DCF

VALUATIO
N
Group 5
ABOUT THE
COMPANY
Infosys is a global leader in next-generation digital services
and consulting. It is one of the largest IT services
companies in the world, with a market capitalization of
5,67,083 CR. Infosys is the second-largest IT services
company in India. In the last year, Infosys stock has
returned -11.79%, compared to a 5.81% return for the Nifty
50 index.
 COMPETITORS
HCL Technologies Limited is an Indian
multinational information technology
(IT) services and consulting company
headquartered in Noida, Uttar Pradesh.
HCL Tech is India's third-largest IT
services company, with a market
capitalisation of 3,44,825 CR and
revenue. It is also one of the leading IT
services companies in the world. HCL
stock has consistently outperformed the
market over the past decade. In the last
year, HCL stock has returned 21.83%,
compared to a 5.81% return for the
Nifty 50 index.
TCS stock is among the most
popular and heavily traded on the
Indian stock exchanges. It is a
component of the Nifty 50 and
Sensex indices. TCS stock has
consistently stayed below and with
the market over the past decade. In
the last year, TCS stock has returned
3.65%, compared to a 5.81% return
for the Nifty 50 index. It has a
Market Capitalization of 12,29,478
CR
Wipro Limited is a global
information technology (IT) services
and consulting company
headquartered in Bangalore, India. It
is a part of the Wipro Group, one of
India's largest conglomerates. Wipro
is the fourth-largest IT services
company in India by market
capitalization of 2,00,061 CR and
revenue. It is also one of the leading
IT services companies in the world.
In the last year, HCL stock has
returned -2.61%, compared to a
5.81% return for the Nifty 50 index.
 SHAREHOLDING
INF HCLTEC S TC WIPR
Y H S O
RATIO ANALYSIS
ROIC
INTRINSIC
GROWTH
 WACC

We have taken Tata Consultancy Services, Wipro Limited, and HCL Technologies Limited to get the Industry insights as they are the
closest competitors to Infosys Limited. We have calculated the Average and Median of Tax Rate, D/E Ratio, D/C ratio, Levered Beta
and Unlevered Beta to be used in calculating Weighted Average Cost of Capital (WACC).
 WEIGHTED
AVERAGE
COST OF CAPITAL
 FREE CASH FLOW
TO FIRM

The Reinvestement Rate is the Expected growth rate of the industry the company is operating in.
DISCOUNTED
CASH FLOW
36
DCF Value %
Overvaluation

Price

Summary of DCF Valuation for Infosys

• Current Market Price: ₹1,385.60
• DCF Valuation Price: ₹873.5
• The discounted cash flow (DCF) analysis of Infosys, a leading IT
services and consulting company, reveals a valuation price of
₹873.5 per share, significantly below the current market price of
₹1,385.60. This analysis is based on a rigorous examination of the
company's financials, future cash flow projections, and the
application of a discount rate.
Key Observations:
• Market Overvaluation: The DCF valuation suggests that Infosys is
currently overvalued by 41%. This means that the market price
exceeds what can be justified by the company's projected future
cash flows.
 SENSITIVITY
Expected Growth

ANALYSIS Rate

Terminal Growth Rate

According to our calculations, the expected growth rate is

16.59% and terminal growth rate is 5.38%
In case the scenario changes, the values change according to
the above table
COMPARABLE
COMPANY
VALUATION
FINANCIAL
SUMMARY
DU-PONT
ANALYSIS
DU-PONT
ANALYSIS
 DU-PONT
• The company's ROE is growing
consistently. From 20.81% in
FY17, the RoE has increased
SUMMARY
close to 32% as of FY23.
• However, the company's Net
Profit margin is shrinking on a
YoY basis from 20.96% in FY17
to 16.42% in FY23.
• The increase in the company's
Asset Turnover ratio from 0.87x
in FY17 to 1.22x in FY23
indicates it is using its asset base
more efficiently.
• The growth in Equity Multiplier
from 1.15x in FY17 to 1.60x as
of FY23 suggests that the
company is taking on more debt
to increase its asset base than
equity.
• This improvement in operational
efficiency and debt-funded asset
acquisition strategy explains the
growth in the company's RoE
amid falling Net Profit margins.
THANK
YOU
Gauri Vig (F2022021)
Mansi Malpani (F2022030)
Preethi Pradeep (F2022036)
Rajan Kumar Tiwari (F2022037)
Satyam Pandey (F2022045)
Siddharth Gopal (F2022049)