Projecting Financials Worksheet

7/29/2019 Projecting Financials Worksheet

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Profit & Loss account FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY10

(Rs. mn) FY 31st March

Total Revenue 36,400 48,530 71,300 95,210 138,930 166,920 216,930

Software Development & Business Pro 18,230 25,387 37,650 50,660 74,580 92,070 117,650

Gross Profit 18,170 23,143 33,650 44,550 64,350 74,850 99,280

Gross Margin % 49.9 47.7 47.2 46.8 46.3 44.8 45.8

S & M Expenses 2,717 3,509 4,610 6,000 9,290 9,160 11,040

G & A Expenses 2,757 3,692 5,690 7,640 11,150 13,310 16,290

Total Cost 23,704 32,588 47,950 64,300 95,020 114,540 144,980

EBIDTA from Operations 12,696 15,942 23,350 30,910 43,910 52,380 71,950

EBIDTA % 34.9 32.8 32.7 32.5 31.6 31.4 33.2

Depreciation 1,903 2,367 2,870 4,370 5,140 5,980 7,610

Operating Profit 10,793 13,575 20,480 26,540 38,770 46,400 64,340

Non-Operating Income 1,003 1,234 1,240 1,390 3,720 7,040 4,730

Extraordinary Income 0 0 450 0 60 0

Provision for Investments 238 97 0 10 20 0

Profit before Tax 11,558 14,712 22,170 27,920 42,530 53,440 69,070

Tax 2,136 2,285 3,350 3,350 4,130 8,840 9,190

MAT Entitlement 0 0 0 0 0 -1,770

Defferred Tax -126 -10 -90 -220 -270 -220

Total Effective Tax 2,010 2,275 3,260 3,130 3,860 6,850 9,190

PAT before Minority Interest 9,548 12,436 18,910 24,790 38,670 46,590 59,880

Minority Interest 0.0 0.0 0.0 210.0 110.0 0.0 0

Profit after Tax after Minority Interest 9,548 12,436 18,910 24,580 38,560 46,590 59,880

Net Margin % 26.2 25.6 26.5 25.8 27.8 27.9 27.6

Dividend 1,788 8,625 3,100 12,380 6,490 19,020 13,450

Dividend Tax 123 1,105 422 1,740 1,020 3,230 2,280

Retained Profits 7,637 2,707 15,388 10,460 31,050 24,340 44,150

EPS

Basic 18.03 23.43 35.22 45.02 69.25 81.54 104.60Diluted 17.86 23.13 34.31 43.76 67.73 81.27 104.42

No. of Shares- Basic mn 530 531 537 546 557 571 572

No. of Shares- Diluted mn 535 538 551 562 569 573 573

Balance Sheet FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09

(Rs. mn) FY 31st March

LIABILITIES

Equity Capital 331 333 1350 1380 2860 2860 2860

Reserves & Surplus 28,244 32,163 50,900 68,280 109,690 135,090 179,680

Total Equity 28,575 32,496 52,250 69,660 112,550 137,950 182,540

Preference Share Capital 490 936 940 - - - -Net Worth 29,065 33,431 53,190 69,660 112,550 137,950 182,540

Minority Interest 0 0 0 680 40 0 0

Deferred Tax Liability (Net) -368 -400 -450 -650 -920 -1190 -1260

Capital Employed 28,697 33,032 52,740 69,690 111,670 136,760 181,280

ASSETS

Gross Block 12,790 16,337 22,870 29,830 46,420 54,390 70,930

Less: Depreciation 5,785 8,098 10,310 13,280 18,360 19,860 24,160

Net Block 7005 8238 12560 16550 28060 34530 46770

Capital WIP 774 2081 3180 5710 9650 13240 6770


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Investments 210 9455 12110 7550 250 720 0

Current Assets

Sundry Debtors 5,187 6,515 13,220 16,080 24,360 32,970 36,720

Cash and Bank Balance 13,465 17,215 15,760 34,290 58,710 69,500 96,950

Loans and Advances 9,135 7,211 10,240 12,970 12,140 27,710 32,790

Total Current Assets 27,787 30,940 39,220 63,340 95,210 130,180 166,460

Less: Current Liabilities and Provisions

Sundry Creditors 1,224 3,150 2,960 3,820 4,770 7,360 5,700

Provisions

Provision for Tax and Others 2,922 4,201 6,010 3,510 3,100 7,200 10,950

Provision for Dividend 961 7,664 1,760 10,610 3,710 15,590 7,730

Others Provisions 1,972 2,668 3,600 5,520 9,920 11,760 14,340

Total Current Liabilities 7,078 17,682 14,330 23,460 21,500 41,910 38,720

Check

Net Current assets 20,708 13,259 24,890 39,880 73,710 88,270 127,740

Capital Employed 28,697 33,032 52,740 69,690 111,670 136,760 181,280

Check 0.00 0.00 0.00 0.00 0.00 0.00 0.00


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Revenue Model-Basics

#Revenue of Infosys is a combination of revenue from BPO, Product Business and IT Services & Con

#Revenue = (No of Person months Billed /12) * No of hours in the year * Billing rate (this is specificall

#Revenue is divided in to onsite and offshore (this is specifically for IT Services and Consulting).

#Total Billed Person Months = Total Billable Months * Billed Percentage.

#Use the average of historical growth for progeon and product businesses.

Using the information given above and below, compute the billing rates per hour for Infosys.

Assuming the employee addtion of 15000, project the revenue for next year.

Assume, 2% rupee depreciation. Assume billing rates are declining by 1% both onsite & offshore.

Infosys Revenue Model 2007 2008 2009 2010

Total Revenue for the period ended ($ mn) 3,036 4,177 4,663

Growth 37.60% 11.64%

Total Revenue for the period ended (Rs mn 138,930 166,920 216,930

Growth

USD - INR rate

Realized 45.77 39.96 46.52

Progeon Revenue ($ mn) 113.70 235.20 279.46

Growth 106.86% 18.82%

Product Revenue ($mn) 97.00 149.88 180.94

Growth 54.51% 20.73%

IT services and consulting ($mn)

Onsite Revenue 1,533 2,012 2169.51

Growth 31.22% 7.83%

Offshore Revenue 1,292 1,780 2,033

Growth 37.80% 14.22%

Total Revenue 2,825 3,792 4,203

Growth 34.23% 10.83%

Growth Drivers

Effort and Utilization (IT services and Consulting)

Effort (person Months) - BILLED

Onsite 134,767 165,595 181,811

Offshore 274,989 357,196 415,550

Total Billed 409,756 522,790 597,361

Non Billed 129,559 167,187 226987.741


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Trainees 65,859 63,606 62756.937

Total (Sales n Support excluded) 605,174 753,583 887,106

Sales n Support 34,142 38,484 48997.7286

Total Workforce 639,316 792,067 936,103

Billed (% of billable) 64.73% 67.63% 72.12%

Theoretical Billable Max (based on no of billable emp) 633,012 773,064.00 828,300

Billed Effort Mix

Onsite 32.89% 31.68% 30.44%

Offshore 67.11% 68.32% 69.56%

Hours

Onsite 1980 1980 1980

Offshore 2208 2208 2208

Billing Rates

Onsite

Offshore

Employee Metrics 72,241 91,187 102,931

S/W Proffessionals 57,493 69,569 79,402

Billable 52,751 64,422 69,025

Banking Product Group 2,053 2,053 2,349

Trainees 2,689 3,094 8,028

Sales n Support 3,522 5,323 6,449

BPO 11,226 16,295 17,080


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sulting Business.

for IT Services and Consulting).


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FY 03 FY 04 FY 05 FY 06 FY 07

Method 1

Software Development & Business 18,230 25,387 37,650 50,660 74,580

Growth 39.3 48.3 34.6 47.2

Direct Cost (% Sales) 50.08 52.31 52.81 53.21 53.68

Hint: Project Direct Costs as % of revenue going up by 40 bps in FY10.

Method 2 FY 03 FY 04 FY 05 FY 06 FY 07

Total Employees 15,356 25,255 36,750 52,715 72,241

Hint: Use direct cost per employee as basis. Keep it same for next year, and project.

Indirect Costs

FY 03 FY 04 FY 05 FY 06 FY 07

Selling & Marketing Exp 2,717 3,509 4,610 6,000 9,290

% Growth 29.1 31.4 30.2 54.8

% of Sales 7.2 6.5 6.3 6.7

G&A Expenses 2,757 3,692 5,690 7,640 11,150

% Growth 33.9 54.1 34.3 45.9

% of Sales 7.6 8.0 8.0 8.0

Hint: Increase selling & Marketing Expenses by 100bps and keep G&A expenses % of


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FY 08 FY 09 FY10E

92,070 117,650 0

23.5 27.8

55.16 54.23

FY 08 FY 09 FY10E

91,187 104,850

FY 08 FY 09 FY10E

9,160 11,040

-1.4 20.5

5.5 5.1

13,310 16,290

19.4 22.4

8.0 7.5

ales constant.


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Projecting Current Year Depreciation:

For beginners, one should

compute depreciation as

% of gross block.

Process for Forecast

1 Forecast Gross Block

2 Based on this Gross b

Forecasting Gross BMethod 1 Gross Block is forecas

Method 2 Use gross block turno

Pls check GB turnover

Forecasting CWIP:

a Forecast CWIP as diff

b Forecast it as % of ca

Forecasting Capital

a Computing

=Change i

b Capital expenditure is

c Forecast it based on t

d Most of the times mna

e Moreover, it can not to

One will build mastery

Project Depreciation for FY11, FY12 and FY13.

FY 03 FY 04 FY 05 FY 06 FY 07 FY 08

Depreciation 1903.4 2367.3 2870 4370 5140 5980

Depreciation % of Avg GB 16% 15% 17% 13% 12%

Hint: Keep, Depreciation as % of GB as constant.

FY 03 FY 04 FY 05 FY 06 FY 07 FY 08

Gross Block 12,790 16,337 22,870 29,830 46,420 54,390

CWIP 774 2,081 3,180 5,710 9,650 13,240

Compute and forecast:

FY 03 FY 04 FY 05 FY 06 FY 07 FY 08

Capital Expenditure 4,853 7,633 9,490 20,530 11,560

Ideally, one should look at each and every asset,

its useful life, and based on which method the

company uses to depreciate these assets, one

should forecast the depreciation.


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Addition to GB 3,546 6,534 6,960 16,590 7,970

Addtion to GB over CWIP of last year 2,772 4,453 3,780 10,880 -1,680

Addtion to GB over CWIP of last year 57% 58% 40% 53% -15%

Hint: Forecast Capital expenditure for FY10 as 15000mn to last year capex.


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ing Current Year Depreciation

for next Year.

lock and last year gross block, forecast depreciation.

lock:ted by addiing to it a portion of Capital Expenditure and total CWIP of last year.

er as a parameter to forecast the gross block.

ratio to avoid significant deviations.

erence between Capex and direct addition to gross block.

ital expenditure.

xpenditure

Capital Expenditure:

GB + Change in CWIP + Change in Intangibles

an incremental phenomenon.

e incremental 'key parameter' of the company for next year like capacity expansions, no. of towers a

gement will give you guidance on this.

be just forecasted looking at next year but vision of management over the years.

in forecasting this only over a period of time.

FY 09 FY10E

7610

12%

FY 09 FY10E

70,930

6,770

FY 09 FY10E

10,070


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16,540

3,300

33%


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ded, additional employees, etc.


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Taxes As % of PBT

FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY10E

Net Tax 2,010 2,275 3,260 3,130 3,860 6,850 9,190

ETR 17% 15% 15% 11% 9% 13% 13%

Hint: Assume Effective Tax Rate to be 20% in FY10.


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Dividend Payout

Dividend is projected as % of PAT or as % of Equity Ca

Preferably, project the dividend as % of PAT.

FY 03 FY 04 FY 05 FY 06 FY 07

Dividend 1,788 8,625 3,100 12,380 6,490

PAT 9,548 12,436 18,910 24,580 38,560

Dividend (% of PAT) 19% 69% 16% 50% 17%

Dividend Distribution Tax 123 1105 421.7 1740 1020

Dividend Distribution Tax (% of Dividends) 7% 13% 14% 14% 16%


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ital.

FY 08 FY 09 FY10E

19,020 13,450

46,590 59,880

41% 22%

3230 2280

17% 17%


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Project Debtors based on debtor turnover ratio.

Key Points:

Collection Period = 365/Revenue*Average Debtors

CP09= 365/Revenue09*(D09+D08)/2

Typically, do not increase or decease the collection period significantly.

FY 03 FY 04 FY 05 FY 06 FY 07 FY 08

Debtors 5,187 6,515 13,220 16,080 24,360 32,970

Collection Period

Hint: Assume, CP10 = 60 Days


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FY 09 FY10E

36,720 ?


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Project creditors based on creditors turnover.

Key Points:

Creditor Period= 365/Purchases*Average Debtors

Creditor Period09= 365/Purchases09*(D09+D08)/2

Typically, do not increase or decease the collection period significantly.

FY 03 FY 04 FY 05 FY 06 FY 07

Sundry Creditors 1,224 3,150 2,960 3,820 4,770

Creditor Days


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FY 08 FY 09 FY10E

7,360 5,700


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FY 03 FY 04 FY 05

Provision for Tax and Others 2,922 4,201 6,010

Provision for Tax and Others (% of Taxes)

Provision for Dividend 961 7,664 1,760

Provision for Dividend (% of Dividends)

Project provisions for taxes as % of current year taxes.

Project provisions for dividends as % of dividends for current year.


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FY 06 FY 07 FY 08 FY 09 FY10E

3,510 3,100 7,200 10,950

10,610 3,710 15,590 7,730


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Other Income/ Non-Operating Income

Ideally, one should break up the other income into dividend income,

interest earned, foreign exchange gains and extraordinary items and

then project individually.

As a beginner, however, It is projected based on cash & equivalents

and liquid investments.

Key determinants are:

a Your view on the intere

b

Key Tips:

1 This item should be pr

2 Because, it is projecte

However, the logic for

3 To fix the circular refer

Computations to be done before projecting:

Other Income or Non-

Solve to project Non-Operating Income for FY10 and FY11:FY 03 FY 04

Non-Operating Income 1,003 1,234

Non-Operating Income % of Cash & Equivalents 6.12%

Cash & Cash Equivalents 13,675 26,670

Hint: Interest rates in the ec

year. After that it will in

It includes dividends received on the investments, interest earned on

the saving bank account cash. Sometimes, it also includes foreign

exchange gains and losses and extrordinry items.


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st rates in the economy in the coming years.

jected at the last.

based on cash and equivalents, it will involve circular reference.

ircular reference is right.

nce, go to Office Button, Excel Options, Formulas and Tick Iterative Computations options.

perating Income as % of Average(Cash & Equivalents and Liquid Investments)

FY 05 FY 06 FY 07 FY 08 FY 09 FY10E

1,240 1,390 3,720 7,040 4,730

27,870 41,840 58,960 70,220 96,950

onomy may be expected to go down. RBI has hinted that it may reduce the repo rates by about 150bps

rease by 75bps in FY11 to curb the inflation.


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Projecting Financials Worksheet