Infosys Technologies Ltd (INFY) Valuation

Flash Player 9 or higher is required to view the chart Click here to download Flash Player now

Company Profile (obtained from Google Finance): Infosys Technologies Limited (Infosys),is a global technology services firm that defines, designs and delivers information technology (IT)-enabled business solutions to its clients. The Company provides end-to-end business solutions that leverage technology for its clients, including technical consulting, design, development, product engineering, maintenance, systems integration, package-enabled consulting, and implementation and infrastructure management services. Infosys also provides software products to the banking industry. Infosys BPO is a majority owned subsidiary. Through Infosys BPO, it provides business process management services, such as offsite customer relationship management, finance and accounting, and administration and sales order processing.On April 1, 2008, Infosys Australia acquired Mainstream Software Pty Limited (MSPL). On March 5, 2009, the Company incorporated a wholly owned subsidiary, Infosys Technologies (Sweden) AB.

ModernGraham Comments: None at this time.

Defensive and Enterprising Investor Tests:

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests: Score = 5/5

1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
3. Earnings Stability – positive earnings per share for at least 5 years – PASS
4. Dividend Record – currently pays a dividend – PASS
5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary:

• Last Updated    11/2/2009
• MG Value    $76
• MG Opinion    Undervalued
• Value Based on 3% Growth    $28
• Value Based on 0% Growth    $17
• Market Implied Growth Rate    7.46%
• Net Current Asset Value (NCAV)    $5.50
• PEmg    23.42
• Current Ratio    5.83
• PB Ratio    5.87

Key Data:

Balance Sheet – 9/30/2009

• Current Assets    $3,855,000,000
• Current Liabilities    $661,000,000
• Total Debt    $0
• Total Assets    $5,188,000,000
• Intangible Assets    $6,000,000
• Goodwill    $144,000,000
• Total Liabilities    $717,000,000
• Outstanding Shares    570,480,000

Earnings Per Share – Diluted

• 2010 (estimate)    $2.07
• 2009    $2.25
• 2008    $2.04
• 2007    $1.50
• 2006    $0.99
• 2005    $0.76
• 2004    $0.51
• 2003    $0.37
• 2002    $0.31
• 2001    $0.25
• 2000    $0.12

Earnings Per Share – Modern Graham

• 2010 (estimate)    $1.96
• 2009    $1.78
• 2008    $1.41
• 2007    $1.01
• 2006    $0.70
• 2005    $0.52

Valuation History:

• 11/2/09 – Value $76, Actual Price $46.36, Undervalued & Enterprising
• 7/26/09 – Value $74, Actual Price $42.40, Undervalued & Enterprising