0 2,201.0
2014
1,991.0 2,066.0
2013
1,752.0 1,797.0
2012
1,671.0 1,746.0
Earnings Per Share
2015
0.21
0.22
2014
0.18
0.17
2013
0.18
0.19
2012
0.17
0.18
Dividends/Share
Book Value/Share
Shares Outstanding (Mil)
Total Equity
Fixed Asset Turns
Revenue Growth Year On Year %

Dec
2,218.0
2,100.0
1,911.0
1,806.0
Mar
2,159.0
2,092.0
1,938.0
1,771.0
Total
8,711.0
8,249.0
7,398.0
6,994.0
0.23
0.20
0.19
0.20
0.22
0.21
0.19
0.20
0.88
0.77
0.76
0.75
13.6
9.4
15.0
9.9
7.9
7.1
6.5
5.6
3.2
2013
2014
2015 Morningstar. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. Data as originally reported. The information
contained herein is not represented or warranted to be accurate, correct, complete, or timely. This report is for information purposes only, and should not be considered a solicitation to buy or sell any security. Redistribution
is prohibited without written permission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869.
2015
Morningstar
Morningstar Equity
Equity Analyst
Analyst Report
Report |Page 6 of 8
Morningstar Equity Research Methodology

Fundamental Analysis
At Morningstar, we believe buying shares of superior
businesses at a discount and allowing them to compound over time is the surest way to create wealth in
the stock market. The long-term fundamentals of businesses, such as cash flow, competition, economic cycles, and stewardship, are our primary focus. Occasionally, this approach causes our recommendations to
appear out of step with the market, but willingness to
be contrarian is an important source of outperformance and a benefit of Morningstars independence.
Our analysts conduct primary research to inform our
views on each firms moat, fair value and uncertainty.
Fundamental Economic
Fair Value
Moat Rating Estimate
Analysis
Uncertainty
Assessment
QQQQQ
QQQQ
QQQ
QQ
Q
Star
Rating
Economic Moat
The economic moat concept is a cornerstone of Morningstars investment philosophy and is used to distinguish high-quality companies with sustainable competitive advantages. An economic moat is a structural
feature that allows a firm to sustain excess returns
over a long period of time. Without a moat, a companys profits are more susceptible to competition. Companies with narrow moats are likely to achieve normalized excess returns beyond 10 years while wide-moat
companies are likely to sustain excess returns beyond
20 years. The longer a firm generates economic profits,
the higher its intrinsic value. We believe lower-quality
no-moat companies will see their returns gravitate to-
ward the firms cost of capital more quickly than companies with moats will. We have identified five sources of
economic moats: intangible assets, switching costs,
network effect, cost advantage, and efficient scale.
Fair Value Estimate

Our analyst-driven fair value estimate is based primarily on Morningstars proprietary three-stage discounted
cash flow model. We also use a variety of supplementary fundamental methods to triangulate a companys
worth, such as sum-of-the-parts, multiples, and yields,
among others. Were looking well beyond next quarter
to determine the cash-generating ability of a companys
assets because we believe the market price of a security will migrate toward the firms intrinsic value over
time. Economic moats are not only an important sorting
mechanism for quality in our framework, but the designation also directly contributes to our estimate of a
companys intrinsic value through sustained excess returns on invested capital.
Uncertainty Rating
The Morningstar Uncertainty Rating demonstrates our
assessment of a firms cash flow predictability, or valuation risk. From this rating, we determine appropriate
margins of safety: The higher the uncertainty, the wider
the margin of safety around our fair value estimate before our recommendations are triggered. Our uncertainty ratings are low, medium, high, very high, and extreme. With each uncertainty rating is a corresponding
set of price/fair value ratios that drive our recommendations: Lower price/fair value ratios (<1.0) lead to positive recommendations, while higher price/fair value
Economic Moat
C O M PE T I T I V E F O R C E S
WIDE
Moat Sources:
Intangible
Assets
NARROW
NONE
Switching
Costs
COMPANY PROFITABILITY
Network
Effect
Cost
Advantage
Efficient
Scale
Morningstar
Morningstar Equity
Equity Analyst
Analyst Report
Report |Page 7 of 8
Morningstar Equity Research Methodology

ratios (>1.0) lead to negative recommendations. In very
rare cases, the fair value estimate for a firm is so unpredictable that a margin of safety cannot be properly
estimated. For these firms, we use a rating of extreme.
Very high and extreme uncertainty companies tend to
have higher risk and volatility.
Quantitatively Driven Valuations

To complement our analysts work, we produce Quantitative Ratings for a much larger universe of companies.
These ratings are generated by statistical models that
are meant to divine the relationships between Morningstars analyst-driven ratings and key financial data
points. Consequently, our quantitative ratings are directly analogous to our analyst-driven ratings.
Quantitative Fair Value Estimate (QFVE): The QFVE is
analogous to Morningstars fair value estimate for
stocks. It represents the per-share value of the equity
of a company. The QFVE is displayed in the same currency as the companys last close price.
Valuation: The valuation is based on the ratio of a companys quantitative fair value estimate to its last close price.
Understanding Differences Between Analyst

and Quantitative Valuations
If our analyst-driven ratings did not sometimes differ
from our quantitative ratings, there would be little value in producing both. Differences occur because our
quantitative ratings are essentially a highly sophisticated analysis of the analyst-driven ratings of comparable companies. If a company is unique and has few
comparable companies, the quantitative model will
have more trouble assigning correct ratings, while an
analyst will have an easier time recognizing the true
characteristics of the company. On the other hand, the
quantitative models incorporate new data efficiently
and consistently. Empirically, we find quantitative ratings and analyst-driven ratings to be equally powerful
predictors of future performance. When the analystdriven rating and the quantitative rating agree, we find
the ratings to be much more predictive than when they
differ. In this way, they provide an excellent second
opinion for each other. When the ratings differ, it may
be wise to follow the analysts rating for a truly unique
company with its own special situation, and follow the
quantitative rating when a company has several reasonable comparable companies and relevant information is flowing at a rapid pace.
Quantitative Uncertainty: This rating describes our level of uncertainty about the accuracy of our quantitative
fair value estimate. In this way it is analogous to Morningstars fair value uncertainty ratings.
Quantitative Economic Moat: The quantitative moat
rating is analogous to Morningstars analyst-driven
economic moat rating in that both are meant to describe the strength of a firms competitive position.
Uncertainty Rating
Price/Fair Value
2.00
Q
1.75
175%
1.50
1.25
1.00
0.75
155%
125%
95%
QQ
135%
105%
80%
125%
115%
110%
QQQ
90%
85%
80%
70%
60%
0.50
50%
QQQQ
QQQQQ
0.25
Low
Uncertainty Rating
Medium
High
Very High

Morningstar Rating
Last Price

21 Jul 2015
Fair Value Estimate
Price/Fair Value
Dividend Yield %
Market Cap (Bil)
Industry
Stewardship
1062.00 INR
1.05
3.70
2,564.19
Standard
21 Jul 2015
21 Jul 2015
21 Jul 2015
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Infosys LTD INFY (XNSE) : We Expect CEO Sikka To Reinvigorate Infosys' Morale and Strategic Direction

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Infosys LTD INFY (XNSE) : We Expect CEO Sikka To Reinvigorate Infosys' Morale and Strategic Direction

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Morningstar Equity Analyst Report | Report as of 21 Jul 2015 | Page 1 of 8

Infosys Ltd INFY (XNSE)

underreview 1,116.35 INR

Fair Value Estimate

Market Cap (Bil)

Information Technology Services

Source: Morningstar Equity Research

Price/Quant Fair Value

Andrew Lange, Analyst, 21 July 2015

We expect CEO Sikka to reinvigorate Infosys' morale and strategic

Infosys historically has been viewed as one of Indias most

Infosys reported a strong start to fiscal 2016. Sequential

Infosys narrow economic moat results from high

Morningstar Equity Analyst Report |Page 2 of 8

Infosys Ltd INFY (XNSE)

underreview 1,116.35 INR

Fair Value Estimate

Market Cap (Bil)

Information Technology Services

Accenture PLC ACN

Cognizant Technology Solutions Corp CTSH

Wipro Ltd WIT

Computer Sciences Corp CSC

is an encouraging sign and cements further long-dated

Infosys has highlighted issues regarding relatively low

Andrew Lange, Analyst, 21 July 2015

Andrew Lange, Analyst, 15 May 2015

Given Infosys' first-quarter results, we have adjusted our

We think Infosys equity stewardship is Standard.

Morningstar Equity Analyst Report |Page 3 of 8

Infosys Ltd INFY (XNSE)

underreview 1,116.35 INR

Fair Value Estimate

Market Cap (Bil)

Information Technology Services

and we think the funds would be better suited to organic

Morningstar Equity Analyst Report |Page 4 of 8

Infosys Ltd INFY (XNSE)

underreview 1,116.35 INR

Fair Value Estimate

Market Cap (Bil)

Information Technology Services

Analyst Notes Archive

Infosys reported a strong start to fiscal 2016. Sequential

Revenue came in below our expectations, but earnings

Infosys Reports Mixed Full-Year Result; Short-Term

Infosys reported a mixed full-year fiscal 2015 result.

Infosys Ltd INFY

Quantitative Fair Value Estimate

Market Cap (Bil)

Infosys Ltd provides end-to-end business solutions, including

Price Versus Quantitative Fair Value

Quantitative Fair Value Estimate

Standard Deviation: 30.52

All Rel Sector Rel Country

Current 5-Yr Avg

Current 5-Yr Avg

Price/Quant Fair Value

Growth Per Share

Monthly Volume (Thousand Shares)

Financials (Fiscal Year in Mil)

Operating Cash Flow

Quarterly Revenue & EPS