Financesummerproject Pushkarmetha01530emba2015!17!180210093433

INDUSTRIAL PROJECT REPORT
ON
“FINANCIAL RATIO ANALYSIS
FOR
TECH MAHINDRA LTD. & INFOSYS LTD.
AND
IT INDUSTRY ANALYSIS”
SUBMITTED BY
Mr. Pushkar Metha (01530)
(EMBA PUMBA 2015-2017)
IN PARTIAL FULFILLMENT OF THE AWARD OF THE DEGREE
EXECUTIVE MASTER OF BUSINESS ADMINISTRATION (EMBA)
IN FINANCE
UNDER GUIDANCE OF
Mrs. Dr. CA Shilpa Bhide
DEPARTMENT OF MANAGEMENT SCIENCES
SAVITRIBAI PHULE PUNE UNIVERSITY
2016-17
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SAVITRIBAI PHULE PUNE UNIVERSITY
CERTIFICATE
This is to certify that Mr. Pushkar R Metha, student of EMBA, studying at Department of
Management Sciences (PUMBA), Savitribai phule Pune University has successfully completed
the internship project work titled “Ratio Analysis for Tech Mahindra and Infosys and IT
Industry Analysis” at Tech Mahindra from 30th May 2016 to 30th June 16.
To the best of my knowledge he has found Hardworking, Sincere and honest throughout the
internship.
We wish him every success in his future career.
Prof. Dr. CA Shilpa Bhide Dr. Prafula Pawar

Internal Guide External Guide Head of Department
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DECLARATION
I Mr. Pushkar R Metha hereby declare that this project is the record of authentic work carried out
by me during the academic year 2016 -17 and has been submitted to Savitribai Phule Pune
University, Department of Management Sciences, PUMBA.
Signature of the student
Pushkar Metha (01530)
(EMBA PUMBA 15-17)
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ACKNOWLEDGEMENT
I am very much obliged and indebted to Mr. Manoj Joshi Functional Head of Tech Mahindra Pvt.
Ltd., for his approval. I also extend my gratitude to Mr. Raghunath Sowani Group Manager Finance
and Makarand Shete General Manager for his approval and valuable suggestions to take up the
project in Tech Mahindra Pvt.
I am very pleased to express my deep sense of gratitude to Mrs. Dr. CA Shilpa Bhide Assistant
professor Department of Management Science (PUMBA) for his consistent encouragement. I shall
forever cherish my association with her for exuberant encouragement, perennial approachability,
absolute freedom of thought and action I have enjoyed during the course of the project.
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INDEX
1 INTRODUCTION 7
1.1 NEED OF THE STUDY 7
1.2 OBJECTIVES 8
1.3 METHODOLOGY 8
1.4 SOURCES OF SECONDARY DATA: 8
1.5 LIMITATIONS 9
2 RATIO ANALYSIS 10
2.1 FINANCIAL ANALYSIS 10
2.2 RATIO ANALYSIS 10
2.3 STEPS IN RATIO ANALYSIS 10
2.4 BASIS OR STANDARDS OF COMPARISON 10
2.5 INTERPRETATION OF THE RATIOS 11
2.6 GUIDELINES OR PRECAUTIONS FOR USE OF RATIOS 11
2.7 IMPORTANCE OF RATIO ANALYSIS 11
2.8 LIMITATIONS OF RATIO ANALYSIS 12
2.9 CLASSIFICATIONS OF RATIOS 12
2.10 IN THE VIEW OF FUNCTIONAL CLASSIFICATION THE RATIOS ARE 13
3 COMPANY PROFILE 14
3.1 KEY METRICS 14
4 DATA ANALYSIS 15
4.1 PER SHARE RATIO 15
4.2 PROFITABILITY RATIO 22
4.3 LIQUIDITY RATIO 33
4.4 VALUATION RATIO 39
5 INDUSTRY ANALYSIS 60
6 SUGGESTION AND CONCLUSION 64
APPENDIX – A 65
REFERENCES 72
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1 INTRODUCTION
Financial Management is the specific area of finance dealing with the financial decision
corporations make, and the tools and analysis used to make the decisions. The discipline as a whole
may be divided between long-term and short-term decisions and techniques. Both share the same
goal of enhancing firm value by ensuring that return on capital exceeds cost of capital, without
taking excessive financial risks.
Capital investment decisions comprise the long-term choices about which projects
receive investment, whether to finance that investment with equity or debt, and when or whether
to pay dividends to shareholders. Short-term corporate finance decisions are called working capital
management and deal with balance of current assets and current liabilities by managing cash,
inventories, and short-term borrowings and lending (e.g., the credit terms extended to customers).
Corporate finance is closely related to managerial finance, which is slightly broader in

scope, describing the financial techniques available to all forms of business enterprise, corporate or
not.
1.1 NEED OF THE STUDY
1. The study has great significance and provides benefits to various parties whom directly
or indirectly interact with the company.
2. It is beneficial to management of the company by providing crystal clear picture

regarding important aspects like liquidity, leverage, activity and profitability.
3. The study is also beneficial to employees and offers motivation by showing how actively
they are contributing for company’s growth.
4. The investors who are interested in investing in the company’s shares will also get
benefited by going through the study and can easily take a decision whether to invest or not
to invest in the company’s shares.
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1.2 OBJECTIVES
The major objectives of the study are to know about financial strengths and weakness of
Tech Mahindra and Infosys through FINANCIAL RATIO.
To evaluate the performance of the company by using ratios as a yardstick to measure the
efficiency of the company. To understand the liquidity, profitability and efficiency positions of the
company during the study period. To evaluate and analyze various facts of the financial
performance of the company. To make comparisons between the ratios during different periods.
1. To study the present financial system of Tech Mahindra and Infosys company.
2. To determine the Profitability, Liquidity Ratios.
3. To analyze the capital structure of the company with the help of Leverage ratio.
4. To understand appropriate ways for the better performance of the organization
1.3 METHODOLOGY
The information is collected through secondary sources during the project. That
information was utilized for calculating performance evaluation and based on that, interpretations
were made.
1.4 SOURCES OF SECONDARY DATA:
1. Most of the calculations are made on the financial statements of the company provided
statements.
2. Referring standard texts and referred books collected some of the information regarding
theoretical aspects.
3. Method- to assess the performance of the company method of observation of the work in
finance department is followed.
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1.5 LIMITATIONS
1. The study provides an insight into the financial, personnel, marketing and other aspects
of Tech Mahindra and Infosys. Every study will be bound with certain limitations.
2. One of the factors of the study was lack of availability of ample information. Most of the
information has been kept confidential and as such as not assed as art of policy of company.
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2 RATIO ANALYSIS
2.1 FINANCIAL ANALYSIS
Financial analysis is the process of identifying the financial strengths and weaknesses of the
firm and establishing relationship between the items of the balance sheet and profit & loss account.
Financial ratio analysis is the calculation and comparison of ratios, which are derived from the
information in a company’s financial statements. The level and historical trends of these ratios can
be used to make inferences about a company’s financial condition, its operations and attractiveness
as an investment. The information in the statements is used by Trade creditors, to identify the
firm’s ability to meet their claims i.e. liquidity position of the company. Investors to know about
the present and future profitability of the company and its financial structure. Management in
every aspect of the financial analysis. It is the responsibility of the management to maintain sound
financial condition in the company.
2.2 RATIO ANALYSIS
The term “Ratio” refers to the numerical and quantitative relationship between two items or variables.
This relationship can be exposed as Percentages Fractions Proportion of numbers. Ratio analysis is
defined as the systematic use of the ratio to interpret the financial statements, so that the strengths and
weaknesses of a firm, as well as its historical performance and current financial condition can be
determined. Ratio reflects a quantitative relationship helps to form a quantitative judgment.
2.3 STEPS IN RATIO ANALYSIS
The first task of the financial analysis is to select the information relevant to the decision under
consideration from the statements and calculates appropriate ratios.
To compare the calculated ratios with the ratios of the same firm relating to the past or with the
industry ratios. It facilitates in assessing success or failure of the firm.
Third step is to interpretation, drawing of inferences and report writing conclusions are drawn
after comparison in the shape of report or recommended courses of action.
2.4 BASIS OR STANDARDS OF COMPARISON
Ratios are relative figures reflecting the relation between variables. They enable analyst to draw
conclusions regarding financial operations. They use of ratios as a tool of financial analysis involves
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the comparison with related facts. This is the basis of ratio analysis. The basis of ratio analysis is of
four types. Past ratios, calculated from past financial statements of the firm, Competitor’s ratio, of
the some most progressive and successful competitor firm at the same point of time.
Industry ratio, the industry ratios to which the firm belongs to projected ratios, ratios of the future
developed from the projected or pro forma financial statements
2.5 INTERPRETATION OF THE RATIOS
The interpretation of ratios is an important factor. The inherent limitations of ratio analysis should
be kept in mind while interpreting them. The impact of factors such as price level changes, change
in accounting policies, window dressing etc., should also be kept in mind when attempting to
interpret ratios. The interpretation of ratios can be made in the following ways.
 Single absolute ratio

 Group of ratios
 Historical comparison
 Projected ratios
 Inter-firm comparison
2.6 GUIDELINES OR PRECAUTIONS FOR USE OF RATIOS
The calculation of ratios may not be a difficult task but their use is not easy. Following guidelines or
factors may be kept in mind while interpreting various ratios is:
 Accuracy of financial statements

 Objective or purpose of analysis
 Selection of ratios
 Use of standards
 Caliber of the analysis
2.7 IMPORTANCE OF RATIO ANALYSIS
 Aid to measure general efficiency

 Aid to measure financial solvency
 Aid in forecasting and planning
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 Facilitate decision making
 Aid in corrective action
 Aid in intra-firm comparison
 Act as a good communication
 Evaluation of efficiency
 Effective tool
2.8 LIMITATIONS OF RATIO ANALYSIS
 Differences in definitions
 Limitations of accounting records
 Lack of proper standards
 No allowances for price level changes
 Changes in accounting procedures
 Quantitative factors are ignored
 Limited use of single ratio
 Background is over looked
 Limited use
o Personal bias
2.9 CLASSIFICATIONS OF RATIOS
The use of ratio analysis is not confined to financial manager only. There are different parties
interested in the ratio analysis for knowing the financial position of a firm for different purposes.
Various accounting ratios can be classified as follows:
1. Traditional Classification
2. Functional Classification
3. Significance ratios
2.9.1 Traditional Classification
Balance Sheet (or) Position Statement Ratio: They deal with the relationship between two
balance sheet items, e.g. the ratio of current assets to current liabilities etc., both the items must,
however, pertain to the same balance sheet.
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Profit & Loss Account (or) Revenue Statement Ratio: These ratios deal with the relationship
between two profit & loss account items, e.g. the ratio of gross profit to sales etc., Composite (or)
inter statement ratios: These ratios exhibit the relation between a profit & loss account or income
statement item and a balance sheet items, e.g. stock turnover ratio, or the ratio of total assets to
sales.
2.9.2 Functional Classification
These include liquidity ratios, long term solvency and leverage ratios, activity ratios and
profitability ratios.
2.9.3 Significance ratios
Some ratios are important than others and the firm may classify them as primary and secondary
ratios. The primary ratio is one, which is of the prime importance to a concern. The other ratios that
support the primary ratio are called secondary ratios.
2.10 IN THE VIEW OF FUNCTIONAL CLASSIFICATION THE RATIOS ARE
1. Liquidity ratio
2. Leverage ratio
3. Activity ratio
4. Profitability ratio
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3 COMPANY PROFILE
Tech Mahindra Limited (TML) was incorporated as a joint venture between Mahindra & Mahindra
and British Telecom Plc in 1986, under the name Mahindra British Telecom. The name was changed
to Tech Mahindra in 2006. The company is mainly an IT and software services provider for
companies in the telecom sector. Services provided include application development management,
consulting, managed services and business process outsourcing (BPO). The company has 140
subsidiaries across the world, the global headcount of the company as on 31st March 2016 was
1,05,432.
3.1 KEY METRICS
Resource Graph
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4 DATA ANALYSIS
4.1 PER SHARE RATIO
4.1.1 Basic EPS
Formula:-
Basic EPS = Profit or loss attributable to common equity holders of the parent business
Weighted average number of common shares outstanding during the period
Earnings per share are the same as any profitability or market prospect ratio. Higher earnings per share
are always better than a lower ratio because this means the company is more profitable and the
company has more profits to distribute to its shareholders. Higher earnings per share ratio often make
the stock price of a company rise.
Basic EPS (Rs.)
Tech Mahindra Infosys
P/L
P/L Wtg. avg. No. Wtg. avg. No.
Tech attributable
Year attributable to of shares of shares Infosys
Mahindra to equity
equity holders outstanding outstanding
holders
2011 696.70 12.60 55.29 8470.00 57.40 147.56
2012 460.60 12.75 36.13 9116.00 57.40 158.82
2013 652.50 12.81 50.94 10194.00 57.20 178.22
2014 2685.50 23.35 115.01 12164.00 114.80 105.96
2015 2256.20 96.08 23.48 15786.00 229.60 68.75
Basic EPS
200.00
150.00 Tech
Mahindra
100.00 Infosys
50.00
0.00
2011 2012 2013 2014 2015
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Findings:
Tech Mahindra EPS was highest in 2014 and reduced in 2015 but it’s satisfactory. For Infosys EPS
was highest in 2013 and for rest years it’s was satisfactory.
Infosys EPS is more than Tech Mahindra. Infosys is more profitable and distribute more profit to
shareholder than Tech Mahindra.
4.1.2 Dilute EPS
Formula:-
Dilute EPS = (P/L attributable to common equity holders + After-tax interest on

convertible debt + Convertible preferred dividends)
(Weighted average number of common shares outstanding during the
period + All dilutive potential common stock)
Diluted earnings per share are the profit for a reporting period per share of common stock
outstanding during that period. The measurement includes the number of shares that would have
been outstanding during the period if the company had issued common shares for all potential
dilutive common stock outstanding during the period.
The reason for stating diluted earnings per share is so that investors can determine how the
earnings per share attributable to them could be reduced if a variety of convertible instruments
were to be converted to stock. Thus, this measurement presents the worst case for earnings per
share. Earnings per share information only need to be reported by publicly-held businesses.
If a company has more types of stock than common stock in its capital structure, it must present
both basic earnings per share and diluted earnings per share information; this presentation must
be for both income from continuing operations and net income. This information is reported on the
company’s income statement.
To calculate diluted earnings per share, include the effects of all dilutive potential common shares.
This means that you increase the number of shares outstanding by the weighted average number of
additional common shares that would have been outstanding if the company had converted all
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dilutive potential common stock to common stock. This dilution may affect the profit or loss in the
numerator of the dilutive earnings per share calculation.
Diluted EPS (Rs.)

Profit/loss
Profit/loss
attributable Weighted
attributable to
Weighted avg. to equity avg. No. of
equity holders
No. of shares holders + shares
+ After-tax
outstanding After-tax outstanding
interest on Tech
Year during the interest on during the Infosys
convertible Mahindra
period + All convertible period + All
debt +
dilutive debt + dilutive
Convertible
potential stock Convertible potential
preferred
preferred stock
dividends
dividends
2011 696.70 12.40 56.19 8470.00 57.14 148.23
2012 460.60 13.21 34.86 9116.00 57.42 158.75
2013 652.50 13.32 48.99 10194.00 57.14 178.40
2014 2685.50 23.89 112.41 12164.00 114.28 106.44
2015 2256.20 98.28 22.96 15786.00 229.69 68.73
Dilute EPS
200.00
150.00
100.00 Tech Mahindra

Infosys
50.00
0.00
2011 2012 2013 2014 2015
Findings:
Tech Mahindra Dilute EPS was highest in 2014 and reduced in 2015 but it’s satisfactory. For Infosys
Dilute EPS was highest 2013 and for rest years it’s satisfactory.
Infosys Dilute EPS is more than Tech Mahindra. Infosys is more profitable and distribute more profit to
shareholder than Tech Mahindra.
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4.1.3 Cash EPS
Formula:-
Cash EPS = Operating Cash Flow

Diluted Shares Outstanding
Cash Earnings Per Share (EPS) considers cash flow generated by a company on per share basis. It is
different from earnings per share, which looks at net income or profit of a company on per share
basis. Cash EPS is calculated by adding all the non-cash transactions like depreciation, amortization,
deferred tax and intangibles like royalty to net income of the company and then divide it by total
number of shares. A non-cash expense is an expense that is reported in the income statement, but
there was no actual cash outflow from the company during the period.
Cash EPS shows a company’s ability to clear off debt, pay dividends and perform other transactions.
Higher cash earnings per share means that company has posted strong annual earnings growth
over the years and vice-versa.
Cash EPS (Rs.)

Current Tech Current Current
Year Current Assets Infosys
Liabiliteis Mahindra Assets Liabiliteis
2011 4392.00 12.60 348.57 4392.00 57.40 76.52
2012 844.00 12.75 66.20 844.00 57.40 14.70
2013 3698.00 12.81 288.68 3698.00 57.20 64.65
2014 3622.00 23.35 155.12 3622.00 114.80 31.55
2015 1454.00 96.08 15.13 1454.00 229.60 6.33
Cash EPS (Rs.)

400.00
Tech
300.00 Mahindra
200.00
Infosys
100.00
0.00
2011 2012 2013 2014 2015
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Findings:
Cash EPS for Tech Mahindra was highest in 2013 and decreased subsequently and was lowest in
2015 and for Infosys Cash EPS is lowest in 2015.
Cash EPS for Tech Mahindra is higher than Infosys which implies Tech Mahindra will not struggle
to clear off debt, pay dividends and perform other transactions.
4.1.4 Book Value/Share
Formula:-
Book Value/Share = Total Shareholder Equity – Preferred Equity

Total Outsanding Shares
Book value per share compares the amount of stockholders' equity to the number of shares
outstanding. If the market value per share is lower than the book value per share, then the stock
price may be undervalued. Thus, this measure is a possible indicator of the value of a company's
stock; it may be factored into a general investigation of what the market price of a share should be,
though other factors concerning cash flows, product sales, and so forth should also be considered.
The measurement is rarely used internally; instead, it is used by investors who are evaluating the
price of a company's stock.
If book value per share is calculated with just common stock in the denominator, then it results in a
measure of the amount that a common shareholder would receive upon liquidation of the company.
Book Value (Rs.)

Total Total
Shareholder Total Shareholder Total
Tech
Year Equity – Outsanding Equity – Outsanding Infosys
Mahindra
Preferred Shares Preferred Shares
Equity Equity
2011 3384.00 12.60 268.57 29757.00 57.40 518.41
2012 3443.20 12.75 270.05 36059.00 57.40 628.21
2013 4182.50 12.81 326.50 42092.00 57.20 735.87
2014 8588.60 23.35 367.82 48068.00 114.80 418.71
2015 11255.80 96.08 117.15 57157.00 229.60 248.94
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Book Value
800.00
700.00 Tech
600.00 Mahindra
500.00
400.00 Infosys
300.00
200.00
100.00
0.00
2011 2012 2013 2014 2015
Findings:
Tech Mahindra book value was highest in 2014 and decreased in 2015 where as for Infosys it was
highest in 2013 and subsequently decreased.
Tech Mahindra’s book value per share is less than Infosys which implies less investment and less amount
is recovered during liquidation.
4.1.5 Dividend per Share
Formula:-
Dividend per Share = Dividends Paid

No. of Shares
Dividends per share (DPS) is an accounting ratio used to evaluate the total number of dividends
declared for each share of issued stock. The issued stock taken into account is common stock.
Declared dividends are the portion of the company’s profit that is to be paid to the shareholder.
However, declared dividends are not the equivalent of paid dividends. The amount that is not paid
to the shareholders is considered retained earnings. So, in a nutshell, dividends per share is
important because it shows returns to the shareholders.
Dividends per share shows the percentage of the profit earned by a public company that is to be
given to the shareholders. This amount is important to both the shareholders and investors.
Shareholders care about this figure because dividends are one way they can gain a financial return
after buying shares in a company. Investors use this ratio as one method of analyzing the financial
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capabilities of a company. Dividends per share only accounts for dividends that are to be
distributed regularly, rather than one-time payments to shareholders.
When the DPS decreases, it shows that a company may not have the best financial health. As a
result, some investors might reduce their investment in the company. For a public limited company,
a drastic reduction in investment can be damaging to the long term prospects of the company.
When DPS increases on an annual basis, the financial health of a company is considered to be good.
Investors love to see this, of course, because it shows that the company has some solid growth
strategies. Investors are much more likely to keep their investment in that scenario.
Dividend / Share(Rs.)
Tech Dividend No. of
Year Dividend Paid No. of Shares Infosys
Mahindra Paid Shares
2011 51.00 12.60 4.05 2699.00 57.40 47.02
2012 51.40 12.75 4.03 2412.00 57.40 42.02
2013 64.10 12.81 5.00 3618.00 57.20 63.25
2014 467.00 23.35 20.00 5111.00 114.80 44.52
2015 579.30 96.08 6.03 5570.00 229.60 24.26
Dividend / Share (Rs.)

70.00
60.00 Tech
50.00 Mahindra
40.00
30.00 Infosys
20.00
10.00
0.00
2011 2012 2013 2014 2015
Findings:
This ratio shows the actual receives to the shareholder. Tech Mahindra DPS was high in 2014 where as
for Infosys it was high in 2013 and it’s satisfactory in 2015.
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DPS is higher for Infosys as compared with Tech Mahindra which implies more return on share for
Infosys.
4.2 PROFITABILITY RATIO

4.2.1 PBITA Margin
Formula:-
PBDIT Margin = Revenue – Expenses (Excluding Taxes, interest, Depreciation & Amortization)
Total Revenue
It's a profitability calculation that measures how profitable a company is before paying interest to
creditors, taxes to the government, and taking paper expenses like depreciation and amortization.
This is not a financial ratio. Instead, it’s a calculation of profitability that is measured in dollars
rather than percentages.
Like all profitability measurements, higher numbers are always preferred over lower numbers
because higher numbers indicate the company is more profitable. Thus, an earnings before ITDA of
$10,000 is better than one of $5,000. This means the first company still has $10,000 left over after
all of its operating expenses have been paid to cover the interest and taxes for the year. Since the
earnings before ITDA only computes profits in raw dollar amounts, it is often difficult for investors
and creditors to use this metric to compare different sized companies across an industry.
PBDIT Margin (%)

Revenue – Revenue –
Expenses Expenses
(Excluding Tech (Excluding Total
Year Total Revenue Infosys
Taxes, interest, Mahindra Taxes, interest, Revenue
Depreciation & Depreciation &
Amortization) Amortization)
2011 1055.60 5092.10 20.73% 11890.00 33083.00 35.94%

2012 899.90 5310.70 16.95% 13230.00 38980.00 33.94%
2013 1083.20 5906.70 18.34% 15103.00 46917.00 32.19%
2014 3631.60 16365.40 22.19% 17299.00 50637.00 34.16%
2015 3351.10 19287.20 17.37% 18772.00 56992.00 32.94%
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PBITA Margin
40.00%
30.00% Tech
Mahindra
20.00%
Infosys
10.00%
0.00%
2011 2012 2013 2014 2015
Findings:
Tech Mahindra PBITA has reduced in 2015 which implies profitability of company before paying interest
and paper expenses has reduced whereas Infosys has maintained the PBITA across the years.
Infosys is more maintaining the profitability than Tech Mahindra.
4.2.2 PBIT Margin (%)
Formula:-
PBIT Margin = Revenue – Operating Expenses (Net Income + Interest + Taxes)

Total Revenue
This indicator gives information on a company's earnings ability. Increase in EBIT is mainly due to
growth of net revenue, good cost control and strong productivity, Decrease in EBIT margin largely
results from reduction in revenue and higher operating costs. EBIT margin is most useful when
compared against other companies in the same industry. The higher EBIT margin reflects the more
efficient cost management or the more profitable business. If no positive EBIT margin can be
generated over a longer period, then the company should rethink the business model. EBIT margin,
however, varies greatly between industries, as factors both net revenue and EBIT directly impact
on the EBIT margin. E.g. retailers have quite a small EBIT margin as they rely on small margins
accompanied with high sales volume. Other industries would have small sales volume but expect to
offset that with higher EBIT margins.
PBIT Margin (%)
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Tech Mahindra Infosys 0 0
Revenue – Revenue –
Operating Operating
Expenses (Net Tech Expenses Total
Year Total Revenue Infosys
Income + Mahindra (Net Income Revenue
Interest + + Interest +
Taxes) Taxes)
2011 806.00 5092.10 15.83% 11096.00 33083.00 33.54%
2012 646.90 5310.70 12.18% 12274.00 38980.00 31.49%
2013 817.20 5906.70 13.84% 14002.00 46917.00 29.84%
2014 3117.80 16365.40 19.05% 16386.00 50637.00 32.36%
2015 2869.20 19287.20 14.88% 17657.00 56992.00 30.98%
PBIT Margin
40.00%
35.00%
Tech
30.00% Mahindra
25.00%
20.00%
Infosys
15.00%
10.00%
5.00%
0.00%
2011 2012 2013 2014 2015
Findings:
Tech Mahindra PBIT has reduced in 2015 which implies company’s net revenue and profitability has
been reduced whereas Infosys has maintained the PBIT year on year.
Infosys is having more net revenue, profitability and good control on operating than Tech Mahindra.
4.2.3 PBT Margin (%)
Formula:-
PBT Margin = Net Profit

Total Revenue
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EBT margin shows company’s earnings before tax as a percentage of net sales (revenues). This ratio
is very close to the net income margin as it also shows “Bottom Line Profit”, except for the fact that
the deducted income taxes are not excluded, and that’s why this ratio is sometimes called pretax
profit margin.
PBT Margin (%)

Tech Total
Year Net Profit Total Revenue Net Profit Infosys
Mahindra Revenue
2011 806.00 4965.50 16.23% 11096.00 31254.00 35.50%
2012 646.90 5243.00 12.34% 12274.00 36765.00 33.39%
2013 817.20 6001.90 13.62% 14002.00 44341.00 31.58%
2014 3117.80 16295.10 19.13% 16386.00 47300.00 34.64%
2015 2869.20 19162.70 14.97% 17657.00 53983.00 32.71%
PBT Margin
40.00%
30.00% Tech
Mahindra
20.00%
Infosys
10.00%
0.00%
2011 2012 2013 2014 2015
Findings:
Tech Mahindra PBIT has reduced in 2015 which implies bottom line profit of company has reduced
whereas Infosys has maintained the PBIT across the years.
Infosys bottom line profit is more than Tech Mahindra.
4.2.4 Return on Net Worth / Equity (%)
Formula:-
Return on Net worth / Equity = Net Income

Shareholder’s Equity
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Return on equity measures how efficiently a firm can use the money from shareholders to generate
profits and grow the company. Unlike other return on investment ratios, ROE is a profitability ratio
from the investor's point of view. In other words, this ratio calculates how much money is made
based on the investors' investment in the company, not the company's investment in assets or
something else.
That being said, investors want to see a high return on equity ratio because this indicates that the
company is using its investors' funds effectively. Higher ratios are almost always better than lower
ratios. Since every industry has different levels of investors and income, ROE can't be used to
compare companies outside of their industries very effectively.
Many investors also choose to calculate the return on equity at the beginning of a period and the
end of a period to see the change in return. This helps track a company's progress and ability to
maintain a positive earnings trend.
Return on Networth / Equity (%)

Shareholder’s Tech Shareholder’s
Year Net Profit Net Profit Infosys
Equity Mahindra Equity
2011 696.70 126.00 5.53 8470.00 287.00 29.51
2012 460.60 127.50 3.61 9116.00 287.00 31.76
2013 652.50 128.10 5.09 10194.00 286.00 35.64
2014 2685.50 233.50 11.50 12164.00 574.00 21.19
2015 2256.20 480.40 4.70 15786.00 1148.00 13.75
Return on Networth / Equity

40.00
30.00
20.00 Tech
Mahindra
10.00 Infosys
0.00
2011 2012 2013 2014 2015
Findings:
26
Returns of Tech Mahindra were highest in 2014 and least in 2012. For Infosys ROE was highest in
2013 and reduced significantly in 2015 and 2015.
ROE of Infosys is much better than Tech Mahindra which implies relative performance and strength of
Infosys in attractive as compared with Tech Mahindra for future investment.
4.2.5 Return on Capital Employed (%)
Formula:-
Return on Capital Employed = Net Operating Profit

Total Assets – Current Liabilities
The return on capital employed ratio shows how much profit each dollar of employed capital
generates. Obviously, a higher ratio would be more favorable because it means that more dollars of
profits are generated by each dollar of capital employed.
Investors are interested in the ratio to see how efficiently a company uses its capital employed as
well as its long-term financing strategies. Companies' returns should always be high than the rate at
which they are borrowing to fund the assets. If companies borrow at 10 percent and can only
achieve a return of 5 percent, they are losing money.
Just like the return on assets ratio, a company's amount of assets can either hinder or help them
achieve a high return. In other words, a company that has a small dollar amount of assets but a
large amount of profits will have a higher return than a company with twice as many assets and the
same profits.
Return on Capital Employed (%)

Total Assets – Net Total Assets
Net Operating Tech
Year Current Operating – Current Infosys
Profit Mahindra
Liabilities Profit Liabilities
2011 806.00 4550.90 17.71% 11096.00 29757.00 37.29%
2012 646.90 4644.70 13.93% 12274.00 36235.00 33.87%
2013 817.20 4879.00 16.75% 14002.00 28981.00 48.31%
2014 3117.80 10519.90 29.64% 16386.00 48098.00 34.07%
2015 2869.20 12815.80 22.39% 17657.00 57230.00 30.85%
27
Return on Capital Employed
60.00%
Tech
40.00% Mahindra
20.00% Infosys
0.00%
2011 2012 2013 2014 2015
Findings:
Tech Mahindra Return on Capital employed(RoCE) was highest in 2014 and reduced in 2015 which
implies less return on the dollar employed whereas Infosys RoCE was highest in 2013 and decreased
subsequently.
Infosys RoCE is more than Tech Mahindra.
4.2.6 Return on Asset
Formula:-
Return on Assets = Net Income

Average Total Assets
The return on assets ratio measures how effectively a company can earn a return on its investment
in assets. In other words, ROA shows how efficiently a company can convert the money used to
purchase assets into net income or profits.
Since all assets are either funded by equity or debt, some investors try to disregard the costs of
acquiring the assets in the return calculation by adding back interest expense in the formula.
It only makes sense that a higher ratio is more favorable to investors because it shows that the
company is more effectively managing its assets to produce greater amounts of net income. A
positive ROA ratio usually indicates an upward profit trend as well. ROA is most useful for
comparing companies in the same industry as different industries use assets differently. For
28
instance, construction companies use large, expensive equipment while software companies use
computers and servers.
Return on Assets (%)

Average Total Tech Average
Year Net Income Net Income Infosys
Assets Mahindra Total Assets
2011 696.70 3040.20 22.92% 8470.00 17907.50 47.30%
2012 460.60 6212.90 7.41% 9116.00 39421.50 23.12%
2013 652.50 6801.95 9.59% 10194.00 47870.00 21.30%
2014 2685.50 10998.85 24.42% 12164.00 57262.50 21.24%
2015 2256.20 15877.85 14.21% 15786.00 67290.00 23.46%
Return on Assets
50.00%
40.00% Tech
Mahindra
30.00%
20.00% Infosys
10.00%
0.00%
2011 2012 2013 2014 2015
Findings:
Tech Mahindra Return on Assets was highest in 2014 and reduced in 2015 which implies less return on
the investment whereas Infosys RoCE was highest in 2011 and remain constant from 2012-15.
Infosys Return on Assets is more than Tech Mahindra.
4.2.7 Total Debt / Equity
Formula:-
Total Debt/Equity = Total Liabilities

Total Equity
29
Each industry has different debt to equity ratio benchmarks, as some industries tend to use more
debt financing than others. A debt ratio of .5 means that there are half as many liabilities than there
is equity. In other words, the assets of the company are funded 2-to-1 by investors to creditors. This
means that investors own 66.6 cents of every dollar of company assets while creditors only own
33.3 cents on the dollar.
A debt to equity ratio of 1 would mean that investors and creditors have an equal stake in the
business assets.
A lower debt to equity ratio usually implies a more financially stable business. Companies with a
higher debt to equity ratio are considered more risky to creditors and investors than companies
with a lower ratio. Unlike equity financing, debt must be repaid to the lender. Since debt financing
also requires debt servicing or regular interest payments, debt can be a far more expensive form of
financing than equity financing. Companies leveraging large amounts of debt might not be able to
make the payments.
Creditors view a higher debt to equity ratio as risky because it shows that the investors haven't
funded the operations as much as creditors have. In other words, investors don't have as much skin
in the game as the creditors do. This could mean that investors don't want to fund the business
operations because the company isn't performing well. Lack of performance might also be the
reason why the company is seeking out extra debt financing.
Total Debt/Equity (X)

Tech Total
Year Total Libilities Total Equity Total Equity Infosys
Mahindra Libilities
2011 640.00 3384.00 18.91% 0.00 29757.00 0.00%
2012 600.00 3443.20 17.43% 0.00 36059.00 0.00%
2013 300.00 4182.50 7.17% 0.00 42092.00 0.00%
2014 5.00 8588.60 0.06% 0.00 48068.00 0.00%
2015 0.00 11255.80 0.00% 0.00 57157.00 0.00%
30
Total Debt/Equity
20.00%
Tech
15.00% Mahindra
10.00%
Infosys
5.00%
0.00%
2011 2012 2013 2014 2015
Findings:
Tech Mahindra has reduced the debt from .18 to 0 and Infosys was having 0 debt in all years.
4.2.8 Asset Turnover Ratio
Formula:-
Asset Turnover Ratio = Net Sales

Avg. Total Assets
This ratio measures how efficiently a firm uses its assets to generate sales, so a higher ratio is
always more favorable. Higher turnover ratios mean the company is using its assets more
efficiently. Lower ratios mean that the company isn't using its assets efficiently and most likely have
management or production problems.
For instance, a ratio of 1 means that the net sales of a company equals the average total assets for
the year. In other words, the company is generating 1 dollar of sales for every dollar invested in
assets.
Like with most ratios, the asset turnover ratio is based on industry standards. Some industries use
assets more efficiently than others. To get a true sense of how well a company's assets are being
used, it must be compared to other companies in its industry.
31
The total asset turnover ratio is a general efficiency ratio that measures how efficiently a company
uses all of its assets. This gives investors and creditors an idea of how a company is managed and
uses its assets to produce products and sales.
Sometimes investors also want to see how companies use more specific assets like fixed assets and
current assets. The fixed asset turnover ratio and the working capital ratio are turnover ratios
similar to the asset turnover ratio that is often used to calculate the efficiency of these asset classes.
Asset Turnover Ratio (%)

Average
Average Tech
Year Net Sales
Mahindra
Net Sales Total Infosys
Total Assets
Assets
2011 5092.10 3040.20 167.49% 33083.00 35815.00 92.37%
2012 5310.70 6212.90 85.48% 38980.00 39421.50 98.88%
2013 5906.70 6801.95 86.84% 46917.00 47870.00 98.01%
2014 16365.40 10998.85 148.79% 50637.00 57262.50 88.43%
2015 19287.20 15877.85 121.47% 56992.00 67290.00 84.70%
Asset Turnover Ratio

200.00%
Tech
150.00% Mahindra
100.00%
Infosys
50.00%
0.00%
2011 2012 2013 2014 2015
Findings:
Tech Mahindra Asset Turnover for 2014 and 2015 is more than 1 which implies company is
generating more sales from the asset invested whereas for Infosys it is less than 1.
Tech Mahindra is better in generating sales as compared with the Infosys.
32
4.3 LIQUIDITY RATIO
4.3.1 Quick Ratio
Formula:-
Quick Ratio = Cash + Cash Equivalents + Short Term Investments + Current Receivables
Current Liabilities
The Quick ratio measures the liquidity of a company by showing its ability to pay off its current
liabilities with quick assets. If a firm has enough quick assets to cover its total current liabilities, the
firm will be able to pay off its obligations without having to sell off any long-term or capital assets.
Since most businesses use their long-term assets to generate revenues, selling off these capital
assets will not only hurt the company it will also show investors that current operations aren’t
making enough profits to pay off current liabilities.
Higher quick ratios are more favorable for companies because it shows there are more quick assets
than current liabilities. A company with a quick ratio of 1 indicates that quick assets equal current
assets. This also shows that the company could pay off its current liabilities without selling any
long-term assets. An acid ratio of 2 shows that the company has twice as many quick assets than
current liabilities.
Quick Ratio (X)

Total CA – Total CA –
Inventory – Inventory –
Prepaid Prepaid
Expenses (Cash Expenses
+ Cash Current Tech (Cash + Cash Current
Year Infosys
Equivalents + Liabilities Mahindra Equivalents + Liabilities
Short Term Short Term
Investment + Investment +
Current Current
receivable) receivable)
2011 1841.20 1529.50 120.38% 29568.00 6058.00 488.08%
2012 1980.90 1700.70 116.48% 32738.00 6793.00 481.94%
2013 2158.50 2379.50 90.71% 39237.00 10256.00 382.58%
2014 9080.40 4219.30 215.21% 42752.00 13715.00 311.72%
2015 9488.90 4200.70 225.89% 46097.00 15537.00 296.69%
33
Quick Ratio
600.00%
500.00% Tech
400.00% Mahindra
300.00%
200.00% Infosys
100.00%
0.00%
2011 2012 2013 2014 2015
Findings:
Tech Mahindra Quick Ratio has been increased in 2015 which implies the liability to pay off the liquidity
has been increased whereas for Infosys ability to pay out liquidity was highest in 2011 and decreases
after that.
Even Infosys quick ratio decreased but is good as compared to Tech Mahindra.
4.3.2 Current Ratio
Formula:-
Current Ratio= Current Assets

Current Liabilities
The current ratio helps investors and creditors understand the liquidity of a company and how
easily that company will be able to pay off its current liabilities. This ratio expresses a firm's current
debt in terms of current assets. So a current ratio of 4 would mean that the company has 4 times
more current assets than current liabilities.
A higher current ratio is always more favorable than a lower current ratio because it shows the
company can more easily make current debt payments.
If a company has to sell of fixed assets to pay for its current liabilities, this usually means the
company isn't making enough from operations to support activities. In other words, the company is
losing money. Sometimes this is the result of poor collections of accounts receivable.
34
The current ratio also sheds light on the overall debt burden of the company. If a company is
weighted down with a current debt, its cash flow will suffer.
Current Ratio (X)

Liabilities Mahindra Assets Liabilities
2011 1841.20 1529.50 1.20 29568.00 6058.00 4.88
2012 1980.90 1700.70 1.16 32738.00 6793.00 4.82
2013 2158.50 2379.50 0.91 39237.00 10256.00 3.83
2014 9080.40 4219.30 2.15 42752.00 13715.00 3.12
2015 9488.90 4200.70 2.26 46097.00 15537.00 2.97
Current Ratio
6.00
5.00 Tech
4.00 Mahindra
3.00
Infosys
2.00
1.00
0.00
2011 2012 2013 2014 2015
Findings:
Tech Mahindra has increased the margin of safety from 1.2 in 2011 to 2.26 in 2015 and maintains
standard of 2:1. Infosys has reduced the margin of safety from 4.88 in 2011 to 2.97 in 2015. 2.97 is also a
good ratio which shows company will not be struggling to meet obligation.
Infosys Current ratio is much healthier than the Tech Mahindra and in last two year Infosys has utilized
current assets properly and maintained more than 2:1.
4.3.3 Inventory Turnover Ratio
Formula:-
Inventory Turnover Ratio = Cost of Goods Sold

Avg. Inventory
35
Inventory turnover is a measure of how efficiently a company can control its merchandise, so it is
important to have a high turn. This shows the company does not overspend by buying too much
inventory and wastes resources by storing non-salable inventory. It also shows that the company
can effectively sell the inventory it buys.
This measurement also shows investors how liquid a company's inventory is. Think about it.
Inventory is one of the biggest assets a retailer reports on its balance sheet. If this inventory can't
be sold, it is worthless to the company. This measurement shows how easily a company can turn its
inventory into cash.
Creditors are particularly interested in this because inventory is often put up as collateral for loans.
Banks want to know that this inventory will be easy to sell.
Inventory turns vary with industry. For instance, the apparel industry will have higher turns than
the exotic car industry.
Inventory Turnover Ratio (X)

Costs of Goods Tech Costs of Avg.

Year Sold
Avg. Inventory
Mahindra Goods Sold Inventory
Infosys
2011 4286.10 3040.20 1.41 21987.00 17907.50 1.23

2012 4663.80 6212.90 0.75 26706.00 39421.50 0.68
2013 5089.50 6801.95 0.75 32915.00 47870.00 0.69
2014 13247.60 10998.85 1.20 34251.00 57262.50 0.60
2015 16418.00 15877.85 1.03 42445.00 67290.00 0.63
Inventory Turnover Ratio

150.00%
Tech
100.00% Mahindra
Infosys
50.00%
0.00%
2011 2012 2013 2014 2015
36
Findings:
Tech Mahindra and Infosys Inventory Turnover were highest in 2011. Infosys ratio reduced to half in
subsequent years where as Tech Mahindra maintained to more than 1 in 2014 and 2015.
Tech Mahindra efficiently uses its inventory and reduced waste inventory as compared to Infosys.
4.3.4 Dividend Payout Ratio
Formula:-
Dividend Payout Ratio = Total Dividend

Net Income
Investors want to see a steady stream of sustainable dividends from a company, the dividend
payout ratio analysis is important. A consistent trend in this ratio is usually more important than a
high or low ratio.
Since it is for companies to declare dividends and increase their ratio for one year, a single high
ratio does not mean that much. Investors are mainly concerned with sustainable trends. For
instance, investors can assume that a company that has a payout ratio of 20 percent for the last ten
years will continue giving 20 percent of its profit to the shareholders.
Conversely, a company that has a downward trend of payouts is alarming to investors. For example,
if a company's ratio has fallen a percentage each year for the last five years might indicate that the
company can no longer afford to pay such high dividends. This could be an indication of poor
operating performance. Generally, more mature and stable companies tend to have a higher ratio
than newer start up companies.
Dividend Payout Ratio (NP) (%)

Tech Total
Year Total Dividend Net Income Net Income Infosys
Mahindra Dividend
2011 51.00 696.70 7.32% 2699.00 8470.00 31.87%
2012 51.40 460.60 11.16% 2412.00 9116.00 26.46%
2013 64.10 652.50 9.82% 3618.00 10194.00 35.49%
2014 467.00 2685.50 17.39% 5111.00 12164.00 42.02%
2015 579.30 2256.20 25.68% 5570.00 15786.00 35.28%
37
Dividend Payout Ratio
50.00%
40.00% Tech
Mahindra
30.00%
20.00% Infosys
10.00%
0.00%
2011 2012 2013 2014 2015
Findings:
Earnings not distributed to shareholders are retained in the business. Tech Mahindra actual
earnings in year 2014 is 115 and dividend paid is 20 only and rest all are plough back in business
and pay out at the year 2011 is very low and high in 2015. For Infosys high in 2013, 105 was
earning and dividend paid was 44.
Payout ratio for Infosys looks attractive then Tech Mahindra.
4.3.5 Earning Retention Ratio
Formula:-
Earnings Retention Ratio= Plowed Back Gross Profit

Total Gross Profit
Earning Retention Ratio is also called as Plowback Ratio. As per definition, Earning Retention
Ratio or Plowback Ratio is the ratio that measures the amount of earnings retained after dividends
have been paid out to the shareholders. The prime idea behind earnings retention ratio is that the
more the company retains the faster it has chances of growing as a business. This is also known as
retention rate or retention ratio. There is always a conflict when it comes to calculation of Earnings
retention ratio, the managers of the company want a higher earnings retention ratio or plowback
ratio, while the shareholders of the company would think otherwise, as the higher the plowback
ratio the uncertain their control over their shares and finances are.
Earnings Retention Ratio (%)

38
Plowed Back Total Gross Tech Plowed Back Total Gross
Year Infosys
Gross Profit Profit Mahindra Gross Profit Profit
2011 645.70 696.70 92.68% 5771.00 8470.00 68.13%
2012 409.20 460.60 88.84% 6704.00 9116.00 73.54%
2013 588.40 652.50 90.18% 6576.00 10194.00 64.51%
2014 2218.50 2685.50 82.61% 7053.00 12164.00 57.98%
2015 1676.90 2256.20 74.32% 10216.00 15786.00 64.72%
Earnings Retention Ratio

100.00%
80.00% Tech
60.00% Mahindra
40.00% Infosys
20.00%
0.00%
2011 2012 2013 2014 2015
Findings:
Tech Mahindra earning retention is lowest in 2015 and for Infosys in 2014 which implies less profit is
plowed back in business for future expansion.
Tech Mahindra is ploughing more profit than Infosys for future expansion.
4.4 VALUATION RATIO

4.4.1 Price /BV Ratio
Formula:-
Price to Book Value = Market Price Per Share

Book Value Per Share
Investors use both of these formats to help determine whether a company is overpriced or
underpriced. For example, a P/B ratio above 1 indicates that the investors are willing to pay more
for the company than its net assets are worth. This could indicate that the company has healthy
future profit projections and the investors are willing to pay a premium for that possibility.
39
If the market book ratio is less than 1, on the other hand, the company’s stock price is selling for
less than their assets are actually worth. This company is undervalued for some reason. Investors
could theoretically buy all of the outstanding shares of the company, liquidate the assets, and earn a
profit because the assets are worth more than the cumulative stock price. Although in reality, this
strategy probably wouldn’t work.
This valuation method is only one that investors use to see if an investment is overpriced. Keep in
mind that this method doesn’t take dividends into consideration. Investors are almost always
willing to pay more for shares that will regularly and reliability issue a dividend. There are many
other factors like this that this basic calculation doesn’t take into account. The real purpose of it is
to give investors a rough idea as to whether the sale price is close to what it should be.
Price/BV (X)
Market
Market Price Book Value Per Tech Book Value
Year Price Per Infosys
Per Share Share Mahindra Per Share
Share
2011 700.00 268.57 2.61 387.00 518.41 0.75
2012 900.00 270.05 3.33 317.00 628.21 0.50
2013 1000.00 326.50 3.06 1344.00 735.87 1.83
2014 2000.00 367.82 5.44 1269.00 418.71 3.03
2015 530.00 117.15 4.52 1627.00 248.94 6.54
Price/BV
8.00
6.00
4.00
Tech
2.00 Mahindra
0.00
2011 2012 2013 2014 2015
Findings:
40
Tech Mahindra Price/BV has increased to 4.52 from 2.61 which implies company is becoming
healthy and future profit projections will be better and the investors are willing to pay a premium
for that whereas Infosys has also increased Price/BV to 6 from 0.75 and becoming healthy.
Infosys have sustainably become healthy and will get more premium from investor than Tech
Mahindra.
4.4.2 Price / Net Operating Revenue
Formula:-
Price/Net Operating Revenue = Gross Income – Operating Expenses
There’s a lot more that goes into evaluating whether a rental property is worth investing in than
this calculation, but this equation gives us good insight into the cash flows of the properties. We
need to take a look at each of the expenses to see how future cash flows will be affected.
For example, assume the first apartment just had a new roof put on and the $20,000 of repairs will
not be there in future years. Now the first option is much more attractive. This is an example of how
this analysis can be manipulated by management. Expenses can be frontloaded or put off to a later
date to make the property look less or more attractive to different investors.
That’s why real estate investors always look at the overall condition of the property and revenue
potential before running this analysis
Price/Net Operating Revenue

Operating Tech Gross Operating
Year Gross Income Infosys
Expenses Mahindra Income Expenses
2011 4965.50 4286.10 1.16 31254.00 21987.00 1.42
2012 5243.00 4663.80 1.12 36765.00 26706.00 1.38
2013 6001.90 5089.50 1.18 44341.00 32915.00 1.35
2014 16295.10 13247.60 1.23 47300.00 34251.00 1.38
2015 19162.70 16418.00 1.17 53983.00 39335.00 1.37
41
Price/Net Operating Revenue
1.50
Tech
1.00 Mahindra
0.50 Infosys
0.00
2011 2012 2013 2014 2015
Findings:
Tech Mahindra Net Operating Revenue decreased in 2015 as compared with 2014 whereas for
Infosys it was stable across years.
Infosys Net Operating revenue are more than Tech Mahindra.
4.4.3 Earning Yield
Formula:-
Earnings Yield = Earnings per share

Market price per share
This indicator is to check how cheap a stock currently is. Unlike a discounted cash flow analysis,
calculating a stock’s current earnings yield requires no estimates into the future.
The earnings yield also allows us to compare stocks versus other assets such as corporate bonds
and Treasury bills. Lately we have been in a low interest environment, so it has been a “no brainer”
to invest in stocks. But there will come a time when interest rates will rise and the interest rate gap
will narrow. Comparing the earnings yield of two companies to see which one is cheaper.
Earnings Yield
Market
Earnings per Market price Tech Earnings per
Year price per Infosys
share per share Mahindra share
share
2011 55.29 700.00 0.08 147.56 700.00 0.21
42
2012 36.13 900.00 0.04 158.82 900.00 0.18
2013 50.94 1000.00 0.05 178.22 1000.00 0.18
2014 115.01 2000.00 0.06 105.96 2000.00 0.05
2015 23.48 530.00 0.04 68.75 530.00 0.13
Earnings Yield
0.25
0.20 Tech
Mahindra
0.15
0.10 Infosys
0.05
0.00
2011 2012 2013 2014 2015
Findings:
Tech Mahindra and Infosys Earning Yield has been reduced which implies for both companies the
earning for investors has been reduced.
Infosys is having more Earnings for Investor as compared with Tech Mahindra.
4.4.4 Absolute Liquid Ratio
Formula:-
Absolute Liquid Asset = Absolute Liquid Asset (Cash & Bank+ Short Term Securities)
Current Liabilities
The reason of computing absolute liquid ratio is to eliminate accounts receivables from the list of
liquid assets because there may be some doubt about their quick collection. This ratio is useful only
when used in conjunction with current ratio and quick ratio. An absolute liquid ratio of 0.5:1 is
considered ideal for most of the companies.
This ratio is also known as Super Quick Ratio or cash position ratio. This ratio establishes a
relationship between absolute liquid assets and current liabilities, There are two components of
this ratio, which are as under:
(a) Absolute liquid assets, which mean marketable securities, cash in hand and bank balance.
43
(b) Current liabilities
This ratio is used to examine absolute liquid position of the firm. If this ratio is 1:1 it indicates that
the firm has enough cash to pay to its creditors. Secondly, it‘s also shows that the firm is not paying
attention towards credit purchases and avoids the use of short-term loan from bank.
Absolute Liquid Asset

Absolute
Absolute Liquid
Liquid Asset
Asset (Cash &
Current Tech (Cash & Current
Year Bank+ Short Infosys
Liabilities Mahindra Bank+ Short Liabilities
Term
Term
Securities)
Securities)
2011 876.30 1529.50 0.57 22651.00 6058.00 3.74
2012 617.30 1700.70 0.36 22576.00 6793.00 3.32
2013 602.10 2379.50 0.25 26760.00 10256.00 2.61
2014 4174.30 4219.30 0.99 30953.00 13715.00 2.26
2015 3564.70 4200.70 0.85 36297.00 15537.00 2.34
Absolute Liquid Asset

4.00
Tech
3.00 Mahindra
2.00
Infosys
1.00
0.00
2011 2012 2013 2014 2015
Findings:
Tech Mahindra Absolute liquid ratio is less than 1 which implies it have less quick assets to pay off the
liabilities where for Infosys it more than 2 which means more quick assets to pay off the liabilities.
Infosys is healthier in quick assets than Tech Mahindra.
4.4.5 Proprietary Ratio
Formula:-
44
Proprietary Ratio = Shareholder’s Equity
Total Tangible Assets
The proprietary ratio (also known as the equity ratio) is the proportion of shareholders' equity to
total assets, and as such provides a rough estimate of the amount of capitalization currently used to
support a business. If the ratio is high, this indicates that a company has a sufficient amount of
equity to support the functions of the business, and probably has room in its financial structure to
take on additional debt, if necessary. Conversely, a low ratio indicates that a business may be
making use of too much debt or trade payables, rather than equity, to support operations (which
may place the company at risk of bankruptcy).
Thus, the equity ratio is a general indicator of financial stability. It should be used in conjunction
with the net profit ratio and an examination of the statement of cash flows to gain a better overview
of the financial circumstances of a business. These additional measures reveal the ability of a
business to earn a profit and generate cash flows, respectively.
Proprietory Ratio
Total
Shareholder’s Total Tangible Tech Shareholder’s
Year Tangible Infosys
Equity Assest Mahindra Equity
Assest
2011 3384.00 6080.40 0.56 29757.00 35815.00 0.83
2012 3443.20 6345.40 0.54 36059.00 43028.00 0.84
2013 4182.50 7258.50 0.58 42092.00 52712.00 0.80
2014 8588.60 14739.20 0.58 48068.00 61813.00 0.78
2015 11255.80 17016.50 0.66 57157.00 72767.00 0.79
Proprietory Ratio
1.00
0.80 Tech
0.60 Mahindra
0.40 Infosys
0.20
0.00
2011 2012 2013 2014 2015
Findings:
45
Tech Mahindra Proprietary ratio has been increased in 2015 which implies it has increased ability
of room to take more debt whereas for Infosys it has maintained across year.
Infosys ability to take additional debts is more than Tech Mahindra.
4.4.6 Working Capital Turnover Ratio
Formula:-
Working Capital Turnover Ratio = Net sales .

(Beginning working capital + Ending working capital)/2
The working capital turnover ratio measures how well a company is utilizing its working capital to
support a given level of sales. Working capital is current assets minus current liabilities. A high
turnover ratio indicates that management is being extremely efficient in using a firm's short-term
assets and liabilities to support sales. Conversely, a low ratio indicates that a business is investing in
too many accounts receivable and inventory assets to support its sales, which could eventually lead
to an excessive amount of bad debts and obsolete inventory.
Working Capital Turnover Ratio

(Beginning (Beginning
working capital working capital
Tech
Year Net Sales + Ending Net Sales + Ending Infosys
Mahindra
working working
capital)/2 capital)/2
2011 806.00 17361.00 0.05 11096.00 17361.00 0.64
2012 646.90 19979.00 0.03 12274.00 19979.00 0.61
2013 817.20 22251.00 0.04 14002.00 22251.00 0.63
2014 3117.80 25911.00 0.12 16386.00 25911.00 0.63
2015 2869.20 28449.00 0.10 17657.00 28449.00 0.62
Working Capital Turnover Ratio

1.00 Tech
Mahindra
0.50 Infosys
0.00
2011 2012 2013 2014 2015
46
Findings:
Tech Mahindra Working Capital Turnover ratio is very less which implies company may be investing in
too many accounts receivables and inventories to support sales whereas for Infosys it has maintained
across years.
Infosys is better in managing working capital requirement than Tech Mahindra.
4.4.7 Fixed Asset Turnover Ratio
Formula:-
Fixed Asset Turnover Ratio = Net Sales

Fixed Assets – Accumulated Deprecation
A high turn over indicates that assets are being utilized efficiently and large amount of sales are
generated using a small amount of assets. It could also mean that the company has sold off its
equipment and started to outsource its operations. Outsourcing would maintain the same amount
of sales and decrease the investment in equipment at the same time.
A low turn over, on the other hand, indicates that the company isn’t using its assets to their fullest
extent. This could be due to a variety of factors. For example, they might be producing products that
no one wants to buy. Also, they might have overestimated the demand for their product and
overinvested in machines to produce the products. It might also be low because of manufacturing
problems like a bottleneck in the value chain that held up production during the year and resulted
in fewer than anticipated sales.
Keep in mind that a high or low ratio doesn’t always have a direct correlation with performance.
There are a few outside factors that can also contribute to this measurement.
Accelerated depreciation is one of the main factors. Remember we always use the net PPL by
subtracting the depreciation from gross PPL. If a company uses an accelerated depreciation method
like double declining depreciation, the book value of their equipment will be artificially low making
their performance look a lot better than it actually is.
Similarly, if a company doesn’t keep reinvesting in new equipment, this metric will continue to rise
year over year because the accumulated depreciation balance keeps increasing and reducing the
47
denominator. Thus, if the company’s PPL are fully depreciated, their ratio will be equal to their
sales for the period. Investors and creditors have to be conscious of this fact when evaluating how
well the company is actually performing.
Fixed Asset Turnover Ratio

Fixed Assets – Fixed Assets –

Tech
Year Net Sales Accumulated Net Sales Accumulated Infosys
Mahindra
Deprecation Deprecation
2011 4965.50 5942.10 0.84 31254.00 35021.00 0.89

2012 5243.00 6194.90 0.85 36765.00 42072.00 0.87
2013 6001.90 7101.50 0.85 44341.00 51611.00 0.86
2014 16295.10 14312.200 1.14 47300.00 60900.00 0.78
2015 19162.70 16543.20 1.16 53983.00 71652.00 0.75
Fixed Asset Turnover Ratio

1.40
1.20 Tech
1.00 Mahindra
0.80
0.60 Infosys
0.40
0.20
0.00
2011 2012 2013 2014 2015
Findings:
Tech Mahindra’s fixed asset turnover ratio has been increased which implies that the firms utilization of
fixed assets is increased. Infosys fixed asset turnover ratio has been decreased in 2014 and 2015 which
implies that firm is not utilizing fixed assets properly.
Tech Mahindra utilizes its fixed asset appropriately as compared to Infosys.
4.4.8 Capital Turnover Ratio
Formula:-
48
Capital Turnover Ratio = Net Sales
Capital Employed
A ratio of how effectively a publicly-traded company manages the capital invested in it to produce
revenues. It is calculated by taking the total of the company's annual sales and dividing it by the
average stockholder equity, which is the average amount of money invested in the company. A high
ratio indicates that the company is using its capital well, while a low ratio indicates the opposite. It
is also called equity turnover.
A measure indicating how effectively investment capital is used to produce revenues. Capital
turnover is expressed as a ratio of annual sales to invested capital.
Capital Turnover Ratio

Capital Tech Capital
Year Net Sales Net Sales Infosys
Employed Mahindra Employed
2011 4965.50 4286.10 1.16 31254.00 21987.00 1.42
2012 5243.00 4663.80 1.12 36765.00 26706.00 1.38
2013 6001.90 5089.50 1.18 44341.00 32915.00 1.35
2014 16295.10 13247.60 1.23 47300.00 34251.00 1.38
2015 19162.70 16418.00 1.17 53983.00 39335.00 1.37
Capital Turnover Ratio

1.50
Tech
1.00 Mahindra
0.50 Infosys
0.00
2011 2012 2013 2014 2015
Findings:
Tech Mahindra and Infosys have maintained the Capital Turnover ratio which implies both companies
are doing well to manage the capital investment to generate Revenue.
Infosys capital investment management is much better than Tech Mahindra.
49
4.4.9 Current Assets to Fixed Asset Ratio
Formula:-
Current Asset to Fixed Asset Ratio = Fixed Asset

Current Asset
Current assets are increased due to the increase in the sundry debtors and the net fixed assets of
the firm are decreased due to the charge of depreciation and there is no major increment in the
fixed assets. The increment in current assets and the decrease in fixed assets resulted an increase in
the ratio compared with the previous year
Current Asset to Fixed Asset Ratio

Tech Current
Year Fixed Asset Current Asset Fixed Asset Infosys
Mahindra Asset
2011 1841.20 660.80 2.79 29568.00 4649.00 6.36
2012 1980.90 815.30 2.43 32738.00 5588.00 5.86
2013 2158.50 748.50 2.88 39237.00 6686.00 5.87
2014 9080.40 2097.60 4.33 42752.00 8116.00 5.27
2015 9488.90 2532.10 3.75 46097.00 9182.00 5.02
Current Asset to Fixed Asset Ratio

8.00
Tech
6.00 Mahindra
4.00
Infosys
2.00
0.00
2011 2012 2013 2014 2015
Findings:
Tech Mahindra CA to FA has been reduced which implies company is following conservative policy
to finance its short term capital requirement where as Infosys CA to FA ratio is maintained.
Infosys follows more conservative policy to finance short term capital requirement than Tech
Mahindra.
50
4.4.10 Net Profit Ratio
Formula:-
Net Profit Ratio = Net Profit

Net Sales
The net profit percentage is the ratio of after-tax profits to net sales. It reveals the remaining profit
after all costs of production, administration, and financing have been deducted from sales, and
income taxes recognized. As such, it is one of the best measures of the overall results of a firm,
especially when combined with an evaluation of how well it is using its working capital. The
measure is commonly reported on a trend line, to judge performance over time. It is also used to
compare the results of a business with its competitors.
Net profit is not an indicator of cash flows, since net profit incorporates a number of non-cash
expenses, such as accrued expenses, amortization, and depreciation.
The formula for the net profit ratio is to divide net profit by net sales, and then multiply by 100.
Net Profit Ratio

Tech
Year Net Profit Net Sales Net Profit Net Sales Infosys
Mahindra
2011 696.70 4965.50 0.14 8470.00 31254.00 0.27
2012 460.60 5243.00 0.09 9116.00 36765.00 0.25
2013 652.50 6001.90 0.11 10194.00 44341.00 0.23
2014 2685.50 16295.10 0.16 12164.00 47300.00 0.26
2015 2256.20 19162.70 0.12 15786.00 53983.00 0.29
Net Profit Ratio

0.40
Tech
0.30 Mahindra
0.20
Infosys
0.10
0.00
2011 2012 2013 2014 2015
51
Findings:
Tech Mahindra net Profit was highest in 2014 which indicates that firm got more sales for attaining
more profit but it decreased in 2015. Infosys Net profit is constant across all years and was highest in
2015.
Infosys is having more net profit as compared to Tech Mahindra.
4.4.11 Operating Ratio
Formula:-
Operating Ratio = Production expenses + Administrative expenses

Net sales
The operating ratio compares production and administrative expenses to net sales. The ratio
reveals the cost per sales dollar of operating a business. A lower operating ratio is a good indicator
of operational efficiency, especially when the ratio is low in comparison to the same ratio for
competitors and benchmark firms.
The operating ratio is only useful for seeing if the core business is able to generate a profit. Since
several potentially significant expenses are not included, it is not a good indicator of the overall
performance of a business, and so can be misleading when used without any other performance
metrics. For example, a company may be highly leveraged and must therefore make massive
interest payments that are not considered part of the operating ratio.
To calculate the operating ratio, add together all production costs (i.e., the cost of goods sold) and
administrative expenses (which includes general, administrative, and selling expenses) and divide
by net sales (which is gross sales, less sales discounts, returns, and allowances). The measure
excludes financing costs, non-operating expenses, and taxes.
Operating Ratio
Production Production
expenses + Tech expenses +
Year Net Sales Net Sales Infosys
Administrative Mahindra Administrative
expenses expenses
2011 806.00 4965.50 0.16 11096.00 31254.00 0.36
2012 646.90 5243.00 0.12 12274.00 36765.00 0.33
52
2013 817.20 6001.90 0.14 14002.00 44341.00 0.32
2014 3117.80 16295.10 0.19 16386.00 47300.00 0.35
2015 2869.20 19162.70 0.15 17657.00 53983.00 0.33
Operating Ratio
0.40
Tech
0.30 Mahindra
0.20
Infosys
0.10
0.00
2011 2012 2013 2014 2015
Findings:
Tech Mahindra operating profit was highest in 2014 and decreased in 2015. Infosys Operating
profit is constant and slightly decreased in 2015.
Infosys can pay more dividends and create reserves as compared to Tech Mahindra.
4.4.12 Return on Total Asset Ratio
Formula:-
Return on Total Assets Ratio = Net Income

Avg. Total Assets
The return on assets ratio measures how effectively a company can earn a return on its investment
in assets. In other words, ROA shows how efficiently a company can convert the money used to
purchase assets into net income or profits.
Since all assets are either funded by equity or debt, some investors try to disregard the costs of
acquiring the assets in the return calculation by adding back interest expense in the formula.
It only makes sense that a higher ratio is more favorable to investors because it shows that the
company is more effectively managing its assets to produce greater amounts of net income. A
positive ROA ratio usually indicates an upward profit trend as well. ROA is most useful for
53
comparing companies in the same industry as different industries use assets differently. For
instance, construction companies use large, expensive equipment while software companies use
computers and servers.
Return on Total Assets Ratio

Average Total Tech Average
Year Net Income Net Income Infosys
Assets Mahindra Total Assets
2011 4965.50 3040.20 1.63 31254.00 17907.50 1.75
2012 5243.00 6212.90 0.84 36765.00 39421.50 0.93
2013 6001.90 6801.95 0.88 44341.00 47870.00 0.93
2014 16295.10 10998.85 1.48 47300.00 57262.50 0.83
2015 19162.70 15877.85 1.21 53983.00 67290.00 0.80
Return on Total Assets Ratio

2.00
Tech
1.50 Mahindra
1.00
Infosys
0.50
0.00
2011 2012 2013 2014 2015
Findings:
Total Assets for the Tech Mahindra was decreased in 2012 and 2013 but it maintain above 1 in 2014 and
2015 and it implies that the firm generate a sales more than one for one rupee investment on total
assets. For Infosys it constantly decreased to 0.80 which shows Infosys is generating sales less than one
for rupee invested.
Return on Total assets of Tech Mahindra is healthier than Infosys.
4.4.13 Reserves & Surplus to Capital Ratio
Formula:-
Reserves & Surplus to Capital = Reserves and Surplus

Total Share Capital
54
Reserves & Surplus to Capital Ratio
Reserves and Tech Reserves Share
Year Share Capital Infosys
Surplus Mahindra and Surplus Capital
2011 10775.40 126.00 85.52 56009.00 287.00 195.15
2012 3315.70 127.50 26.01 35772.00 287.00 124.64
2013 4054.40 128.10 31.65 41806.00 286.00 146.17
2014 8355.10 233.50 35.78 47494.00 574.00 82.74
2015 10775.40 480.40 22.43 56009.00 1148.00 48.79
Reserves & Surplus to Capital Ratio

250.00
Tech
200.00
Mahindra
150.00
100.00 Infosys
50.00
0.00
2011 2012 2013 2014 2015
Findings:
Tech Mahindra Reserve and Surplus to capital ratio has been decreased from 85.52 to 22.43 which
implies company has followed conservative dividend policy whereas for Infosys it has been decreased
from 195 to 48.
Infosys’s is more conservative in dividend policy then Tech Mahindra.
4.4.14 Price Earning P/E Ratio
Formula:-
Price Earning P/E Ratio = Market Value Price per Share

Earnings per share
The price to earnings ratio indicates the expected price of a share based on its earnings. As a
company's earnings per share being to rise, so does their market value per share. A company with a
high P/E ratio usually indicated positive future performance and investors are willing to pay more
for this company's shares.
55
A company with a lower ratio, on the other hand, is usually an indication of poor current and future
performance. This could prove to be a poor investment.
In general a higher ratio means that investors anticipate higher performance and growth in the
future. It also means that companies with losses have poor PE ratios.
An important thing to remember is that this ratio is only useful in comparing like companies in the
same industry. Since this ratio is based on the earnings per share calculation, management can
easily manipulate it with specific accounting techniques.
Price Earning P/E Ratio

Market
Market Value Earning Per Tech Earning Per
Year Value Price Infosys
Price per Share Share Mahindra Share
per Share
2011 700.00 55.29 12.66 700.00 147.56 4.74
2012 900.00 36.13 24.91 900.00 158.82 5.67
2013 1000.00 50.94 19.63 1000.00 178.22 5.61
2014 2000.00 115.01 17.39 2000.00 105.96 18.88
2015 530.00 23.48 22.57 530.00 68.75 7.71
Price Earning P/E Ratio

30.00
Tech
20.00 Mahindra
10.00 Infosys
0.00
2011 2012 2013 2014 2015
Findings:
Tech Mahindra P/E Ratio has been increased in 2015 from previous year which implies investors
anticipate higher performance and growth wehere as for Infosys it has decrease in 2015 which shows
company is not performing well.
Investors anticipate more growth in future from Tech Mahindra as compared with Infosys.
56
4.4.15 Return on Investment
Formula:-
Return on Investment = Investment Revenue – Investment Cost

Investment Cost
Generally, any positive ROI is considered a good return. This means that the total cost of the
investment was recouped in addition to some profits left over. A negative return on investment
means that the revenues weren’t even enough to cover the total costs. That being said, higher
return rates are always better than lower return rates.
The ROI calculation is extremely versatile and can be used for any investment. Managers can use it
to measure the return on invested capital. Investors can use it to measure the performance of their
stock and individuals can use it to measure their return on assets like their homes.
One thing to remember is that it does not take into consideration the time value of money. For a
simple purchase and sale of stock, this fact doesn’t matter all that much, but it does for calculation
of a fixed asset like a building or house that appreciates over many years. This is why the original
simplistic earnings portion of the formula is usually altered with a present value calculation.
Return on Investment
Investment Investment
Revenue – Investment Tech Revenue – Investment
Year Infosys
Investment Cost Mahindra Investment Cost
Cost Cost
2011 696.70 3384.00 0.21 8470.00 29757.00 0.28
2012 460.60 3443.20 0.13 9116.00 36059.00 0.25
2013 652.50 4182.50 0.16 10194.00 42092.00 0.24
2014 2685.50 8588.60 0.31 12164.00 48068.00 0.25
2015 2256.20 11255.80 0.20 15786.00 57157.00 0.28
57
Return on Investment
0.40
Tech
0.30 Mahindra
0.20
Infosys
0.10
0.00
2011 2012 2013 2014 2015
Findings:
This ratio indicates the firm ability of generating profit per rupee of capital employed. Return to the
shareholder and lenders for Tech Mahindra is high in the year 2014, least in the year 2012 and
satisfactory return is in 2015. Return to the shareholder and lenders for Infosys is high in the year
2015 and satisfactory and maintained.
Infosys ROI is higher than Tech Mahindra.
4.4.16 Net Working Capital
Net working capital is a liquidity calculation that measures a company’s ability to pay off its current
liabilities with current assets. This measurement is important to management, vendors, and general
creditors because it shows the firm’s short-term liquidity as well as management’s ability to use its
assets efficiently.
Much like the working capital ratio, the net working capital formula focuses on current liabilities like
trade debts, accounts payable, and vendor notes that must be repaid in the current year. It only makes
sense the vendors and creditors would like to see how much current assets, assets that are expected to
be converted into cash in the current year, are available to pay for the liabilities that will become due in
the coming 12 months.
If a company can’t meet its current obligations with current assets, it will be forced to use it’s long-term
assets, or income producing assets, to pay off its current obligations. This can lead decreased
operations, sales, and may even be an indicator of more severe organizational and financial problems.
Formula:-
Net Working Capital = Total Current Assets – Total Current Liabilities
58
Net Working Capital
Liabiliteis Mahindra Assets Liabiliteis
2011 1841.20 1529.50 311.70 29568.00 6058.00 23510.00
2012 1980.90 1700.70 280.20 32738.00 6793.00 25945.00
2013 2158.50 2379.50 -221.00 39237.00 10256.00 28981.00
2014 9080.40 4219.30 4861.10 42752.00 13715.00 29037.00
2015 9488.90 4200.70 5288.20 46097.00 15537.00 30560.00
Net Working Capital

40000.00
Tech
30000.00
Mahindra
20000.00
Infosys
10000.00
0.00
-10000.00 2011 2012 2013 2014 2015
Findings:
Tech Mahindra has increased its Net working capital from negative in 2013 to 5k in 2015 which implies
company is able to generate enough from operations to pay for its current obligations with current
assets whereas Infosys has increased its Net Working capital to 30K.
Infosys is having much more working capital than Tech Mahindra which can be utilized to expand
business rapidly without taking on new, additional debt or investors. It can fund its own expansion
through its current growing operations.
59
5 INDUSTRY ANALYSIS
Disruptive technologies, expanding competition and rapidly changing customer

requirements have impacted the IT-BPM sector immensely. Erratic movements in global
commodity prices, inflation, unemployment, digitization, currency movements, changing customer
experience and expectations is changing the face of IT industry. It provides both opportunities and
challenges for the global technology industry.
As per the NASSCOM Strategic Report 2015, the worldwide IT-BPM spend was at US$ 2.3
trillion, growing at 4.6% over 2013. Global sourcing of services grew by 10%. APAC recorded the
highest growth of 5.1%, driven by faster growth in BPM services. While BFSI and Manufacturing
continued to gain momentum, emerging verticals like healthcare, communications and media,
retail, government and utilities were key growth drivers for the IT industry in 2014. India
continued to hold on to its leadership position with ~55% market share in global IT sourcing
services.
The Indian IT-BPM industry continued its growth path embracing global and local
volatilities. Its ability to evolve over time is one of the key reasons for India’s leadership in the IT-
BPM industry. Overall the Industry revenues (exports + domestic) for FY 2015 are expected to
cross ~US$ 146 billion, a growth of 13% in constant currency terms over the previous year as per
NASSCOM. Exports with ~67% share in revenues are expected to touch ~US$ 100 billion, a growth
of 13.1% in constant currency. The Indian IT industry is expected to contribute ~9.5% to India’s
National Gross Domestic Product (GDP). The Central Government’s focus on ‘Make in India’ and
‘Digital India’ has boosted the demand for the domestic IT industry. eCommerce, SMAC and IoT
have also pushed growth for this sector. The government expects investments in digitization and
infrastructure improvement and implementing technology in healthcare, manufacturing and
agricultural sectors is an opportunity of ~ US$ 6 billion to the IT services sector. IT-BPM Industry
has added ~230,000 employees in FY 2015 while the industry employs ~ 3.5 million and is India’s
largest private sector employer directly and ~10 million indirectly. It is also 67 playing a key role in
promoting diversity within the industry by employing ~34% women. The industry has taken lead
in adapting to newer environments over the decades and is now focusing on digitally transforming
customers’ business.
60
The industry has been expanding its service offerings constantly and adding capabilities,
evolving business models and providing high customer satisfaction. Indian remains an excellent
business delivery model for the IT-BPM industry and has become the epicenter of the global
technology industry. It has been growing in size, scale, maturity and domain expertise serving
global customers.
The impact of disruptive trends such as cloud computing, mobility and analytics have transformed
the IT services industry. The adoption of the latest technology trends is focused on changing the
delivery methodology of software applications and therefore converge with traditional IT services
markets. Implementing new technologies in business solutions has become imperative for all
service providers. The future of the Indian IT services sector will largely be impacted by the digital
initiatives of the service providers and requirements of the customers. Indian service providers
through a combination of constant innovation, maintaining quality of services, moving up the
value chain and balancing the digital wave of services with traditional services is expected to grow
at the rate of ~13% in FY 2016 too. India remains a high potential market worldwide, offering
multiple opportunities for unmet needs. Considering the surge in mobile subscriptions, internet
users and ecommerce markets, India is set to leapfrog into the digital world. The last year can be
characterized as the year of rapid transition and transformation leading the industry to expanding
into newer verticals and geographies, attracting new customers and transforming companies from
being technology partners to strategic business partners.
The global economy belied initial optimism and continued to remain patchy in 2014. While the global
output increased by 3.3%, lower than initial expectations, emerging and developing economies
performed better (4.4%) than developed economies (1.8%). GDP growth among developed economies
which are also the largest markets for IT Services was very uneven with the US (2.2%) and UK (3.2%)
performing better than the Euro region (0.8%) and Japan (0.9%). Businesses are adapting, reshaping
their strategies and increasingly using technology to establish a stronger customer-connect, create
competitive differentiation and address new opportunities, though it is taking longer than expected, for
economies to regain their stride. In particular, the adoption of the digital five forces namely mobility,
cloud, big data analytics, social media and artificial intelligence continues apace resulting in reimagined
business models, business processes, systems and workplaces, disrupting the old ways of doing business
in multiple industries and opening up entirely new, often unconventional, revenue sources for those
who have imaginatively leveraged these forces.
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5.1 Outlook
The future of the global technology industry will be shaped by economic forces especially in
the advanced countries. As per the IMF global growth remains moderate, with uneven prospects
across the main countries and regions. It is projected to be 3.5% in 2015 versus 3.4% growth of
2014. Relative to last year, the outlook for advanced economies is improving, while growth in
emerging market and developing economies is projected to be lower, primarily reflecting weaker
prospects for some large emerging market economies and oil-exporting countries. Factors like
lower oil prices, exchange rate swings, and country/region specific factors have affected the global
activity in 2014 and are still shaping the outlook. US is projected to grow ~3% in 2015 with
domestic demand supported by lower oil prices and an accommodative monetary policy. Growth in
Eurozone is showing signs of pick up, supported by lower oil prices, lower interest rates and
weaker euro. Emerging markets may have a sub duded growth rate largely due to a sharp drop in
oil prices and lower prospects from larger emerging markets and the growth rate may drop to
~4% as projected by IMF. Despite this slowdown, emerging markets are still accounted for three
fourth of the global growth on 2014. Overall growth is projected to reach 3.5% to 3.8% in 2015 and
2016.
As the global economy improves and consumer confidence increases, investing in new
technologies, cloud computing, mobility and analytics, and innovation will provide tremendous
opportunities. As per NASSCOM, the Indian IT-BPM industry is expected to reach digital revenues of
US$ 300 billion by 2020. This opportunity accounts for 12 -14% of the industry revenues. By FY
2016, NASSCOM expects the industry to add revenues of US$ 20 billion to the existing revenues of
US$ 146 billion. Export revenues are projected to grow by 12-14% and reach US$ 110-112 billion.
Domestic revenues are expected to grow at a rate of 15 -17% and is expected to reach US$ 55-57
billion during the year.
According to Gartner, one of the world’s leading information technology research and
advisory companies, worldwide IT spending is set to shrink to US$ 3.66 trillion in 2015, a 1.3%
decrease from 2014 mainly due to the rising dollar. It expects spending on data centre systems,
enterprise software markets and telecom services to increase as compared to 2014. IT services is
projected to contract slightly. The Gartner Worldwide IT Spending Forecast is the leading indicator
of major technology trends across the hardware, software, IT services and telecom markets.
62
5.2 Opportunities and Risks
India has continued to retain its first mover advantage and maintained its leadership
position. It remains a high potential market worldwide, offering multiple opportunities for unmet
needs. With the second largest 68 ANNUAL REPORT 2014 - 2015 population in the world, India also
presents a large end user market. It continues to remain an excellent delivery Centre for the IT-BPM
industry. Currency movements and increased operational efficiency have ensured that India’s
position as the most cost competitive market has only become stronger over the past years. It has
established a global delivery chain of ~ 640 ODCs across 78 countries. The variety and scale of offer
in India allows multiple collaborative models to exist. The Indian technology industry is today a
global ‘digital skill hub’. India has ~ 7,000 digital focused firms with start-ups investing in futuristic
technologies. All this together reinforces India’s leadership position in the global sourcing market.
Opportunities of growth on the back of reviving global economies, better offshore IT

spends in most industry verticals, on-going renewals cycles of IT Services spends and adoption of
Digital enterprises (SMAC) being the new imperative across industries. The demand for “value for
money” services, positive outlook on discretionary spends, acceptance of new business models and
platforms, a stronger balance-sheet size post-merger, cross selling opportunities to a wider client
base and availability of qualified and skilled workforce etc. The other technological key growth
driver that is expected to open new opportunities is the Network Services space.
63
6 SUGGESTION AND CONCLUSION
Ratio analyses are immensely helpful in making a comparative of the financial statement for several
years. The company financial position is very secure. It is observed that most of the ratios are as per
the industry standard.
It has been also been observed that in most of the ratio likes EPS, Book Value, Dividend Per share,
PBITA Margin, ROE etc., Infosys Ltd. is doing better than the Tech Mahindra which shows Infosys
Ltd. is much more stable as compared with the Tech Mahindra and in turn can provide more
returns to Shareholders / Investors.
The empirical results reveal that the dividend payout policies of Tech Mahindra and Infosys Ltd. are
significant and strong positively correlated with leverage. Tech Mahindra and Infosys ltd. are
significant and strong positively correlated with provision for Taxation.
The Technology has been changing at the rapid space and it demands to invest in new technologies
like cloud computing, mobility and analytics, Big Data and innovation which will provide
tremendous opportunities. The customer demands are more dynamic which require more
technological work force. The companies need to take the proactive steps in moving Digital and
building the competency for new technologies where there are huge opportunities to grow.
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APPENDIX – A
Balance Sheet for Tech Mahindra
------------------- in Rs. Cr. -------------------

Mar-15 Mar-14 Mar-13 Mar-12 Mar-11
12 mths 12 mths 12 mths 12 mths 12 mths
EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share Capital 480.4 233.5 128.1 127.5 126
Total Share Capital 480.4 233.5 128.1 127.5 126
Reserves and Surplus 10,775.40 8,355.10 4,054.40 3,315.70 3,258.00
Total Reserves and Surplus 10,775.40 8,355.10 4,054.40 3,315.70 3,258.00
Total Shareholders’ Funds 11,255.80 8,588.60 4,182.50 3,443.20 3,384.00
Equity Share Application Money 0.3 1.5 0.3 0 0
Suspense A/C (Net) 1,230.40 1,230.40 0 0 0
NON-CURRENT LIABILITIES
Long Term Borrowings 0 5 300 600 640
Other Long Term Liabilities 0 374.1 227 430.9 393.1
Long Term Provisions 329.3 320.3 169.2 170.6 133.8
Total Non-Current Liabilities 329.3 699.4 696.2 1,201.50 1,166.90
CURRENT LIABILITIES
Short Term Borrowings 0 0 804.5 526.6 542.7
Trade Payables 1,833.10 1,431.90 564.4 468.4 303.4
Other Current Liabilities 890.3 1,698.00 804.6 566.9 532.4
Short Term Provisions 1,477.30 1,089.40 206 138.8 151
Total Current Liabilities 4,200.70 4,219.30 2,379.50 1,700.70 1,529.50
Total Capital And Liabilities 17,016.50 14,739.20 7,258.50 6,345.40 6,080.40
ASSETS
NON-CURRENT ASSETS
Tangible Assets 1,948.50 1,793.90 713.3 646.3 597
65
Intangible Assets 32.5 39.7 6.8 6.3 3
Capital Work-In-Progress 551.1 264 28.4 162.7 60.8
Fixed Assets 2,532.10 2,097.60 748.5 815.3 660.8
Non-Current Investments 3,630.90 2,294.00 3,807.50 3,133.10 3,114.90
Deferred Tax Assets [Net] 288 310.9 94.4 82 53.2
Long Term Loans And Advances 1,076.50 940.6 449.6 334.1 410.3
Other Non-Current Assets 0.1 15.7 0 0 0
Total Non-Current Assets 7,527.60 5,658.80 5,100.00 4,364.50 4,239.20
CURRENT ASSETS
Current Investments 456.8 0 0 120.3 0
Inventories 0 0 0 0.2 0.6
Trade Receivables 4,240.80 3,927.80 1,372.50 1,243.10 964.3
Cash And Cash Equivalents 1,819.50 2,826.30 271.1 138.9 193.8
Short Term Loans And Advances 1,745.20 1,348.00 331 478.4 682.5
Other Current Assets 1,226.60 978.3 183.9 0 0
Total Current Assets 9,488.90 9,080.40 2,158.50 1,980.90 1,841.20
Total Assets 17,016.50 14,739.20 7,258.50 6,345.40 6,080.40
OTHER ADDITIONAL INFORMATION
CONTINGENT LIABILITIES, COMMITMENTS
Contingent Liabilities 6,390.60 2,385.10 558.9 265.8 354.1
CIF VALUE OF IMPORTS
Stores, Spares And Loose Tools 22.3 12.9 0.8 0.9 1.4
Capital Goods 2s09.8 149.8 29.3 63.7 73.6
EXPENDITURE IN FOREIGN EXCHANGE
Expenditure In Foreign Currency 10,365.30 8,134.00 2,470.60 2,083.40 1,761.60
REMITTANCES IN FOREIGN CURRENCIES FOR
DIVIDENDS
Dividend Remittance In Foreign
0.2 0.1 11.9 11.9 13.3
Currency
EARNINGS IN FOREIGN EXCHANGE
FOB Value Of Goods 18,366.90 15,550.20 5,549.70 4,702.80 4,165.70
Other Earnings 18.7 5.8 1.2 4.6 43
66
BONUS DETAILS
Bonus Equity Share Capital 345.55 105.35 105.35 105.35 105.35
NON-CURRENT INVESTMENTS
Non-Current Investments Quoted
44.7 16.2 - - -
Market Value
Non-Current Investments Unquoted
4,188.00 2,967.60 3,851.40 3,177.00 3,158.80
Book Value
CURRENT INVESTMENTS
Current Investments Quoted
- - - - -
Market Value
Current Investments Unquoted
467.7 - - 120.3 -
Book Value
Number of Equity Shares used as
denominator for calculating Dilute
EPS 98.28 23.89 13.32 13.21 12.40
Market Value Per Share 530 2000 1000 900 700
Profit and Loss Account for Tech Mahindra
Profit & Loss account of Tech

------------------- in Rs. Cr. -------------------
Mahindra
15-Mar 14-Mar 13-Mar 12-Mar 11-Mar
INCOME
Revenue From Operations
19,162.70 16,295.10 6,001.90 5,243.00 4,965.50
[Gross]
Revenue From Operations
19,162.70 16,295.10 6,001.90 5,243.00 4,965.50
[Net]
Total Operating Revenues 19,162.70 16,295.10 6,001.90 5,243.00 4,965.50
Other Income 124.5 70.3 -95.2 67.7 126.6
Total Revenue 19,287.20 16,365.40 5,906.70 5,310.70 5,092.10
67
EXPENSES
Operating And Direct Expenses 6,910.70 3,401.20 1,674.30 1,414.80 1,412.00
Employee Benefit Expenses 7,201.20 6,971.50 2,513.80 2,251.00 1,943.80
Finance Costs 8.6 86.8 109 102.5 111.3
Depreciation And Amortisation
473.3 427 157 150.5 138.3
Expenses
Other Expenses 1,824.20 2,361.10 635.4 745 680.7
Total Expenses 16,418.00 13,247.60 5,089.50 4,663.80 4,286.10
Profit/Loss Before
Exceptional, Extra Ordinary 2,869.20 3,117.80 817.2 646.9 806
Items And Tax
Exceptional Items 61.3 120 0 -67.9 0
Profit/Loss Before Tax 2,930.50 3,237.80 817.2 579 806
Tax Expenses-Continued Operations
Current Tax 648.7 843.3 177.1 147.2 140.2
Deferred Tax 25.6 -64.4 -12.4 -28.8 -30.9
Total Tax Expenses 674.3 778.9 164.7 118.4 109.3
Profit/Loss After Tax And
2,256.20 2,458.90 652.5 460.6 696.7
Before Extra-Ordinary Items
Prior Period Items 0 226.6 0 0 0
Profit/Loss From Continuing
2,256.20 2,685.50 652.5 460.6 696.7
Operations
Profit/Loss For The Period 2,256.20 2,685.50 652.5 460.6 696.7
EARNINGS PER SHARE
Basic EPS (Rs.) 24 115 51 36 56
68
Diluted EPS (Rs.) 23 112 49 35 53
VALUE OF IMPORTED AND INDIGENIOUS
RAW MATERIALS
STORES, SPARES AND LOOSE TOOLS
DIVIDEND AND DIVIDEND PERCENTAGE
Equity Share Dividend 579.3 467 64.1 51.4 51
Tax On Dividend 117.8 79.4 10.9 8.3 8.3
Equity Dividend Rate (%) 120 200 50 40 40
Balance Sheet for Infosys
EQUITIES AND LIABILITIES

SHAREHOLDER'S FUNDS
Equity Share Capital 1,148.00 574 286 287 287
Total Share Capital 1,148.00 574 286 287 287
Reserves and Surplus 56,009.00 47,494.00 41,806.00 35,772.00 29,470.00
Total Reserves and Surplus 56,009.00 47,494.00 41,806.00 35,772.00 29,470.00
Total Shareholders Funds 57,157.00 48,068.00 42,092.00 36,059.00 29,757.00
Equity Share Application Money 0.00 0.00 0.00 0.00 0.00
Share Capital Suspense 0.00 0.00 0.00 0.00 0.00
NON-CURRENT LIABILITIES
Long Term Borrowing 0 0 0 0 0
Deferred Tax Liabilities [Net] 0 0 0 56 0
Other Long Term Liabilities 73 30 364 120 0
Total Non-Current Liabilities 73 30 364 176 0
CURRENT LIABILITIES
Short Term Browwings 0 0 0 0 0
Trade Payables 623 124 68 178 0
Other Current Liabilities 6,105.00 5,546.00 4,071.00 2,827.00 2,454.00
Short Term Provisions 8,809.00 8,045.00 6,117.00 3,788.00 3,604.00
Total Current Liabilities 15,537.00 13,715.00 10,256.00 6,793.00 6,058.00
Total Capital And Liabilities 72,767.00 61,813.00 52,712.00 43,028.00 35,815.00
ASSETS
NON-CURRENT ASSETS
Tangible Assets 8,248.00 7,347.00 5,719.00 4,425.00 4,061.00
Intangible Assets 0 0 13 28 0
Capital Work-In-Progress 934 769 954 1,135.00 588
Fixed Assets 9,182.00 8,116.00 6,686.00 5,588.00 4,649.00
Non-Current Investments 11,111.00 6,108.00 3,968.00 2,764.00 1,409.00
69
Deferred Tax Assets [Net] 405 433 542 378 189
Long Term Loans And Advances 5,970.00 4,378.00 2,227.00 1,529.00 0
Other Non-Current Assets 2 26 52 31 0
Total Non-Current Assets 26,670.00 19,061.00 13,475.00 10,290.00 6,247.00
CURRENT ASSETS
Current Investments 2 749 2,749.00 1,580.00 0
Inventories 0 0 0.00 0.00 0
Trade Receivables 9,798.00 8,627.00 7,336.00 6,365.00 5,404.00
Cash And Cash Equivalents 29,176.00 27,722.00 24,100.00 20,401.00 18,057.00
Short Term Loans And Advances 7,121.00 3,231.00 2,660.00 2,175.00 4,594.00
OtherCurrentAssets 0 2,423.00 2,392.00 2,217.00 1,513.00
Total Current Assets 46,097.00 42,752.00 39,237.00 32,738.00 29,568.00
Total Assets 72,767.00 61,813.00 52,712.00 43,028.00 35,815.00
CONTINGENT LIABILITIES, COMMITMENTS
Contingent Liabilities 1,512.00 1,461.00 1,020.00 1,693.00 1,024.00
CIF VALUE OF IMPORTS
Trade/Other Goods 3 3 3 3 0
Capital Goods 391 415 374 307 0
EXPENDITURE IN FOREIGN EXCHANGE
Expenditure In Foreign Currency 26,138.00 21,627.00 21,400.00 16,834.00 13,532.00
REMITTANCES IN FOREIGN CURRENCIES FOR
DIVIDENDS
Dividend Remittance In Foreign Currency 952 647 369 344 -
EARNINGS IN FOREIGN EXCHANGE
FOB Value Of Goods 52,860.00 46,153.00 43,150.00 36,020.00 31,187.00
Other Earnings 6 5 7 87 -
BONUS DETAILS
Bonus Equity Share Capital 1,128.66 554.66 267.66 267.66 267.66
NON-CURRENT INVESTMENTS
Non-Current Investments Quoted Market
- 1,269.00 - 317 -
Value
Non-Current Investments Unquoted Book
9,578.00 4,874.00 2,668.00 2,456.00 1,409.00
Value
CURRENT INVESTMENTS
Current Investments Quoted Market Value - - - - -
Current Investments Unquoted Book
- 749 2,649.00 1,580.00 -
Value
Number of Equity Shares used as

denominator for calculating Dilute
EPS 229.69 114.28 57.14 57.42 57.14
Market Value Per Share 1627 1269 1344 317 387
70
Profit and Loss Account for Tech Mahindra
Profit & Loss account of Infosys ------------------- in Rs. Cr. -------------------

INCOME
Revenue From Operations [Gross] 53,983.00 47,300.00 44,341.00 36,765.00 31,254.00
Revenue From Operations [Net] 53,983.00 47,300.00 44,341.00 36,765.00 31,254.00
Total Operating Revenues 53,983.00 47,300.00 44,341.00 36,765.00 31,254.00
Other Income 3,009.00 3,337.00 2,576.00 2,215.00 1,829.00
Total Revenue 56,992.00 50,637.00 46,917.00 38,980.00 33,083.00
EXPENSES
Operating And Direct Expenses 6,029.00 4,284.00 3,990.00 2,969.00 3,947.00
Employee Benefit Expenses 28,206.00 25,115.00 24,350.00 19,932.00 15,481.00
Finance Cost 0.00 0.00 0.00 0.00 0.00
Depreciation And Amortisation Expenses 1,115.00 913 1,101.00 956 794
Other Expenses 3,985.00 3,939.00 3,474.00 2,849.00 1,765.00

Total Expenses 39,335.00 34,251.00 32,915.00 26,706.00 21,987.00
Profit/Loss Before Exceptional, 17,657.00 16,386.00 14,002.00 12,274.00 11,096.00

ExtraOrdinary Items And Tax
Exceptional Items 3,036.00 412 0 83 484
Profit/Loss Before Tax 20,693.00 16,798.00 14,002.00 12,357.00 11,580.00
Tax Expenses-Continued Operations
Current Tax 4,898.00 4,537.00 4,063.00 3,361.00 3,110.00
Deferred Tax 9 97 -255 -120 0
Total Tax Expenses 4,907.00 4,634.00 3,808.00 3,241.00 3,110.00
Profit/Loss After Tax And Before
15,786.00 12,164.00 10,194.00 9,116.00 8,470.00
Extraordinary Items
Profit/Loss From Continuing
15,786.00 12,164.00 10,194.00 9,116.00 8,470.00
Operations
Profit/Loss For The Period 15,786.00 12,164.00 10,194.00 9,116.00 8,470.00
EARNINGS PER SHARE

Basic EPS (Rs.) 69 106 178 159 148
Diluted EPS (Rs.) 69 106 178 159 148
71
VALUE OF IMPORTED AND INDIGENIOUS RAW
MATERIALS
STORES, SPARES AND LOOSE TOOLS
DIVIDEND AND DIVIDEND PERCENTAGE

Equity Share Dividend 5,570.00 5,111.00 3,618.00 2,412.00 2,699.00
Tax On Dividend 1,134.00 1,034.00 615 403 438
Equity Dividend Rate (%) 485 1,190.00 1,260.00 840 940
REFERENCES
1. http://www.techmahindra.com/investors/annual_reports.aspx
2. https://www.infosys.com/investors/reports-filings/annual-report/
3. www.wikipedia.com
4. Financial Management - I. M. Pandey
72

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INDUSTRIAL PROJECT REPORT

“FINANCIAL RATIO ANALYSIS

TECH MAHINDRA LTD. & INFOSYS LTD.

Mr. Pushkar Metha (01530)

(EMBA PUMBA 2015-2017)

IN PARTIAL FULFILLMENT OF THE AWARD OF THE DEGREE

EXECUTIVE MASTER OF BUSINESS ADMINISTRATION (EMBA)

Mrs. Dr. CA Shilpa Bhide

DEPARTMENT OF MANAGEMENT SCIENCES

SAVITRIBAI PHULE PUNE UNIVERSITY

We wish him every success in his future career.

Prof. Dr. CA Shilpa Bhide Dr. Prafula Pawar

University, Department of Management Sciences, PUMBA.

Signature of the student

Pushkar Metha (01530)

(EMBA PUMBA 15-17)

project in Tech Mahindra Pvt.

Corporate finance is closely related to managerial finance, which is slightly broader in

1.1 NEED OF THE STUDY

2. It is beneficial to management of the company by providing crystal clear picture

2. To determine the Profitability, Liquidity Ratios.

4. To understand appropriate ways for the better performance of the organization

1.4 SOURCES OF SECONDARY DATA:

2.2 RATIO ANALYSIS

2.3 STEPS IN RATIO ANALYSIS

2.4 BASIS OR STANDARDS OF COMPARISON

2.5 INTERPRETATION OF THE RATIOS

 Single absolute ratio

2.6 GUIDELINES OR PRECAUTIONS FOR USE OF RATIOS

 Accuracy of financial statements

2.7 IMPORTANCE OF RATIO ANALYSIS

 Aid to measure general efficiency

2.8 LIMITATIONS OF RATIO ANALYSIS

2.9 CLASSIFICATIONS OF RATIOS

2.9.1 Traditional Classification

2.9.2 Functional Classification

2.9.3 Significance ratios

2.10 IN THE VIEW OF FUNCTIONAL CLASSIFICATION THE RATIOS ARE

3.1 KEY METRICS

Basic EPS (Rs.)

Tech Mahindra Infosys

2011 696.70 12.60 55.29 8470.00 57.40 147.56

2012 460.60 12.75 36.13 9116.00 57.40 158.82

2013 652.50 12.81 50.94 10194.00 57.20 178.22

2014 2685.50 23.35 115.01 12164.00 114.80 105.96

2015 2256.20 96.08 23.48 15786.00 229.60 68.75

4.1.2 Dilute EPS

Dilute EPS = (P/L attributable to common equity holders + After-tax interest on

Diluted EPS (Rs.)

Tech Mahindra Infosys

100.00 Tech Mahindra

Cash EPS = Operating Cash Flow

Cash EPS (Rs.)

Cash EPS (Rs.)

4.1.4 Book Value/Share

Book Value/Share = Total Shareholder Equity – Preferred Equity

Book Value (Rs.)

4.1.5 Dividend per Share

Dividend per Share = Dividends Paid

Dividend / Share (Rs.)

4.2 PROFITABILITY RATIO

PBDIT Margin (%)

2011 1055.60 5092.10 20.73% 11890.00 33083.00 35.94%

Infosys is more maintaining the profitability than Tech Mahindra.