Institutional Equities

Information Technology Sector

19 March 2019

Rolling Forward Valuation By 6 months Girish Pai

Head of Research
We are changing the target prices on our universe of coverage primarily driven
girish.pai@nirmalbang.com
by the rolling forward of the basis of valuation to FY21 EPS rather than
+91-22-6273 8017
September 2020 EPS that we used previously. Our Target P/E multiples do not
change. This has led to upward revision of target prices (see Exhibit 1 below).
However our ratings on stock remain the same. Wipro’s numbers have also
been adjusted for the recent bonus issue.
Sector Update

Exhibit 1: Changes made to our earnings estimates, target prices and ratings
New New Old Old New Old New Old Chg
CMP New Old
Company Mkt cap FY20E EPS FY21E EPS FY20E EPS FY21E EPS target P/E target P/E TP TP (%)
(Rs) rating rating
(US$bn) (Rs) (Rs) (Rs) (Rs) (x) (x) (Rs) (Rs)
TCS 2,023 110 92.0 97.4 92.0 97.4 16.5 16.5 Sell Sell 1,607 1,607 0
Infosys 710 45 39.5 41.7 39.5 41.7 14.9 14.9 Sell Sell 620 603 2.8
Wipro 258 23 17.8 18.1 23.8 24.2 11.6 11.6 Sell Sell 209 277 -24
HCL Technologies 1,012 20 83.4 87.0 83.4 87.0 12.4 12.4 Acc Acc 1,076 1,054 2.1
Tech Mahindra 789 11 56.2 59.3 56.2 59.3 9.9 9.9 Sell Sell 587 561 4.6
Mindtree 963 2 54.2 56.0 54.2 56.0 9.9 9.9 Sell Sell 554 553 0.2
Persistent Systems 658 1 57.2 59.3 57.2 59.3 8.3 8.3 Sell Sell 489 481 1.7

Source: Bloomberg, Nirmal Bang Institutional Equities Research.

Note 1: Wipro’s EPS has been adjusted for the 1:3 bonus issue that was concluded recently
Note 2: We already moved the Target Price of TCS in the report released on 18 March 2019
 Institutional Equities
Exhibit 2: Comparative Valuation
TCS Infosys Wipro HCL Tech Tech Mahindra Mindtree Persistent
Year Ending March March March March March March March
Prices as on 18-Mar-19 2,022.8 710.2 257.6 1,012.0 788.6 962.5 657.9
Currency INR INR INR INR INR INR INR
Market Value (Rsbn) 7,744 3,087 1,272 1,376 695 159 53
(US$mn) 107,562 42,874 17,667 19,116 9,657 2,212 731

Target Price 1,607 620 209 1,076 587 554 489

Upside/(downside) -20.6% -12.7% -18.9% 6.3% -25.6% -42.4% -25.6%

Recommendation Sell Sell Sell Accumulate Sell Sell Sell

FDEPS (Rs)
FY18 67.0 32.5 16.8 62.9 42.8 34.7 40.4
FY19E 82.9 35.7 18.5 74.4 50.1 46.2 44.2
FY20E 92.0 39.5 17.8 83.4 56.2 54.2 57.2
FY21E 97.4 41.7 18.1 87.0 59.3 56.0 59.3
PE (x)
FY18 30.2 21.9 15.3 16.1 18.4 27.8 16.3
FY19E 24.4 19.9 13.9 13.6 15.7 20.8 14.9
FY20E 22.0 18.0 14.5 12.1 14.0 17.8 11.5
FY21E 20.8 17.0 14.2 11.6 13.3 17.2 11.1
EV/EBITDA (x)
FY18 23.7 15.2 13.8 11.2 13.8 20.0 10.7
FY19E 19.1 14.4 11.2 9.2 9.8 13.9 8.7
FY20E 17.4 12.7 9.2 8.2 8.8 11.3 6.8
FY21E 16.8 12.0 8.8 7.7 8.3 10.6 6.1
EV/Sales (x)
FY18 6.2 4.1 2.6 2.5 2.1 2.7 1.7
FY19E 5.3 3.7 2.2 2.1 1.8 2.1 1.5
FY20E 4.7 3.3 1.9 1.9 1.6 1.8 1.2
FY21E 4.5 3.1 1.8 1.8 1.5 1.7 1.1
RoIC (%)
FY18 57.3 44.9 24.5 38.9 25.8 32.9 29.7
FY19E 61.7 47.9 29.2 37.3 36.3 47.6 41.4
FY20E 61.5 51.3 35.4 34.1 38.1 51.3 49.9
FY21E 61.1 50.2 35.8 30.1 38.7 53.2 53.5
Source: Bloomberg, Nirmal Bang Institutional Equities Research

2 Information Technology Sector

 Institutional Equities
Exhibit 3: Industry Valuation
Price MCap EPS (Rs) P/E (x) EV/Sales (x) P/B (X)
EPS (Rs) (US$mn) FY19 FY20 FY21 FY19 FY20 FY21 FY19 FY20 FY21 FY19 FY20 FY21
TCS 2,023 110,686 82.9 92.0 97.4 24.4 22.0 20.8 5.3 4.7 4.5 9.0 7.3 6.1
Infosys 710 45,247 35.7 39.5 41.7 19.9 18.0 17.0 3.7 3.3 3.1 5.8 5.1 4.5
Wipro 258 22,666 18.5 17.8 18.1 13.9 14.5 14.2 2.2 1.9 1.8 2.7 2.5 2.3
HCL Tech 1,012 20,015 74.4 83.4 87.0 13.6 12.1 11.6 2.1 1.9 1.8 3.3 3.0 2.8
Tech Mahindra 789 11,308 50.1 56.2 59.3 15.7 14.0 13.3 1.8 1.6 1.5 3.3 2.9 2.5
Persistent 658 767 44.2 57.2 59.3 14.9 11.5 11.1 1.5 1.2 1.1 2.4 2.1 1.8
Mindtree 963 2,305 46.2 54.2 56.0 20.8 17.8 17.2 2.1 1.8 1.7 5.1 4.3 3.7
Cognizant* (US$) 80 41,482 4.5 4.9 5.4 18.0 16.4 14.9 2.1 1.9 1.7 3.5 3.0 2.8
Accenture (US$) 165 106,225 7.2 7.9 8.6 22.8 20.9 19.2 2.4 2.2 2.0 8.0 6.9 5.8
Cap Gemini* (Euro) 115 20,467 6.5 7.2 7.8 17.6 16.0 14.7 1.3 1.2 1.1 2.4 2.2 2.0
Globant (US$) 56 2,604 2.2 2.6 3.3 26.0 21.3 16.9 3.9 3.1 2.5 5.2 4.1 -
Epam (US$) 124 9,181 6.2 7.7 9.6 20.0 16.0 12.9 3.7 2.9 2.2 4.5 3.6 2.9
Luxoft (US$) 37 1,994 2.4 2.9 3.2 15.7 12.7 11.5 2.0 1.8 1.5 2.5 2.2 1.9
Hexaware* 338 1,467 21.4 23.8 26.6 15.8 14.2 12.7 1.7 1.4 1.2 3.7 3.2 2.9
Cyient 659 1,087 39.4 47.8 54.1 16.7 13.8 12.2 1.4 1.2 1.0 2.9 2.6 2.3
Mphasis 969 2,630 56.6 63.9 71.9 17.1 15.2 13.5 2.2 1.9 1.6 3.6 3.2 3.0
eClerx 1,123 634 59.4 70.1 80.0 18.9 16.0 14.0 2.6 2.3 2.1 3.4 3.2 2.9
LTI 1,568 3,966 87.6 98.3 110.3 17.9 16.0 14.2 2.8 2.3 2.0 5.7 4.7 4.0
LTTS 1,491 2,262 69.5 76.9 88.8 21.5 19.4 16.8 3.0 2.5 2.1 6.6 5.4 4.4
#VALU #VALU #VALU #VALU #VALU #VALU #VALU #VALU
KPIT #N/A N/A #N/A N/A 15.6 19.4 23.4 #####
E! E! E! E! E! E! E! E!
NIIT Tech 1,317 1,186 67.5 81.1 92.0 19.5 16.2 14.3 2.0 1.7 1.5 4.0 3.4 3.0
Intellect Design 201 385 8.4 10.6 13.8 24.0 18.9 14.5 1.8 1.5 1.3 2.5 2.3 2.3
OFSS 3,348 4,188 169.5 192.9 213.4 19.8 17.4 15.7 - - - 8.7 8.9 8.9
Just Dial 663 626 27.4 30.7 34.0 24.2 21.6 19.5 3.5 3.4 3.0 4.3 3.6 3.1
Infoedge 1,835 3,268 18.3 30.4 39.4 100.4 60.3 46.6 18.6 15.1 12.6 10.6 9.1 7.8
Makemytrip (US$) 35 2,952 (1.1) (0.5) 0.1 (31.4) (67.1) 249.3 4.0 3.5 3.0 2.6 2.8 2.9
Genpact* 29 6,462 2.0 2.2 2.5 14.7 13.1 11.7 2.1 1.9 - 3.3 2.8 2.4
WNS 52 2,636 2.7 2.8 3.1 19.7 18.9 17.1 3.1 2.8 2.8 4.8 4.0 3.4
EXLS* 58 2,074 3.0 3.3 3.8 19.6 17.8 15.4 2.1 1.8 - 2.9 2.5 -
Source: Bloomberg, Nirmal Bang Institutional Equities Research

3 Information Technology Sector

 Institutional Equities
Exhibit 4: Stock Performance
Stock Performance
CY13 CY14 CY15 CY16 CY17 CY18 1QCY17 2QCY17 3QCY17 4QCY17 1QCY18 2QCY18 3QCY18 4QCY18 QTD
(%)
TCS 70.1 17.3 (4.4) (2.8) 11.7 44.4 3.4 (2.9) 3.1 7.8 8.5 29.7 18.2 (13.2) 6.7
Infosys 50.8 12.3 10.5 (8.6) 4.1 27.2 3.0 (8.5) (3.8) 14.8 9.5 15.5 11.7 (10.0) 8.1
Wipro 57.7 0.2 1.0 (15.4) 30.4 7.2 9.2 0.2 8.5 9.9 (8.7) (7.0) 23.9 1.9 4.1
HCL Tech 99.1 27.5 5.8 (2.5) 7.2 9.1 6.8 (2.7) 2.8 0.4 10.3 (4.4) 17.4 (11.9) 5.6
Tech Mahindra 100.6 41.4 (19.6) (8.1) 3.0 43.6 (4.9) (16.8) 19.9 8.6 28.5 2.6 13.7 (4.2) 10.4
Persistent 91.7 65.8 (20.7) (3.6) 11.7 (9.6) (4.6) 14.5 (1.8) 4.1 (0.5) 16.9 (2.8) (20.0) 4.3
Mindtree 122.7 59.8 16.4 (26.9) 17.0 41.0 (13.5) 16.8 (12.1) 31.9 25.9 27.8 4.7 (16.4) 11.4
Cognizant 38.4 6.2 14.8 (7.9) 27.1 (11.9) 5.9 11.6 9.2 (1.6) 11.6 (0.9) (2.3) (18.4) 27.3
Accenture 25.0 9.9 17.4 10.5 31.2 (9.0) 2.5 3.2 9.2 13.7 (4.0) 11.0 4.0 (17.8) 6.5
Globant SA - - 150.3 (12.9) 39.7 24.3 11.3 19.3 (7.8) 14.0 11.1 11.9 3.9 (3.7) (9.1)
Epam Systems INC 83.9 37.2 65.8 (18.9) 67.5 5.9 17.5 11.3 4.6 22.5 3.6 11.5 10.8 (17.2) (0.6)
Luxoft Holding INC - 1.7 105.3 (29.4) (0.3) (45.1) 12.0 (2.7) (21.4) 16.5 (26.4) (10.1) 28.5 (35.4) 35.8
Cap Gemini 48.4 - 44.0 (6.2) 22.5 (13.1) 7.2 4.5 9.6 (0.3) 1.8 14.4 (5.9) (20.7) 20.2
Hexaware 56.1 51.2 21.1 (15.1) 65.0 (2.6) 4.7 12.7 11.4 25.5 11.3 21.6 (6.4) (23.1) 2.4
Cyient 88.6 53.3 (8.6) 3.9 18.3 5.8 (4.7) 8.6 0.6 13.7 19.7 10.3 (2.8) (17.5) 7.3
Mphasis 12.2 (13.9) 33.9 13.8 27.9 38.6 2.3 3.4 3.2 17.1 15.6 29.4 8.2 (14.4) (3.5)
NIIT Tech 45.9 (0.1) 63.0 (26.4) 53.1 77.7 2.7 32.6 (6.0) 19.7 33.2 26.9 (0.1) 5.2 14.1
LTI - - - - 61.2 57.9 5.1 10.3 1.3 37.2 22.3 24.7 14.7 (9.7) (9.4)
LTTS - - - - 30.5 66.0 (0.8) (7.9) 9.1 31.0 20.7 (1.4) 42.5 (2.1) (12.2)
Intellect Design - - 258.4 (50.2) 27.9 33.7 (17.6) 7.2 3.2 40.3 (1.1) 17.1 4.9 10.1 (10.3)
OFSS 1.0 1.5 11.5 (17.1) 30.6 (9.9) 22.7 (5.4) 0.7 11.7 (7.8) 8.8 (3.9) (6.5) (8.5)
Ramco Systems 54.2 219.0 71.7 (57.8) 57.3 (47.5) 14.7 (14.8) 16.8 37.9 (32.6) (4.1) (6.1) (13.4) (8.8)
Just Dial (4.9) (36.0) (61.5) 57.4 (4.0) 58.6 (29.5) 0.1 40.7 (15.4) 25.3 (14.0) 5.2 32.0
Infoedge 34.6 81.3 2.4 5.4 44.3 10.8 (11.9) 29.1 6.9 18.7 (10.4) 0.9 20.0 2.2 26.2
Makemytrip 53.9 33.1 (31.2) 32.5 29.9 (21.3) 49.8 (3.0) (14.3) 4.3 10.7 8.9 (24.1) (14.0) 41.9
Index Performance
(%)
Nasdaq 37.0 20.0 8.6 5.7 31.0 (2.4) 10.5 3.9 5.9 7.7 0.3 9.0 8.3 (17.6) 3.9
S&P 500 31.3 13.0 (0.8) 9.0 19.5 (7.5) 5.0 2.6 4.0 6.7 (3.1) 4.4 7.2 (14.7) 5.1
Stox 600 17.3 4.2 7.8 (2.0) 8.1 (13.7) 5.8 (0.5) 2.3 0.4 (5.2) 2.9 0.9 (12.3) 9.3
DAX 25.5 2.7 9.6 6.6 13.4 (18.7) 7.5 0.1 4.1 1.2 (8.0) 3.1 (0.5) (13.8) 13.4
Nikkei 56.7 7.1 9.1 0.6 19.0 (12.2) (1.2) 5.9 1.6 11.9 (7.7) 6.1 8.1 (17.0) 17.5
MSCI EM (5.0) (4.7) (17.1) 8.5 34.4 (16.6) 11.6 5.5 7.0 6.6 0.8 (8.0) (2.0) (8.1) 23.1
Bovespa (15.5) (2.9) (13.3) 38.9 26.9 15.0 7.9 (3.2) 18.1 2.8 9.8 (13.2) 9.0 10.8 (2.1)
HSCEI (5.3) 10.0 (18.4) (3.6) 25.5 (14.5) 10.3 0.9 5.3 7.1 2.7 (7.7) (0.5) (9.3) 16.8

CNX BANK (8.7) 63.9 (9.3) 6.6 41.4 6.4 18.9 8.2 3.6 6.0 (4.8) 8.7 (4.7) 8.0 9.1
CNX IT 57.2 17.4 (0.3) (7.4) 11.7 25.1 4.0 (5.1) 3.2 9.7 8.8 11.8 13.2 (9.2) 6.8
CNX FMCG 11.7 17.8 0.1 1.7 30.5 14.8 15.4 13.6 (8.5) 8.7 (1.8) 10.9 2.7 2.6 (1.2)
CNX AUTO 9.9 57.3 (0.7) 10.5 30.2 (22.2) 8.5 6.7 2.6 9.7 (8.7) (1.0) (10.4) (3.8) (6.5)
CNX ENERGY 0.1 8.4 (0.7) 19.2 40.8 0.6 14.8 (0.4) 10.1 11.9 (7.5) 0.9 17.7 (8.5) 13.7
CNX PHARMA 26.3 42.6 10.3 (15.5) (5.4) (8.0) 2.8 (7.7) (4.5) 4.5 (12.8) 9.8 8.7 (11.6) 4.4
CNX METAL (13.8) 6.2 (31.3) 45.5 49.7 (21.4) 17.1 (3.4) 18.7 11.5 (11.3) (2.1) 1.3 (10.7) (2.7)
CNX INFRA (4.7) 22.5 (8.8) (2.3) 34.1 (11.8) 15.2 3.4 1.4 11.1 (7.7) (6.1) (5.1) 7.1 (0.4)
CNX MIDCAP (5.4) 55.7 7.2 6.5 47.4 (15.2) 20.8 3.1 2.1 15.9 (10.6) (3.1) (5.6) 3.7 0.1
CNX SMALLCAP (8.1) 53.9 7.4 2.2 57.5 (29.0) 22.1 4.7 3.7 18.8 (13.6) (7.9) (14.3) 4.0 2.3
NIFTY 6.5 31.1 (4.3) 2.6 29.3 3.6 13.2 3.8 2.8 7.0 (3.5) 5.9 2.0 (0.6) 5.5

USD/INR 61.8 63.0 66.2 67.4 65.1 68.5 67.0 64.5 `64.3 64.7 65.2 68.5 70.1 72.1 70.7
Source: Bloomberg, Nirmal Bang Institutional Equities Research

4 Information Technology Sector

 Institutional Equities
Financials - TCS
Exhibit 5: Income statement Exhibit 6: Cash flow
Y/E March (Rsbn) FY17 FY18 FY19E FY20E FY21E Y/E March (Rsbn) FY17 FY18 FY19E FY20E FY21E
Average INR/USD 67.1 64.5 70.0 72.0 74.5 EBIT 303 305 376 423 438
Net Sales (USD mn) 17,575 19,089 20,871 22,673 22,847
(Inc.)/dec. in working capital 6 (20) (77) (36) (10)
-Growth (%) 6.2 8.6 9.3 8.6 0.8
Cash flow from operations 309 285 299 387 429
Net Sales 1,180 1,231 1,459 1,633 1,702
-Growth (%) 8.6 4.4 18.5 11.9 4.3 Other income 42 36 39 35 47
Cost of Sales & Services 669 713 848 950 998 Depreciation & amortisation 20 20 25 20 20
Gross Margin 511 518 612 682 704 Financial expenses - - - - -
% of sales 43.3 42.1 41.9 41.8 41.3 Tax paid (82) (82) (101) (112) (119)
SG& A 208 213 236 260 265 Dividends paid (112) (116) (133) (150) (158)
% of sales 17.6 17.3 16.1 15.9 15.6
Net cash from operations 178 143 130 180 172
EBIT 303 305 376 423 438
Capital expenditure (19) (19) (23) (21) (21)
EBIT Margin (%) 25.7 24.8 25.8 25.9 25.7
Net cash after capex 159 124 107 160 151
Other income (net) 42 36 39 35 47
PBT 345 341 416 458 485 Inc./(dec.) in debt 0 (0) (2) - -
-PBT margin (%) 29.3 27.7 28.5 28.1 28.5 (Inc.)/dec. in investments (192) 60 59 - -
Provision for tax 82 82 101 112 119 Equity issue/(Share Buyback) - (160) (160) - -
Effective tax rate (%) 23.6 24.1 24.2 24.5 24.5 Cash from financial activities (191) (101) (103) - -
Minority Interest 1 1 1 1 1 Others 5 5 (39) (1) 46
Net profit 263 258 314 345 365
Opening cash 67 40 69 35 194
-Growth (%) 8.6 (1.8) 21.6 9.9 5.9
Closing cash 40 69 35 194 391
-Net profit margin (%) 22.3 21.0 21.5 21.1 21.5
Change in cash (28) 29 (35) 159 197
Average Shares outstanding-Basic 3,941 3,829 3,790 3,752 3,752
Source: Company, Nirmal Bang Institutional Equities Research Source: Company, Nirmal Bang Institutional Equities Research

Exhibit 8: Key ratios

Exhibit 7: Balance sheet
Y/E March FY17 FY18 FY19E FY20E FY21E
Y/E March (Rsbn) FY17 FY18 FY19E FY20E FY21E
Per Share (Rs)
Equity capital 2.0 1.9 3.8 3.8 3.8
EPS 66.7 67.0 82.9 92.0 97.4
Reserves & surplus 885 875 857 1,052 1,260
FDEPS 66.7 67.0 82.9 92.0 97.4
Net worth 887 876 860 1,056 1,264
Dividend Per Share 23.5 25.1 29.1 33.1 34.9
Minority Interest - - - - -
Dividend Yield (%) 1.2 1.2 1.4 1.6 1.7
Other liabilities 21 29 30 34 34
Book Value 231.6 228.9 224.7 275.8 330.1
Total loans 3 2 1 1 1
Dividend Payout Ratio (excl DT) 42.4 37.2 35.1 36.0 35.8
Total liabilities 911 908 891 1,090 1,299
Return ratios (%)
Goodwill 38 39 40 40 40
RoE 32.4 29.3 36.2 36.0 31.5
Net block (incl. CWIP) 117 116 114 115 116
RoCE 33.7 30.7 37.2 37.9 33.1
Investments 3 3 6 6 6
Pre Tax ROIC 60.8 57.3 61.7 61.5 61.1
Deferred tax asset - net 28 34 30 34 34
Tunover Ratios
Other non-current assets 62 76 65 70 71
Asset Turnover Ratio 1.1 1.1 1.3 1.2 1.1
Other current assets 485 427 465 472 474
Debtor Days (incl. unbilled Rev) 87 95 87 87 86
Debtors 280 320 349 390 401
Working Capital Cycle Days 64 63 77 75 74
Cash & bank balance 36 49 52 52 52
Valuation ratios (x)
Bank deposits 4 21 (18) 141 339
PER 30.3 30.2 24.4 22.0 20.8
Total current assets 805 815 849 1,056 1,266
P/BV 8.7 8.8 9.0 7.3 6.1
Total current liabilities 143 176 212 229 234
EV/EBTDA 23.9 23.7 19.2 17.4 16.8
Net current assets 662 639 637 827 1,033
EV/Sales 6.5 6.3 5.3 4.7 4.5
Total assets 911 908 891 1,090 1,299
M-cap/Sales 6.6 6.3 5.3 4.7 4.6
Source: Company, Nirmal Bang Institutional Equities Research
Source: Company, Nirmal Bang Institutional Equities Research

5 Information Technology Sector

 Institutional Equities
Financials - Infosys
Exhibit 9: Income statement Exhibit 10: Cash flow
Y/E March (Rsbn) FY17 FY18 FY19E FY20E FY21E Y/E March (Rsbn) FY17 FY18 FY19E FY20E FY21E
Average INR/USD 67.1 64.5 69.9 72.0 74.5 EBIT 169 171 191 214 222
Net Sales (USD mn) 10,206 10,940 11,787 12,858 12,819
(Inc.)/dec. in working capital (19) (46) 12 (18) (3)
-Growth (%) 7.4 7.2 7.7 9.1 (0.3)
Cash flow from operations 150 126 203 196 219
Net Sales 685 705 825 926 955
-Growth (%) 9.7 3.0 16.9 12.3 3.1 Other Income 31 32 30 19 25
Direct Costs 433 451 535 601 619 Depreciation & Amortisation 17 19 20 24 25
Gross Margin 252 254 289 325 336 Financial Expenses 0 0 0 0 0
% of sales 36.8 36.0 35.1 35.1 35.2 Tax Paid (56) (57) (61) (65) (69)
SG& A 83 82 99 111 115 Dividends Paid (143) (179) (106) (103) (109)
% of sales 12.2 11.7 11.9 12.0 12.0
Net Cash from Operations (1) (59) 87 71 91
EBIT 169 171 191 214 222
Capital Expenditure (26) (3) (49) (38) (41)
% of sales 24.7 24.3 23.2 23.1 23.2
Net Cash after Capex (26) (63) 38 33 50
Other income (net) 31 32 30 19 25
PBT 200 204 216 233 246 Inc./(Dec.) in Debt - - - - -
-PBT margin (%) 29.1 28.9 26.2 25.2 25.8 (Inc.)/Dec. in Investments (145) 43 (22) 0 0
Provision for tax 56 57 61 65 69 Share Issue/(Share Buyback) (130) (83) 0 0
Effective tax rate (%) 28.1 28.0 28.2 28.0 28.0 Cash from Financial Activities (145) (87) (105) 0 0
Net profit (adjusted) 144 147 155 168 177 Others 71 122 (88) (1)
-Growth (%) 6.4 2.3 5.8 8.1 5.6
Opening Cash 327 226 198 43 75
-Net profit margin (%) 21.0 20.8 18.8 18.1 18.6
Closing Cash 226 198 43 75 125
Shares Outstanding (Basic) 4,594 4,347 4,348 4,244 4,244
Change in Cash (101) (28) (155) 32 50
Source: Company, Nirmal Bang Institutional Equities Research
Source: Company, Nirmal Bang Institutional Equities Research

Exhibit 11: Balance sheet Exhibit 12: Key ratios

Y/E March (Rsbn) FY17 FY18 FY19E FY20E FY21E Y/E March FY17 FY18 FY19E FY20E FY21E
Equity capital 11.4 10.9 21.8 21.2 21.2 Per Share (Rs)
Reserves & surplus 678 638 511 575 644
EPS-Adjusted 31.2 32.5 35.7 39.6 41.8
Net worth 690 649 532 596 665
FDEPS-Adjusted 31.2 32.5 35.7 39.5 41.7
Deferred tax liability 2 5 5 5 5
Dividend Per Share 25.8 33.5 20.2 20.2 21.3
Other liabilities 2 3 4 4 4
Dividend Yield (%) 3.6 4.7 2.8 2.8 3.0
Total loans - - - - -
Book Value 150 149 122 141 157
Total liabilities and Equity 693 658 542 606 675
Dividend Payout Ratio (incl. DT) 99.3 122.1 68.1 61.5 61.5
Goodwill 37 22 36 36 36
Return ratios (%)
Other intangible assets 8 2 8 8 8
RoE 22.0 21.9 26.3 29.7 28.1
Net block 117 121 131 145 161
RoCE 30.5 30.5 36.6 41.3 39.1
Investments 164 122 144 144 144
Pre Tax ROIC 51.1 44.9 47.9 51.3 50.2
Deferred tax asset - net 5 13 12 12 12
Turnover Ratios
Other non-current assets 65 82 81 88 89
Asset Turnover 0.8 0.9 1.2 1.2 1.1
Unbilled revenue 36 43 48 53 54
Debtor Days (incl. unbilled Rev.) 84 89 85 84 83
Derivative financial instrument 3 0 4 4 4
Working Capital Cycle Days 37 49 38 38 38
Other current assets 49 64 55 62 62
Valuation ratios (x)
Income tax assets-current - - - - -
P/E 22.7 21.9 19.9 18.0 17.0
Debtors 123 131 148 164 166
P/BV 4.7 4.8 5.8 5.1 4.5
Cash & bank balance 226 198 43 75 125
EV/EBITDA 15.4 15.2 14.4 12.7 12.0
Total current assets 437 436 298 358 412
EV/Sales 4.2 4.1 3.7 3.3 3.1
Total current liabilities 140 141 167 184 187
M-cap/Sales 4.5 4.4 3.7 3.3 3.2
Net current assets 297 295 131 174 225
Source: Company, Nirmal Bang Institutional Equities Research
Total assets 693 658 542 606 675
Source: Company, Nirmal Bang Institutional Equities Research

6 Information Technology Sector

 Institutional Equities
Financials - Wipro
Exhibit 13: Income statement Exhibit 14: Cash flow
Y/E March (Rsbn) FY17 FY18 FY19E FY20E FY21E Y/E March (Rsbn) FY17 FY18 FY19E FY20E FY21E
Average INR/USD 68.6 65.3 70.0 72.0 74.5 EBIT 94 84 99 117 115
Net Sales - IT Services (USDmn) 7,704 8,060 8,191 8,667 8,430
(Inc.)/dec. in working capital 4 (17) 44 (6) 2
-Growth (%) 4.9 4.6 1.6 5.8 (2.7)
Cash flow from operations 97 67 143 111 117
Net Sales - Overall 550 545 585 639 643
-Growth (%) 7.0 (1.0) 7.4 9.3 0.6 Other income 22 24 22 27 31
Cost of Sales & Services 392 386 408 436 440 Depreciation & amortisation 17 17 17 17 18
% of sales 71.1 70.8 69.8 68.1 68.4 Financial expenses (5) (6) (6) (6) (6)
Gross profit 159 159 177 204 203 Tax paid (25) (22) (25) (30) (31)
% of sales 28.9 29.2 30.2 31.9 31.6 Dividends paid (30) (5) (11) (48) (55)
SG& A 73 76 83 87 89
Net cash from operations 76 74 140 71 75
% of sales 13.2 14.0 14.2 13.6 13.8
Capital expenditure (12) 24 (9) (6) (6)
EBIT 94 84 99 117 115
Net cash after capex 64 98 131 65 69
% of sales 17.1 15.5 17.0 18.3 17.8
Interest expenses 5 6 6 6 6 Inc./(dec.) in debt 17 (4) (34) 0 0
Other income (net) 22 24 22 27 31 (Inc.)/dec. in investments (90) 42 37 0 0
PBT 110 102 115 138 140 Equity issue/(buyback) (25) (110) 0 0 0
-PBT margin (%) 20.1 18.8 19.6 21.5 21.8 Cash from financial activities (98) (72) 3 0 0
Provision for tax 25 22 25 30 31 Others (12) (34) (34) - -
Effective tax rate (%) 22.8 21.8 21.8 22.0 22.0
Opening cash 99 53 45 144 209
Minority Interest 0.2 0.0 0.0 0.0 0.0
Closing cash 53 45 145 209 278
Net profit 85 80 90 107 109
Change in cash (46) (8) 100 65 69
-Growth (%) (4.6) (5.7) 11.9 19.7 1.8
-Net profit margin (%) 15.4 14.7 15.3 16.8 17.0 Source: Company, Nirmal Bang Institutional Equities Research
Source: Company, Nirmal Bang Institutional Equities Research
Exhibit 16: Key ratios
Exhibit 15: Balance sheet Y/E March FY17 FY18 FY19E FY20E FY21E
Y/E March (Rsbn) FY17 FY18 FY19E FY20E FY21E Per Share (Rs)
Equity capital 5 9 9 9 9 EPS 17.5 16.8 18.5 17.8 18.1
Reserves & surplus 518 476 561 620 674
FDEPS 17.5 16.8 18.5 17.8 18.1
Net worth 523 485 570 629 683
Dividend Per Share 6.1 1.2 1.8 8.0 9.1
Deferred tax liability, net 4 (4) (5) (5) (5)
Dividend Yield (%) 2.4 0.5 0.7 3.1 3.5
Other liabilities 15 13 13 13 13
Book Value 87 81 95 104 113
Total loans 20 45 50 50 50
Dividend Payout Ratio 35.0 6.7 12.2 45.0 50.0
Total liabilities 561 540 628 687 742
Return ratios (%)
Goodwill 126 118 123 123 123
RoE 17.1 15.9 17.0 17.9 16.6
Other intangible assets 16 18 15 15 15
RoCE 14.4 12.7 14.9 16.3 14.8
Net block 70 64 68 56 44
Pre Tax ROIC 28.8 24.5 29.2 35.4 35.8
Investments 299 258 221 221 221
Tunover Ratios
Other non-current assets 29 34 57 57 57
Asset Turnover Ratio 0.7 0.7 0.7 0.7 0.7
Unbilled revenue 45 42 27 30 29
Debtor Days (incl. unbilled Rev) 95 99 86 87 83
Inventories 4 3 4 4 4
Working Capital Cycle Days 56 68 36 36 34
Other current assets 50 65 51 55 53
Valuation ratios (x)
Debtors 99 105 110 122 117
PER 14.8 15.3 13.9 14.5 14.2
Cash & bank balance 53 45 144 209 278
P/BV 3.0 3.2 2.7 2.5 2.3
Total current assets 251 262 336 419 480
EV/EBTDA 12.2 13.8 11.2 9.2 8.8
Total current liabilities 230 214 192 205 199
EV/Sales 2.5 2.6 2.2 1.9 1.8
Net current assets 21 48 144 214 281
M-cap/Sales 2.8 2.8 2.7 2.4 2.4
Total assets 561 540 628 687 742
Source: Company, Nirmal Bang Institutional Equities Research
Source: Company, Nirmal Bang Institutional Equities Research

7 Information Technology Sector

 Institutional Equities
Financials - HCL Technologies
Exhibit 17: Income statement Exhibit 18: Cash flow
Y/E March (Rsmn) FY17 FY18 FY19E FY20E FY21E Y/E March (Rsmn) FY17 FY18 FY19E FY20E FY21E
Average INR/USD 67.0 64.5 69.9 72.0 74.5 EBIT 94,750 99,880 119,553 133,676 141,220
Net Sales (USD mn) 6,975 7,838 8,644 9,767 9,999
(Inc.)/Dec. in Working Capital 9,864 (22,249) (17,603) (9,258) (2,977)
YoY Growth (%) 48.5 12.4 10.3 13.0 2.4
Cash flow from Operations 104,614 77,631 101,950 124,418 138,243
INR Net Sales 467,220 505,700 604,649 703,345 744,950
YoY Growth (%) 50.1 8.2 19.6 16.3 5.9 Other Income 9,190 11,110 8,920 9,904 8,471
Cost of Sales & Services 308,890 332,370 392,031 460,721 482,399 Depreciation & Amortisation 8,340 14,520 21,496 28,069 34,819
Gross Margin 158,330 173,330 212,619 242,624 262,551 Tax Paid (19,520) (23,170) (25,966) (30,152) (31,435)
% of sales 33.9 34.3 35.2 34.5 35.2 Dividends Paid (40,819) (21,952) (13,267) (72,107) (78,662)
SG&A 55,240 58,930 71,570 80,879 86,512 Net Cash from Operations 61,804 58,139 93,133 60,132 71,435
% of sales 11.8 11.7 11.8 11.5 11.6
Capital Expenditure (49,985) (49,354) (62,076) (89,613) (106,131)
EBITDA 103,090 114,400 141,049 161,745 176,038
Net Cash after Capex 11,819 8,785 31,057 (29,480) (34,696)
% of sales 22.1 22.6 23.3 23.0 23.6
Inc./(dec.) in Debt (4,315) (1,046) 34,509 21,000 0
Depreciation and Amortization 8,340 14,520 21,496 28,069 34,819
Depreciation and Amortization 1.8 2.9 3.6 4.0 4.7 (Inc.)/Dec. in Investments (613) 28,503 (26,656) 6,016 33,904
(as
EBIT% of sales) 94,750 99,880 119,553 133,676 141,220 Equity Issue/(Buyback) 0 (35,002) (40,000) 0 0
% of sales 20.3 19.8 19.8 19.0 19.0 Cash from Financial Activities (4,928) (7,545) (32,147) 27,016 33,904
Other income (net) (incl forex gain/loss) 9,190 11,110 8,920 9,904 8,471 Others (1,020) 2,534 6,292 2,464 792
PBT 103,940 110,990 128,473 143,580 149,691 Opening Cash 7,293 13,165 16,939 22,140 22,140
Provision for tax 19,520 23,170 25,966 30,152 31,435
Closing Cash 13,165 16,939 22,140 22,140 22,140
Effective tax rate (%) 18.8 20.9 20.2 21.0 21.0
Change in Cash 5,872 3,774 5,201 (0) (0)
Minority Interest 0 0 0 0 0
Net profit 84,420 87,820 102,507 113,429 118,256 Source: Company, Nirmal Bang Institutional Equities Research
-Growth (%) 49.0 4.0 16.7 10.7 4.3
-Net profit margin (%) 18.1 17.4 17.0 16.1 15.9
Source: Company, Nirmal Bang Institutional Equities Research
Exhibit 20: Key ratios
Exhibit 19: Balance sheet Y/E March (Rsmn) FY17 FY18 FY19E FY20E FY21E
Y/E March (Rsmn) FY17 FY18 FY19E FY20E FY21E Per Share (Rs)
Equity capital 1,400 1,392 1,360 1,360 1,360 EPS 59.8 62.7 74.5 83.4 87.0
Reserves & surplus 333,504 366,776 417,380 458,701 498,294 FDEPS 60.5 62.9 74.4 83.4 87.0
Net worth 334,904 368,168 418,740 460,061 499,654 Dividend Per Share 24.0 13.0 8.0 44.0 48.0
Other liabilities 12,525 12,669 17,630 20,094 20,886 Dividend Yield (%) 2.4 1.3 0.8 4.3 4.7
Total loans 5,417 4,371 38,880 59,880 59,880 Book Value 237 263 304 338 367
Total liabilities 352,846 385,208 475,249 540,035 580,420 Dividend Payout Ratio (excl. DDT) 40.1 20.7 10.7 52.8 55.2
Intangible assets 114,260 144,057 0 0 0 Return ratios (%)
Net block 46,810 51,847 236,484 298,028 369,341 RoE 27.4 25.0 26.1 25.8 24.6
Investments 1,466 5,222 3,900 3,900 3,900 RoCE 28.9 27.1 27.8 26.3 25.2
Other non-Current assets 37,119 37,675 46,478 52,975 55,064 Pre Tax ROIC 46.2 38.9 37.3 34.1 30.1
Debtors 108,026 122,575 147,448 168,058 174,685 Turnover Ratios
Cash & bank balance 13,165 16,939 22,140 22,140 22,140 Asset Turnover Ratio 1.0 1.0 1.0 1.0 1.0
Other Current assets 143,485 106,036 137,398 130,111 95,799 Debtor Days (incl. unbilled Rev.) 84 88 89 87 86
Total Current assets 264,676 245,550 306,986 320,309 292,623 Working Capital Cycle Days 21 35 40 39 38
Total Current liabilities 111,477 99,143 118,599 135,177 140,507 Valuation ratios (x)
Net Current assets 153,199 146,407 188,387 185,132 152,116 P/E 16.7 16.1 13.6 12.1 11.6
Total assets 352,854 385,208 475,249 540,035 580,420 P/BV 4.3 3.9 3.3 3.0 2.8
Source: Company, Nirmal Bang Institutional Equities Research EV/EBITDA 12.2 11.2 9.2 8.2 7.7
EV/Sales 2.7 2.5 2.1 1.9 1.8
M-cap/Sales 2.9 2.7 2.3 2.0 1.8
Source: Company, Nirmal Bang Institutional Equities Research

8 Information Technology Sector

 Institutional Equities
Financials - Tech Mahindra
Exhibit 21: Income statement Exhibit 22: Cash flow
Y/E March (Rsmn) FY17 FY18 FY19E FY20E FY21E Y/E March (Rsmn) FY17 FY18 FY19E FY20E FY21E
Average INR/USD 67.0 64.5 69.8 72.0 74.5 EBIT 32,062 36,321 53,954 58,229 58,554
Net Sales (US$mn) 4,351 4,771 5,002 5,380 5,272 (Inc.)/dec. in working capital (9,120) 8,227 (8,451) (4,082) 267
-Growth (%) 7.8 9.6 4.8 7.6 (2.0) Cash flow from operations 22,942 44,548 45,504 54,147 58,821
Net Sales 291,408 307,730 349,402 387,413 392,662 Other income 7,776 14,093 5,630 9,213 12,141
-Growth (%) 10.0 5.6 13.5 10.9 1.4 Depreciation & amortisation 9,781 10,849 11,596 10,917 10,405
Cost of Sales & Services 205,661 215,299 233,953 263,656 268,015 Financial expenses (1,286) (1,624) (1,384) (1,082) (682)
Gross Profit 85,747 92,431 115,449 123,757 124,647 Tax paid (10,021) (10,925) (13,220) (16,258) (17,153)
% of sales 29.4 30.0 33.0 31.9 31.7 Dividends paid (13,047) (9,048) (14,835) (28,153) (20,939)
SG& A 43,904 45,261 49,899 54,611 55,689 Net cash from operations 16,145 47,893 33,291 28,784 42,592
% of sales 15.1 14.7 14.3 14.1 14.2 Capital expenditure (19,449) (21,142) (5,448) (6,000) (6,000)
EBITDA 41,843 47,170 65,550 69,146 68,959 Net cash after capex (3,304) 26,751 27,843 22,784 36,592
% of sales 14.4 15.3 18.8 17.8 17.6 Inc./(dec.) in debt (145) 3,963 (7,134) (2,000) (2,000)
Depreciation 9,781 10,849 11,596 10,917 10,405 (Inc.)/dec. in investments 18,498 (15,609) (8,773) (2,491) 163
% of sales 3.4 3.5 3.3 2.8 2.6 Equity issue/(buyback) (451) 29 8 - -
EBIT 32,062 36,321 53,954 58,229 58,554 Cash from financial activities 17,903 (11,617) (15,899) (4,491) (1,837)
% of sales 11.0 11.8 15.4 15.0 14.9 Others (638) (4,340) (7,160) 10,457 2,279
Interest expenses 1,286 1,624 1,384 1,082 682 Opening cash 40,138 54,098 64,892 69,675 98,425
Other income (net) 7,776 14,093 5,630 9,213 12,141 Closing cash 54,098 64,892 69,675 98,425 135,459
PBT 38,552 48,790 58,201 66,360 70,013 Change in cash 13,961 10,794 4,783 28,750 37,034
-PBT margin (%) 13.2 15.9 16.7 17.1 17.8
Source: Company, Nirmal Bang Institutional Equities Research
Provision for tax 10,021 10,925 13,220 16,258 17,153
Effective tax rate (%) 26.0 22.4 22.7 24.5 24.5
Minority Interest 389 (136) 98 148 148
Net profit 28,119 38,001 44,400 49,554 52,312
Exhibit 24: Key ratios
-Growth (%) (9.8) 35.1 16.8 11.6 5.6 Y/E March FY17 FY18 FY19E FY20E FY21E
-Net profit margin (%) 9.6 12.3 12.7 12.8 13.3 Per Share (Rs)
Source: Company, Nirmal Bang Institutional Equities Research FDEPS 31.7 42.8 50.1 56.2 59.3
Dividend Per Share 8.5 13.9 26.3 19.6 20.7
Exhibit 23: Balance sheet Dividend Yield (%) 1.1 1.8 3.3 2.5 2.6
Y/E March (Rsmn) FY17 FY18 FY19E FY20E FY21E Book Value 184 211 238 274 312
Equity capital 4,388 4,417 4,425 4,425 4,425 Dividend Payout Ratio (%. Incl DDT) 32.2 39.0 63.4 42.3 42.2
Reserves & surplus 159,984 184,011 207,636 240,042 274,241 Return ratios (%)
Net worth 164,372 188,428 212,061 244,467 278,666 RoE 18.3 21.5 22.2 21.7 20.0
Minority Interest 4,641 5,091 5,165 5,165 5,165 RoCE 17.3 17.2 23.1 22.7 20.3
Other liabilities 18,905 18,246 17,889 17,889 17,889 Pre Tax ROIC 26.2 25.8 36.3 38.1 38.7
Total loans 8,818 13,440 6,663 4,663 2,663 Turnover Ratios
Total liabilities 196,736 225,205 241,778 272,184 304,383 Asset Turnover 1.1 1.0 1.1 1.0 1.0
Goodwill 26,279 27,727 28,440 28,440 28,440 Debtor Days 67 77 81 79 78
Net block (incl. CWIP) 42,051 50,896 44,748 39,831 35,427 Working Capital Cycle Days 57 44 47 47 46
Investments 6,802 15,116 20,128 20,128 20,128 Valuation ratios (x)
Deferred tax asset - net 2,674 5,766 5,971 5,971 5,971 P/E 25.2 18.6 15.9 14.2 13.5
Other non-current assets 19,594 23,797 27,353 29,844 29,682 P/BV 4.3 3.7 3.3 2.9 2.5
Other current assets 21,571 19,623 23,635 25,787 25,647 EV/EBITDA 15.7 13.8 9.8 8.8 8.3
Debtors 53,377 64,979 77,268 84,305 83,845 EV/Sales 2.3 2.1 1.8 1.6 1.5
Loans & Advances 33,608 30,917 33,432 36,477 36,278 M-cap/Sales 2.4 2.3 2.0 1.8 1.8
Cash & bank balance 54,098 64,892 69,675 98,425 135,459 Source: Company, Nirmal Bang Institutional Equities Research
Inventory 611 659 638 638 638
Total current assets 163,265 181,070 204,648 245,632 281,866
Total current liabilities 63,929 79,167 89,511 97,663 97,130
Net current assets 99,336 101,903 115,137 147,969 184,736
Total assets 196,736 225,205 241,778 272,184 304,383
Source: Company, Nirmal Bang Institutional Equities Research

9 Information Technology Sector

 Institutional Equities
Financials - Mindtree
Exhibit 25: Income statement Exhibit 26: Cash flow
Y/E March (Rsmn) FY17 FY18 FY19E FY20E FY21E Y/E March (Rsmn) FY17 FY18 FY19E FY20E FY21E
Average INR/USD 67.2 64.5 70.0 72.0 74.5 EBIT 5,327 5,692 9,126 10,981 11,062
Net Sales (USD mn) 780 847 997 1,083 1,066
(Inc.)/dec. in working capital 1,781 (257) (4,435) (1,186) 119
YoY Growth (%) 9.1 8.6 17.8 8.6 (1.6)
Cash flow from operations 7,108 5,435 4,691 9,795 11,181
Net Sales 52,364 54,628 69,876 77,975 79,378
YoY Growth (%) 11.8 4.3 27.9 11.6 1.8 Other income 413 1,900 952 1,387 1,714
Employee benefits expense 34,058 35,641 44,144 49,275 50,231 Depreciation & amortisation 1,858 1,712 1,634 1,733 1,812
% of sales 65.0 65.2 63.2 63.2 63.3 Financial expenses (191) (169) (50) (85) (85)
Gross Margin 18306 18987 25732 28699 29147 Tax paid (1,390) (1,722) (2,423) (3,378) (3,490)
% of sales 35.0 34.8 36.8 36.8 36.7 Dividends paid (1,934) (2,188) (2,766) (3,358) (3,358)
Other expenses 11,121 11,583 14,972 15,985 16,272
Net cash from operations 5,864 4,968 2,038 6,094 7,774
% of sales 21.2 21.2 21.4 20.5 20.5
Capital expenditure 371 629 1,269 1,000 1,000
EBITDA 7,185 7,404 10,759 12,715 12,874
Net cash after capex 5,493 4,339 769 5,094 6,774
% of sales 13.7 13.6 15.4 16.3 16.2
Depreciation & Amortisation 1,858 1,712 1,634 1,733 1,812 Inc./(dec.) in debt (532) (220) 12 - -
EBIT 5,327 5,692 9,126 10,981 11,062 (Inc.)/dec. in investments (4,097) (1,127) (1,912) (4,000) (4,000)
% of sales 10.2 10.4 13.1 14.1 13.9 Equity issue/(buyback) 2 (41) 3 - -
Interest expenses 191 169 50 85 85 Cash from financial activities (4,627) (1,388) (1,897) (4,000) (4,000)
Other income (net) 413 1,900 952 1,387 1,714 Others (690) (2,170) (1,455) 400 400
PBT 5,549 7,423 10,027 12,284 12,691
Opening cash 2,332 2,508 3,289 706 2,200
-PBT margin (%) 10.6 13.6 14.4 15.8 16.0
Closing cash 2,508 3,289 706 2,200 5,374
Provision for tax 1,390 1,722 2,423 3,378 3,490
Change in cash 176 781 (2,583) 1,494 3,174
Effective tax rate (%) 25.0 23.2 24.2 27.5 27.5
Net profit 4,159 5,701 7,605 8,906 9,201 Source: Company, Nirmal Bang Institutional Equities Research
-Growth (%) (29.5) 37.1 33.4 17.1 3.3
-Net profit margin (%) 7.9 10.4 10.9 11.4 11.6
Source: Company, Nirmal Bang Institutional Equities Research

Exhibit 27: Balance sheet Exhibit 28: Key ratios

Y/E March (Rsmn) FY17 FY18 FY19E FY20E FY21E Y/E March FY17 FY18 FY19E FY20E FY21E
Equity capital 1,680 1,639 1,642 1,642 1,642 Per Share (Rs)
Reserves & surplus 24,095 25,779 29,290 34,837 40,680 EPS 25.4 34.8 46.4 54.3 56.1
Net worth 25,775 27,418 30,932 36,479 42,322 FDEPS 25.3 34.7 46.2 54.2 56.0
Other liabilities 301 85 101 101 101 Dividend Per Share 9.8 11.1 14.0 17.0 17.0
Total loans 13 9 5 5 5 Book Value 157 167 188 222 257
Total liabilities 26,089 27,512 31,038 36,585 42,428 Dividend Payout Ratio (incl DDT) 47 38 36 38 36
Net block 5,932 5,121 4,692 3,559 2,347 Return ratios (%)
Goodwill 4,470 4,539 4,730 4,730 4,730 RoE 16.7 21.4 26.1 26.4 23.4
Investments 5,927 7,264 8,936 12,936 16,936 RoCE 21.8 21.7 32.5 34.8 30.2
Deferred tax asset - net 624 318 357 357 357 Pre Tax ROIC 27.8 32.9 47.6 51.3 53.2
Other non-current assets 2,202 2,298 2,499 2,499 2,499 Turnover Ratios
Unbilled revenue 1,885 2,791 3,196 3,553 3,518 Asset Turnover 1.5 1.5 1.7 1.7 1.5
Other current assets 1,386 1,590 1,805 2,008 1,987 Debtor Days (incl. unbilled Rev.) 76 86 87 87 85
Debtors 8,962 10,155 13,541 15,057 14,905 Working Capital Cycle Days 37 30 36 45 47
Cash & bank balance 2,508 3,289 706 2,200 5,374 Valuation ratios (x)
Total current assets 14,741 17,825 19,248 22,817 25,784 P/E 38.7 28.0 20.8 17.8 17.2
Total current liabilities 7,807 9,853 9,424 10,313 10,224 P/BV 6.1 5.8 5.1 4.3 3.7
Net current assets 6,934 7,972 9,824 12,504 15,560 EV/EBITDA 20.9 20.0 13.9 11.3 10.6
Total assets 26,089 27,512 31,038 36,585 42,428 EV/Sales 2.9 2.7 2.1 1.8 1.7
Source: Company, Nirmal Bang Institutional Equities Research M-cap/Sales 3.0 2.9 2.3 2.0 2.0
Dividend Yield (%) 1.0 1.2 1.5 1.8 1.8
Source: Company, Nirmal Bang Institutional Equities Research

10 Information Technology Sector

 Institutional Equities
Financials - Persistent Systems
Exhibit 29: Income statement Exhibit 30: Cash flow
Y/E March (Rsmn) FY17 FY18 FY19E FY20E FY21E (Y/E March) FY17 FY18 FY19E FY20E FY21E
Average INR/USD 67.1 64.5 69.9 72.0 74.5 EBIT 3,049 3,102 4,202 5,050 4,977
Net Sales (USD mn) 429 471 487 545 532 (Inc.)/dec. in working capital (1,762) (570) (384) (898) 316
YoY Growth (%) 22.0 9.7 3.4 12.0 (2.4) Cash flow from operations 1,287 2,532 3,818 4,152 5,293
Net Sales 28,784 30,337 34,026 39,268 39,613 Other income 958 1,190 725 1,173 1,472
YoY Growth (%) 24.5 5.4 12.2 15.4 0.9 Depreciation & amortisation 1,490 1,585 1,595 1,911 1,989
Cost of Sales & Services 18,518 19,704 21,759 24,957 25,189 Tax paid (992) (1,062) (1,422) (1,816) (1,882)
% of sales 64.3 65.0 63.9 63.6 63.6 Dividends paid (761) (800) (949) (1,305) (1,259)
Gross Margin 10,266 10,633 12,266 14,311 14,424 Net cash from operations 1,982 3,445 3,767 4,114 5,612
% of sales 35.7 35.0 36.1 36.4 36.4 Capital expenditure 1,650 1,027 854 820 854
SG& A 5,727 5,946 6,470 7,350 7,459 Net cash after capex 332 2,419 2,913 3,294 4,759
% of sales 19.9 19.6 19.0 18.7 18.8 Inc./(dec.) in debt 127 (136) 313 - -
EBITDA 4,539 4,687 5,797 6,961 6,965 (Inc.)/dec. in investments 135 (1,145) (2,943) - -
% of sales 15.8 15.4 17.0 17.7 17.6 Equity issue/(buyback) - - (2,250) - -
Depreciation 1,490 1,585 1,595 1,911 1,989 Cash from financial
261 (1,280) (4,880) - -
EBIT 3,049 3,102 4,202 5,050 4,977 activities
% of sales 10.6 10.2 12.3 12.9 12.6 Others (515) (234) (104) -

Other income (net) 958 1,190 725 1,173 1,472 Opening cash 1,432 1,510 2,414 342 3,636

PBT 4,007 4,292 4,927 6,222 6,449 Closing cash 1,510 2,414 342 3,636 8,395

-PBT margin (%) 13.9 14.1 14.5 15.8 16.3 Change in cash 77 904 (2,072) 3,294 4,759

Provision for tax 992 1,062 1,422 1,816 1,882 Source: Company, Nirmal Bang Institutional Equities Research
Effective tax rate (%) 24.8 24.7 28.9 29.2 29.2
Exhibit 32: Key ratios
Net profit 3,015 3,231 3,505 4,406 4,567
-Growth (%) 1.4 7.2 8.5 25.7 3.6 Y/E March FY17 FY18 FY19E FY20E FY21E
-Net profit margin (%) 10.5 10.6 10.3 11.2 11.5 Per Share (Rs)

Source: Company, Nirmal Bang Institutional Equities Research EPS 37.7 40.4 44.2 57.2 59.3
FDEPS 37.7 40.4 44.2 57.2 59.3
Exhibit 31: Balance sheet Dividend Per Share 9.0 10.0 10.2 14.1 13.6
Y/E March (Rsmn) FY17 FY18 FY19E FY20E FY21E Book Value 237 266 279 319 362
Equity capital 800 800 770 770 770 Dividend Payout Ratio (%) 25 25 27 30 28
Reserves & surplus 18,193 20,472 20,709 23,810 27,118 Return ratios (%)
Net worth 18,993 21,272 21,479 24,580 27,888 RoE 17.2 15.4 19.7 21.9 19.0
Deferred tax liability 111 - 316 316 316 RoCE 17.1 15.3 19.5 21.6 18.7
Other liabilities 166 160 168 168 168 Pre Tax ROIC 31.1 29.7 41.4 49.9 53.5
Total loans 22 17 13 13 13 Tunover Ratios
Total liabilities 19,291 21,448 21,977 25,078 28,386 Asset Turnover Ratio 1.5 1.4 1.6 1.6 1.4
Goodwill 76 77 82 82 82 Debtor Days (incl. unbilled Rev) 60 58 56 58 54
Net block (incl CWIP) 5,573 5,097 4,357 3,266 2,131 Working Capital Cycle Days 39 51 51 50 52
Investments 6,839 8,797 11,252 11,252 11,252 Valuation ratios (x)
Deferred tax asset 306 372 720 720 720 PER 17.5 16.3 14.9 11.5 11.1
Other non-current assets 994 129 277 277 277 P/BV 2.8 2.5 2.4 2.1 1.8
Other current assets 3,411 4,585 5,381 6,360 6,016 EV/EBTDA 11.3 10.7 8.7 6.8 6.1
Debtors 4,754 4,847 5,211 6,191 5,846 EV/Sales 1.8 1.7 1.5 1.2 1.1
Cash & bank balance 1,510 2,414 342 3,636 8,395 M-cap/Sales 1.8 1.7 1.5 1.3 1.3
Total current assets 9,675 11,846 10,934 16,187 20,257 Dividend Yield 1.4 1.5 1.6 2.1 2.1
Total current liabilities 4,173 4,870 5,645 6,707 6,333
Source: Company, Nirmal Bang Institutional Equities Research
Net current assets 5,502 6,976 5,288 9,480 13,923
Total assets 19,291 21,448 21,977 25,078 28,386
Source: Company, Nirmal Bang Institutional Equities Research

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 Institutional Equities
Rating track - TCS
Date Rating Market price (Rs) Target price (Rs)
13 April 2015 Sell 2,619 2,314
17 April 2015 Sell 2,574 2,325
10 July 2015 Sell 2,529 2,173
9 September 2015 Sell 2,540 2,173
5 October 2015 Sell 2,641 2,217
14 October 2015 Sell 2,599 2,248
8 January 2016 Under Review 2,398 -
13 January 2016 Under Review 2,327 -
14 March 2016 Sell 2,360 2,055
20 April 2016 Sell 2,520 2,089
15 July 2016 Sell 2,521 2,075
14 September 2016 Sell 2,359 2,041
14 October 2016 Sell 2,329 2,073
10 January 2017 Sell 2,304 1,952
13 January 2017 Sell 2,344 1,956
14 February 2017 Sell 2,414 1,983
21 February 2017 Sell 2,502 1,983
2 March 2017 Sell 2,477 1,983
19 April 2017 Sell 2,309 1,996
21 June 2017 Sell 2,443 1,923
14 July 2017 Sell 2,446 1,930
28 September 2017 Sell 2,475 1,908
13 October 2017 Sell 2,548 1,913
26 December 2017 Under Review 2,647 -
12 January 2018 Under Review 2,792 -
17 March 2018 Accumulate 2,829 3,155
20 April 2018 Accumulate 3,191 3,176
26 June 2018* Accumulate 1,818 1,812
11 July 2018 Accumulate 1,876 1,862
05 October 2018 Accumulate 2,063 2,145
12 October 2018 Accumulate 1,980 2,120
27 December 2018 Sell 1,892 1,712
7 January 2019 Sell 1,877 1,533
11 January 2019 Sell 1,883 1,545
18 March 2019 Sell 2,040 1,607
19 March 2019 Sell 2,023 1,607
* Post 1:1 Bonus

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 Institutional Equities
Rating track - Infosys
Date Rating Market price (Rs) Target price (Rs)
13 April 2015 Accumulate 2,229 2,147
27 April 2015 Sell 1,995 1,823
4 June 2015 Sell 2,032 1,823
22 July 2015** Accumulate 1,116 1,189
7 September 2015 Accumulate 1,074 1,189
14 September 2015 Accumulate 1,091 1,189
13 October 2015 Accumulate 1,122 1,194
8 January 2016 Under Review 1,063 -
14 January 2016 Under Review 1,133 -
14 March 2016 Sell 1,141 1,002
15 April 2016 Sell 1,173 1,010
9 June 2016 Sell 1,238 1,010
18 July 2016 Sell 1,072 988
29 August 2016 Sell 1,020 970
17 October 2016 Sell 1,027 964
10 January 2017 Sell 970 920
16 January 2017 Sell 975 910
14 February 2017 Sell 985 926
15 April 2017 Sell 931 887
15 May 2017 Sell 964 887
21 June 2017 Sell 944 844
17 July 2017 Sell 972 846
21 August 2017 Sell 923 794
28 August 2017 Sell 912 836
11 September 2017 Sell 884 836
28 September 2017 Sell 906 833
25 October 2017 Sell 924 873
26 December 2017 Under Review 1,039 -
15 January 2018 Under Review 1,079 -
17 March 2018 Accumulate 1,170 1,154
14 April 2018 Accumulate 1,171 1,157
24 April 2018 Accumulate 1,188 1,157
3 July 2018 Accumulate 1,307 1,314
14 July 2018 Accumulate 1,317 1,328
5 October 2018** Accumulate 711 752
17 October 2018 Accumulate 695 756
27 December 2018 Accumulate 644 688
7 January 2019 Sell 661 620
14 January 2019 Sell 684 603
19 March 2019 Sell 710 620
** Post 1:1 bonus issue of equity shares

13 Information Technology Sector

 Institutional Equities
Rating track - Wipro
Date Rating Market price (Rs) Target price (Rs)
13 April 2015 Sell 618 576
22 April 2015 Sell 588 546
24 July 2015 Sell 588 548
30 September 2015 Sell 587 546
23 October 2015 Sell 578 544
8 January 2016 Under Review 556 -
19 January 2016 Under Review 549 -
14 March 2016 Sell 540 498
21 April 2016 Sell 601 489
20 July 2016 Sell 549 478
24 October 2016 Sell 499 436
10 January 2017 Sell 472 410
27 January 2017 Sell 474 413
14 February 2017 Sell 474 427
26 April 2017 Sell 495 437
21 June 2017* Sell 254 197
21 July 2017 Sell 269 235
28 September 2017 Sell 290 228
18 October 2017 Sell 290 244
26 December 2017 Under Review 302 -
22 January 2018 Under Review 329 -
17 March 2018 Accumulate 296 302
26 April 2018 Accumulate 287 303
3 July 2018 Buy 262 335
23 July 2018 Buy 282 323
5 October 2018 Buy 325 377
17 October 2018 Buy 309 364
27 December 2018 Sell 326 297
7 January 2019 Sell 324 268
21 January 2019 Sell 347 277
19 March 2019** Sell 258 209
* Post 1:1 bonus share issue, ** Post 1:3 bonus share issue

14 Information Technology Sector

 Institutional Equities
Rating track – HCL Tech
Date Rating Market price (Rs) Target price (Rs)
13 April 2015 Accumulate 959 1,013
22 April 2015 Accumulate 895 1,014
4 August 2015 Accumulate 938 1,008
1 October 2015 Accumulate 982 991
5 October 2015 Accumulate 859 991
20 October 2015 Buy 859 989
8 January 2016 Under Review 828 -
20 January 2016 Under Review 841 -
14 March 2016 Sell 824 737
29 April 2016 Sell 799 719
4 August 2016 Sell 826 745
24 October 2016 Sell 832 718
10 January 2017 Sell 838 712
25 January 2017 Sell 849 718
14 February 2017 Sell 827 740
12 May 2017 Sell 839 743
21 June 2017 Sell 854 713
28 July 2017 Sell 899 764
28 September 2017 Sell 874 744
26 October 2017 Sell 903 763
26 December 2017 Under Review 887 -
22 January 2018 Under Review 958 -
17 March 2018 Accumulate 968 1,048
16 April 2018 Accumulate 991 1,048
3 May 2018 Accumulate 1,001 1,041
3 July 2018 Buy 926 1,131
30 July 2018 Buy 963 1,172
5 October 2018 Buy 1,081 1,281
24 October 2018 Buy 952 1,277
11 December 2018 Buy 942 1,329
27 December 2018 Accumulate 942 1,072
7 January 2019 Accumulate 932 958
30 January 2019 Accumulate 988 1,054
19 March 2019 Accumulate 1,012 1,076

15 Information Technology Sector

 Institutional Equities
Rating track - Tech Mahindra
Date Rating Market price (Rs) Target price (Rs)
13 April 2015 Sell 660 593
28 May 2015 Sell 549 511
19 June 2015 Sell 541 470
28 July 2015 Sell 520 470
28 September 2015 Sell 567 474
4 November 2015 Sell 557 472
15 December 2015 Sell 543 471
8 January 2016 Under Review 522 -
2 February 2016 Under Review 497 -
14 March 2016 Sell 459 395
25 May 2016 Sell 480 409
21 June 2016 Sell 544 421
3 August 2016 Sell 499 400
28 October 2016 Sell 414 385
10 January 2017 Sell 473 368
31 January 2017 Sell 472 383
14 February 2017 Sell 500 388
7 March 2017 Sell 501 408
29 May 2017 Sell 429 403
21 June 2017 Sell 395 367
1 August 2017 Sell 385 360
28 September 2017 Sell 447 358
2 November 2017 Sell 478 387
11 December 2017 Sell 496 426
26 December 2017 Under Review 493 -
30 January 2018 Under Review 605 -
17 March 2018 Accumulate 635 608
28 May 2018 Accumulate 703 721
3 July 2018 Accumulate 655 716
31 July 2018 Accumulate 658 718
5 October 2018 Buy 696 845
31 October 2018 Accumulate 685 731
27 November 2018 Accumulate 695 731
27 December 2018 Sell 695 590
7 January 2019 Sell 681 525
6 February 2019 Sell 751 561
19 March 2019 Sell 789 587

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 Institutional Equities

Rating track - Mindtree

Date Rating Market price (Rs) Target price (Rs)
7 June 2017 Sell 547 424
21 June 2017 Sell 519 382
20 July 2017 Sell 506 382
22 August 2017 Sell 461 382
28 September 2017 Sell 471 396
26 October 2017 Sell 507 426
26 December 2017 Under Review 600 -
18 January 2018 Under Review 622 -
17 March 2018 Sell 812 574
26 October 2017 Sell 867 -
26 December 2017 Under Review 600 -
18 January 2018 Under Review 622 -
17 March 2018 Sell 812 574
19 April 2018 Sell 867 577
3 July 2018 Sell 986 716
19 July 2018 Sell 1,062 803
4 September 2018 Sell 1,100 803
5 October 2018 Sell 1,063 986
19 October 2018 Sell 978 778
27 December 2018 Sell 855 631
7 January 2019 Sell 815 552
17 January 2019 Sell 835 553
19 March 2019 Sell 963 554

17 Information Technology Sector

 Institutional Equities
Rating track - Persistent Systems
Date Rating Market price (Rs) Target price (Rs)
21 September 2015 Sell 685 562
27 October 2015 Sell 669 553
7 December 2015 Sell 663 544
8 January 2016 Under Review 630 -
27 January 2016 Under Review 609 -
14 March 2016 Sell 599 522
22 March 2016 Sell 741 555
26 April 2016 Sell 719 558
22 June 2016 Sell 697 558
26 July 2016 Sell 665 562
26 October 2016 Sell 660 573
19 December 2016 Sell 613 573
10 January 2017 Sell 636 557
24 January 2017 Sell 612 548
14 February 2017 Sell 624 574
27 April 2017 Sell 568 534
21 June 2017 Sell 681 516
24 July 2017 Sell 659 526
28 September 2017 Sell 651 540
17 October 2017 Sell 663 566
04 December 2017 Sell 654 566
26 December 2017 Under Review 650 -
30 January 2018 Under Review 788 -
17 March 2018 Sell 816 698
25 April 2018 Accumulate 726 717
3 July 2018 Accumulate 811 847
31 July 2018 Accumulate 828 867
5 October 2018 Buy 718 909
23 October 2018 Accumulate 560 622
12 December 2018 Accumulate 611 622
27 December 2018 Sell 630 504
7 January 2019 Sell 577 455
29 January 2019 Sell 567 481
19 March 2019 Sell 658 489

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 Institutional Equities
DISCLOSURES

This Report is published by Nirmal Bang Equities Private Limited (hereinafter referred to as “NBEPL”) for private circulation. NBEPL is a
registered Research Analyst under SEBI (Research Analyst) Regulations, 2014 having Registration no. INH000001436. NBEPL is also
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NBEPL has other business divisions with independent research teams separated by Chinese walls, and therefore may, at times, have
different or contrary views on stocks and markets.

NBEPL or its associates have not been debarred / suspended by SEBI or any other regulatory authority for accessing / dealing in
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taken reasonable care to achieve and maintain independence and objectivity in making any recommendations.

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 Institutional Equities
Disclaimer
Stock Ratings Absolute Returns
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ACCUMULATE -5% to15%
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20 Information Technology Sector