EQUITY RESEARCH

ON IT SECTOR
 INTRODUCTION

• Equities are playing a major role in contribution of capital to the business from
the beginning
• Equity analysis is researching and analyzing equities, or stocks
• Investors purchase equity shares with two basic objectives:
1. To make capital profits by selling shares at higher prices.
2. To earn dividend income.
 IT SECTOR
• Information Technology (IT) industry in India is one of the fastest growing industries.
• Indian IT industry has built up valuable brand equity for itself in the global markets

• India ranks third among global start-up ecosystems with more than 5,300 tech start-ups.

• Indian IT and BPM industry is expected to grow to US$ 350 billion by 2025
SEGMENTS OF IT SECTOR

IT SERVICES BUSINESS PROCESS

MANAGEMENT
(51% SHARE) (20% SHARE)

IT & ITeS
SECTOR

SOFTWARE PRODUCTS
AND ENGINEERING HARDWARE
SERVICES (8% SHARE)
(19% SHARE)
 ECONOMIC ANALYSIS OF IT SECTOR

• India’s It industry contributed around 7.7 percent of the country’s GDP and is
expected to contribute10 percent of India’s GDP by 2025.
• IT industry employs nearly 3.97 million people in India of which 105,000
were added in FY18.
• Total export revenue of the industry is expected to grow 7-9 percent year-on-
year to US$135-137 billion in FY19.

•ITBPM sector accounts for largest share in total

Indian services export, which is 45 percent.

• Hiring at India’s top 10 information technology (IT) companies grew more

than four-fold year-on-year in 2018.
MARKET SIZE OF IT INDUSTRY AS PER DOMESTIC REVENUE
AND EXPORT REVENUE
 DEMAND AND SUPPLY IMPACT ON IT SECTOR

• Global BPM spending estimated to rise to US$ 233

billion by 2020.
• Tax holidays for STPI and SEZs
• National AI portal
• Technology mission for services in villages and schools
• NASSCOM launched online platform
• DXC technology set up first global analytics unit
• Increased computer penetration
 INDUSTRY ANALYSIS

• The ITBPM sector in India expanded at a CAGR of 10.71 percent to US$167

billion in FY18 from US$74 billion in FY10, which is 3-4 times higher than the
global IT-BPM growth.
• It is estimated that the size of the industry will grow to US$350 billion by
2025.
 SWOT ANALYSIS- STRENGTHS

• Highly skilled, English speaking manpower.

• Round-the clock benefit for Western companies due to the huge time
difference
• Dedicated workforce aiming at making a long term career in the area.
• Lower response time with efficient and effective service
 SWOT ANALYSIS - WEAKNESSES

• The cost of telecom and network infrastructure is much higher in India than in
the US
• Recent months have seen a rise in the level of attrition rates among IT workers
who are quitting their jobs to pursue higher studies.
• Of late workers have shown a tendency not to pursue IT as a full-time career.
 SWOT- OPPORTUNITIES

• To capitalise and encash on the already established image of India being

portrayed as the most favoured IT destination in the world.
• Rapidly growing urban infrastructure has fostered several IT centres in the
country
• Tax exemption of three years in a block of seven years to start-ups under
‘Startup India’.
 SWOT- THREATS

• Workers in British Telecom have protested against outsourcing of work to

Indian BPO companies
• High competition
• Similar services at many times
GROWTH PROSPECTS SUSTAIN PE AND VC
INTERESTS
 BUSINESS ANALYSIS - INFOSYS

• Infosys is a global leader in the next generation digital services and

consulting.
• They enable their clients in 45 countries and navigate their digital
transformation with AI powered core.
• It has market capitalisation of US $ 47.7 billion.
• It became the first IT company from India to be listed on NASDAQ and has 13
subsidiaries around the globe.
 KEY FINANCIAL HIGHLIGHTS

• The decrease in the net profit by 2.54% from fiscal 2019 to fiscal 2018 was attributable to
decrease in operating profit as a percentage of increase in the tax expense.
• During the year company also invested in its subsidiaries for operation and expansion so
investment increased by 9.6%
• Although the equity has marginally increased by approx. 24% but primarily it has decreased
by 1.24% due to buy back of equity shares, dividend declared, partially offset by profit
earned during the year.
• The amount of the securities premium increase from 28 crore to 138 crore on standalone basis
also on consolidated basis it increase from 36 crore to 149 crore because of transfer of 99
crore from stock option outstanding account.
 PAT

Chart Title
18500
18000
17500
17000
16500
16000
15500
15000
14500
2018 predicted 2019 predicted 2020 predicted 2021 predicted 2022
PAT
 INCOME

Chart Title
100000
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
2018 predicted 2019 predicted 2020 predicted 2021 predicted 2022
INCOME Column1 Column2
 EPS

Chart Title
80
70
60
50
40
30
20
10
0
2018 predicted 2019 predicted 2020 predicted 2021 predicted 2022
EPS Column1 Column2
 P/E RATIO

Chart Title
18

16

14

12

10

0
2018 predicted 2019 predicted 2020 predicted 2021 predicted 2022
P/E Column1 Column2
 SCOPE OF IT INDUSTRY

• Technologies, such as telemedicine, health, remote monitoring solutions and clinical

information systems, would continue to boost demand for IT service across the globe.
• Digitisation of content and increased connectivity is leading to a rise in IT adoption
by media.
• The rollout of Fifth Generation (5G) wireless technology by telecommunication
companies is expected to bring at least US$ 10 billion global business to Indian IT
firms by 2019-25.
• BRIC would provide US$ 380–420 billion opportunity by 2020
THANK YOU…