3 December 2017
Update
| Sector:
Technology
BSE SENSEX
32,833
S&P CNX
10,122
Infosys
Buy
CMP: INR960
New era Take#2
TP: INR1,100(+15%)
Appoints CapGemini’s Salil Parekh as CEO and MD
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val, INRm
Free float (%)
The event
INFO IN
2,297
1,045/862
5/-6/-25
2,201.7
34.1
4,845.9
87.3
Infosys announced over the weekend that its Board of Directors has appointed
Salil S. Parekh as Chief Executive Officer and Managing Director (CEO & MD) of
the Company effective January 2, 2018. Mr. Parekh joins Infosys from
Capgemini where he was a member of the Group Executive Board.
Mr. U B Pravin Rao will step down as the interim CEO and Managing Director
effective January 2, 2018 and will continue as Chief Operating Officer and a
whole-time Director of the Company.
Financials Snapshot (INR b)
Y/E Mar
2017 2018E 2019E
Net Sales
684.9 704.5 771.3
EBITDA
186.1 186.5 202.5
PAT
143.8 143.0 147.5
EPS (INR)
62.8
63.8
67.8
Gr. (%)
6.4
1.6
6.3
BV/Sh (INR)
301.5 278.7 316.4
RoE (%)
22.0
21.8
22.5
RoCE (%)
22.0
21.8
22.5
P/E (x)
15.3
15.0
14.1
P/BV (x)
3.2
3.4
3.0
Shareholding pattern (%)
As On
Sep-17 Jun-17 Sep-16
Promoter
12.8
12.8
12.8
DII
22.1
20.2
18.0
FII
34.6
38.0
40.1
Others
30.6
29.0
29.2
FII Includes depository receipts
Stock Performance (1-year)
Infosys
Sensex - Rebased
1,250
1,150
1,050
950
850
About Salil Parekh
Mr. Parekh had been with Capgemini India for over a decade & a half, starting
with Ernst & Young in 1992 and was part of the consulting business that was
acquired by Capgemini in 2000.
Mr. Parekh was responsible for overseeing a business cluster comprising
Application Services (North America, UK, Asia), Cloud Infrastructure Services,
and Sogeti (Technology & Engineering Services Division). He was also the
Chairman of the company’s North America Executive Council.
He leveraged Digital and Cloud services to drive transformation for clients. He
was responsible for the strategy and execution for the Cloud business - setting
its direction and enabling its rapid adoption at clients. He was also the architect
of the North America growth and turnaround, and was instrumental in setting
up their off-shoring capabilities.
He has Master of Engineering degrees in Computer Science and Mechanical
Engineering from Cornell University, and a Bachelor of Technology degree in
Aeronautical Engineering from the Indian Institute of Technology, Bombay.
First thoughts: Early days, few positives and caveats
We would be remiss to jump to any conclusions on INFO’s future prospects under
the new leadership. That said, we enlist our first few thoughts on the appointment
below:
Potential positives…
Appointment of Mr. Parekh comes in reasonable time after Mr. Nilekani’s swift
appointment to the Board. This allows INFO to expedite away from inward
focus and start to chase growth in business sooner than later
The new CEO’s extensive tenure in CAPG, among large companies with
favorable Digital Perception (others being Accenture, TCS and Cognizant),
maybe applicable to good effect.
Mr. Parekh has a strong technology background and rich IT services experience,
and is unlikely to feel out of place in his new role.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Ashish Chopra – Research Analyst
(Ashish.Chopra@MotilalOswal.com); +91 22 6129 1530
Sagar Lele – Research Analyst
(Sagar.Lele@MotilalOswal.com); +91 22 6129 1531