Top 5 Things You Need to Know About Infosys

It's been a great afternoon session for Infosys investors, who saw their shares rise 1.3% to a price of $15.83 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.

Infosys's Valuation Is in Line With Its Sector Averages:

Infosys Limited, together with its subsidiaries, provides consulting, technology, outsourcing, and next-generation digital services in North America, Europe, India, and internationally. The company belongs to the Technology sector, which has an average price to earnings (P/E) ratio of 27.16 and an average price to book (P/B) ratio of 6.23. In contrast, Infosys has a trailing 12 month P/E ratio of 22.3 and a P/B ratio of 14.28.

Infosys's PEG ratio is 1.39, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

The Company Has a Positive Net Current Asset Value:

2020-03-31 2021-03-31 2022-03-31 2023-03-31
Revenue (MM) $12,780 $13,561 $16,311 $18,212
Gross Margins 33.1% 34.9% 32.6% 30.2%
Operating Margins 21.3% 24.7% 23.2% 21.2%
Net Margins 18.24% 19.27% 18.17% 16.37%
Net Income (MM) $2,331 $2,613 $2,963 $2,981
Net Interest Expense (MM) -24 191 194 191
Net Interest Expense (MM) -$24 $191 $194 $191
Depreciation & Amort. (MM) -$407 -$441 -$466 -$524
Earnings Per Share $0.55 $0.61 $0.7 $0.71
EPS Growth n/a 10.91% 14.75% 1.43%
Diluted Shares (MM) 4,265 4,251 4,219 7,140
Free Cash Flow (MM) $2,146 $2,973 $3,055 $2,534
Capital Expenditures (MM) -$465 -$285 -$290 -$319
Net Current Assets (MM) $3,653 $3,984 $3,304 $2,538
Current Ratio 2.62 2.55 2.0 1.81
Net Debt / EBITDA -0.52 -0.65 -0.34 -0.1

Infosys benefits from a steady stream of strong cash flows, low leverage, and growing revenues and decreasing reinvestment in the business. The company's financial statements show average operating margins with a stable trend and positive EPS growth. However, the firm has slimmer gross margins than its peers. Finally, we note that Infosys has a decent current ratio.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.