Infosys Ltd:Annual Report 2023-24 Analysis

Infosys Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History:

Infosys was founded in 1981 by seven engineers: N. R. Narayana Murthy, Nandan Nilekani, S. Gopalakrishnan, S. D. Shibulal, K. Dinesh, Ashok Arora, and N. S. Raghavan. They started with an initial capital of just $250.

Headquarters Location and Global Presence:

Infosys is headquartered in Bengaluru, Karnataka, India. It has a global presence with offices and development centers across the Americas, Europe, Asia, and Australia.

Company Vision and Mission:

• Vision: To be a globally respected organization that provides best-of-breed business solutions, leveraging technology, delivered by best-in-class people.
• Mission: To achieve our objectives in an environment of fairness, honesty, and courtesy towards our clients, employees, vendors, and society at large.

Key Milestones in Their Growth Journey:

• 1981: Founded in Pune
• 1983: Relocated to Bangalore.
• 1993: Initial Public Offering (IPO) on the Bombay Stock Exchange (BSE).
• 1999: Listed on NASDAQ.
• 2006: Crossed $2 billion in revenue.
• 2012: Return of N. R. Narayana Murthy as Executive Chairman to revitalize the company.
• 2014: Vishal Sikka appointed as CEO, focusing on innovation and new technologies.
• 2018: Salil Parekh appointed as CEO.

Stock Exchange Listing Details and Market Capitalization:

Infosys is listed on the following stock exchanges:

• Bombay Stock Exchange (BSE)
• National Stock Exchange (NSE)
• New York Stock Exchange (NYSE)

Market capitalization fluctuates but consistently ranks among the largest companies in India.

Recent Financial Performance Highlights:

Consult the latest Infosys investor relations reports and press releases for the most current financial information.

Management Team and Leadership Structure:

• CEO & MD: Salil Parekh Consult the Infosys website for the most up-to-date information on the board of directors and other key management personnel.

Notable Awards or Recognitions:

Infosys has received numerous awards and recognitions for its performance, corporate governance, and sustainability efforts. These include recognitions from Forbes, Fortune, and various industry-specific organizations. Consult their official website for a current list of awards.

Their Products #

Complete Product Portfolio with Categories:

Infosys offers a wide range of services and solutions across various categories:

• Application Development and Maintenance: Custom application development, application modernization, maintenance, and support.
• Consulting: Business consulting, technology consulting, digital transformation consulting.
• Digital Transformation: AI, Cloud, IoT, Big Data & Analytics, Automation.
• Engineering Services: Product engineering, embedded systems, VLSI design.
• Infrastructure Management Services: Cloud infrastructure, data center management, network management, security services.
• Business Process Management (BPM): Outsourcing of business processes such as finance, accounting, HR, and customer service.
• Enterprise Resource Planning (ERP): Implementation and support of ERP systems like SAP and Oracle.
• Cybersecurity: Security consulting, threat management, incident response.

Flagship or Signature Product Lines:

• Infosys Cobalt: A cloud-based platform offering over 14,000 assets and cloud-native services to accelerate enterprise cloud journeys.
• Infosys Nia: An AI platform that helps enterprises automate tasks, predict outcomes, and discover new opportunities.

Key Technological Innovations or Patents:

Infosys invests heavily in R&D and has a portfolio of patents in areas such as AI, cloud computing, and data analytics. Details on specific patents can be found through patent databases.

Recent Product Launches or R&D Initiatives:

Infosys frequently launches new solutions and services, often focused on emerging technologies like AI, blockchain, and the metaverse. Recent initiatives often relate to sustainability and cloud computing.

Primary Customers #

Target Industries and Sectors:

Infosys serves a diverse range of industries, including:

• Financial Services
• Retail
• Manufacturing
• Energy, Utilities, and Resources
• Communication, Media, and Entertainment
• Healthcare
• Life Sciences

Geographic Markets (domestic vs. international):

Infosys generates a significant portion of its revenue from international markets, particularly North America and Europe. It also has a strong presence in India and other parts of Asia.

Major Competitors #

Direct Competitors in India and Globally:

• India: Tata Consultancy Services (TCS), Wipro, HCLTech, Tech Mahindra
• Globally: Accenture, IBM, Capgemini, Cognizant, DXC Technology

How they differentiate from competitors:

Infosys aims to differentiate itself through:

• Innovation: Focus on emerging technologies and R&D.
• Client-centric approach: Building long-term relationships with clients and providing customized solutions.
• Quality: High standards of quality and delivery excellence.
• Talent: Attracting and retaining top talent in the industry.

Industry Challenges and Opportunities:

• Challenges: Rapid technological changes, increasing competition, economic uncertainty, geopolitical risks.
• Opportunities: Digital transformation, cloud adoption, AI, cybersecurity, sustainability.

Future Outlook #

Expansion Plans or Growth Strategy:

Infosys’s growth strategy focuses on:

• Expanding its presence in key markets.
• Investing in emerging technologies.
• Acquiring companies to strengthen its capabilities.
• Developing new solutions and services.

Upcoming Products or Innovations:

Infosys is likely to focus on developing new solutions in areas such as:

• AI and machine learning
• Cloud computing
• Cybersecurity
• Sustainability

Sustainability Initiatives or ESG Commitments:

Infosys has a strong commitment to sustainability and ESG (Environmental, Social, and Governance) principles. Key initiatives include:

• Reducing its carbon footprint.
• Promoting diversity and inclusion.
• Investing in education and community development.

Long-term Vision and Strategic Goals:

Infosys’s long-term vision is to be a leading global provider of digital services and consulting, helping clients navigate the digital transformation and achieve their business goals. It also aims to be a responsible corporate citizen and contribute to a sustainable future.

3-Year Trend Analysis of Key Financial Metrics #

Revenue Growth #

• Consolidated: FY24 revenue growth was 4.7%, a decrease from 20.7% growth reported in FY23.
• Standalone: FY24 revenue growth was 4.0% down from 19.3% growth reported in FY23.

Net Profit Growth #

• Consolidated: FY24 net profit growth was 8.9%, down from 15.4% reported in FY23.
• Standalone: FY24 net profit grew 17% compared to 8.2% reported in FY23.

Operating Margin #

• Consolidated: FY24 operating margin was 20.7%, a decrease from 21.1% reported in FY23.
• Standalone: FY24 reported operating margin was 22.3% and 22.5% in FY23.

Earnings Per Share (EPS) Growth #

• Consolidated: Basic EPS grew by 10.0% in FY24, a decline compared to 18.7% in FY23.
• Standalone: Basic EPS grew by 18.3% in FY24, a decline compared to 20.4% in FY23.

Return on Equity (ROE) #

• Consolidated: ROE was 32.1% in FY24, increased from the 31.2% reported in FY23.
• Standalone: ROE was 36.6% in FY24, increased from the 34.0% reported in FY23.

Free Cash Flow (FCF) #

• FCF has not been consistently showing a pattern over the past 3 years.

Business Segment Performance (FY24) #

• Financial Services: Revenue declined by 3.7%, and operating margin decreased to 22.1% from 24.8% in FY23.
• Retail: Revenue increased by 6.1%, with operating margin improving to 30.6% from 30.2% in FY23.
• Communication: Revenue decreased by 0.5%, and operating margin decreased to 20.5% from 20.8% in FY23.
• Energy, Utilities, Resources, and Services: Revenue growth of 8.1% was observed, with a slight decline in operating margin to 27.6% from 27.8% in FY23.
• Manufacturing: This segment showed the strongest performance, with revenue growth of 17.1% and a significant operating margin improvement to 18.8% from 16.4% in FY23.
• Hi-Tech: Revenue grew by 4.6%, with operating margin rising to 25.4% from 24.9% in FY23.
• Life Sciences: The segment exhibited strong growth with a 14.2% increase in revenue, although operating margin slightly declined to 25.2% from 25.4% in FY23.
• All Other Segments: This category experienced a revenue growth of 13.6%, with a notable increase in operating margin to 16.0% from 8.1% in FY23.

Major Strategic Initiatives and Their Progress #

• AI-First Strategy: Infosys has augmented its services with generative AI, integrating it into various offerings and developing playbooks. The company is leveraging Infosys Topaz for AI-first solutions. It got ISO 42001:2023 certified for AI Management Systems.
• Cloud Capabilities: Infosys Cobalt continues to drive cloud adoption among clients, in collaboration with major public cloud providers. Cloud and data form the foundation for AI and generative AI.
• Digital Transformation: Strengthening capabilities in key digital technology areas such as AI, product engineering, cybersecurity, and human experience remains a priority.
• Employee Value Proposition: Emphasis on employee upskilling and reskilling with over 2,50,000 employees trained on AI skills, maintaining a high employee satisfaction score of 80%, and promoting gender diversity (39.3% women employees).
• Operational Efficiency: Implemented Project Maximus, a margin expansion program, focusing on value-based selling, efficient pyramid structures, lean operations, automation, and cost reduction.

Risk Landscape Changes #

• Key risks include: geopolitical uncertainties, economic slowdown affecting client spending, heightened competition in the IT services sector, talent acquisition and retention, and evolving regulatory landscapes (particularly in data privacy, and immigration).
• Emerging risks : Focus is there on the rapid evolution of AI technologies and the need to adapt quickly, supply chain constraints.
• Cybersecurity remains a significant concern, highlighted by a security incident at Infosys McCamish Systems, necessitating ongoing investments in cybersecurity infrastructure and response capabilities.
  • Infosys has also made training available to preempt pitfalls and has worked on making efficiency projections

ESG Initiatives and Metrics #

Environmental #

• Infosys has maintained carbon neutrality for the fifth consecutive year across Scope 1, 2, and 3 emissions. Renewable energy sources account for 67.52% of electricity consumption in India operations. Water conservation efforts include lake rejuvenation projects and reduced water intensity.

Social #

• Focus on digital skilling initiatives (Infosys Springboard), empowering over 11.75 million learners. The “Tech for Good” solutions have impacted over 119 million lives.

Governance #

• Infosys has established an ESG Committee, overseeing organization-wide ESG priorities and goals. Infosys is among the first IT services companies to achieve ISO 42001:2023. The company is actively engaging with stakeholders on ESG matters and has been recognized for workplace diversity and inclusion.

Management Outlook #

• Management remains optimistic about leveraging advances in technology, particularly AI and generative AI, for client benefits.
• The focus is on scaling cloud capabilities, expanding digital technology expertise, and enhancing employee value proposition.
• The company aims to deliver on its ESG commitments while enabling clients to achieve their sustainability goals.
• The company is positioned to support clients with its leadership in AI, cloud, and digital services.

Detailed Analysis #

Financial Position Analysis #

3-Year Comparative Analysis of Assets, Liabilities, and Equity (Consolidated) #

(In ₹ crore)

Significant Changes in Major Line Items (>10% YoY) #

• Financial Assets (Non-current): Decreased by 15.3% in 2024 primarily due to 105.1% increase in Deferred Tax assets
• Other non-current assets: Decreased by 8.9% in 2024.
• Current Investments: Increased by 87% in 2024, driven by a surge in investments in liquid mutual fund units and commercial paper.
• Other financial assets (current) Increased by 4.14% due to increase in intrest recivable on Income tax refund
• Other current assets: Decreased by 11.5% in 2024, predominantly due to a reduction in unbilled revenues.
• Other Equity: Increased by 17.3% in 2024 and 3.49% the previous year driven by profits and other comprehensive income.
• Other financial liabilities (Non-current): Increased by 17.68%.
• Deferred tax liabilities (net): Increased by 47.0% in 2024, driven by a 26.9% increase in differed tax assets.
• Other non-current liabilities: Decreased by 53% in 2024.
• Other financial liabilities (Current): Decreased by 9% driven by a decrease in other payables

Working Capital Trends #

• Working capital has shown a significant increase in 2024 (₹50,638 crore) compared to 2023 (₹31,695 crore) and 2022 (₹29,165 crore), primarily due to an increase in current investments and a decrease in other current liabilities.

Asset Quality Metrics #

Allowance for Credit Losses (as % of Trade Receivables) #

• Allowance decreased year-over-year indicating possible improved quality and management of accounts receivable.

Goodwill to Total Assets #

• Goodwill as a percentage of total assets shows slight fluctuations, but there is overall growth in goodwill, possibly due to acquisitions.

Debt Structure and Maturity Profile #

Lease Liabilities #

• The majority of lease liabilities are spread between one to five years, indicating medium-term obligations.

Off-Balance Sheet Items #

Contingent Liabilities #

• Contingent liabilities decreased from ₹4,762 crore in 2023 to ₹3,583 crore in 2024, indicating a reduction in potential future obligations.

Financial Performance Analysis #

Revenue Breakdown by Segment / Geography with Growth Rates #

• Financial Services: Fiscal 2024 revenue was ₹42,158 crore, a 3.7% decrease compared to fiscal 2023.
• Retail: Fiscal 2024 revenue was ₹22,504 crore, a 6.1% increase compared to fiscal 2023.
• Communication: Fiscal 2024 revenue was ₹17,991 crore, a 0.5% decrease compared to fiscal 2023.
• Energy, Utilities, Resources and Services: Fiscal 2024 revenue was ₹20,035 crore, an 8.1% increase compared to fiscal 2023.
• Manufacturing: Fiscal 2024 revenue was ₹22,298 crore, a 17.1% increase compared to fiscal 2023.
• Hi-Tech: Fiscal 2024 revenue was ₹12,411 crore, a 4.6% increase compared to fiscal 2023.
• Life Sciences: Fiscal 2024 revenue was ₹11,515 crore, a 14.2% increase compared to fiscal 2023.
• All Other Segments: Fiscal 2024, revenue of 4,758, 13.6 increase compared to 2023.
• North America: Fiscal 2024 revenue decreased by 1.9%.
• Europe: Revenue decreased by 12.2%.
• India: Fiscal 2024 revenue decreased by 0.5%.
• Rest of the World: Fiscal 2024 revenue increased by 4.2%.

Cost Structure Analysis #

• Cost of Sales: Decreased as a percentage of revenue from 61.6% in fiscal 2023 to 60.2% in fiscal 2024 (standalone). Decreased from 58.0% in fiscal year 2023 to 56.4% on consolidated basis. Decrease primarly attributed to decrease in sub-contractors cost and on account of improved utilization.
• Selling and Marketing Expenses: Increased as a percentage of revenue from 4.0% in fiscal 2023 to 4.4% in fiscal 2024 (standalone) and from 4.3% during fiscal year 2023 to 4.5% on a consolidated basis. Primarily due to increases in employee benefit costs and branding and marketing expenses.
• General and Administration Expenses: Decreased as a percentage of revenue, from 4.3% in fiscal 2023 to 4.2% in fiscal 2024 (standalone) and remained same on a consolidated basis at 4.9% for fiscal year 2024.

Margin Analysis #

• Operating Margin: 20.7% in fiscal 2024, compared to 21.1% in previous fiscal year. Standalone operating margin reduced slightly from 22.5 to 22.3.
• Net Profit Margin: 17.1% in fiscal 2024, increased from 16.4% in the previous fiscal year. Standalone, net profit margin has increased from 18.8% in fiscal year 2023 to 21.1%.

Operating Leverage #

• Segment operating income growth varied significantly, with a 3.7% decrease in Financial Services, up to 34.8% growth in the Manufacturing segment, showcasing different levels of operational efficiency and cost management.

Non-Recurring Items #

• Fiscal 2024 includes interest (pre-tax) on income tax refund of ₹1,933 crore, and tax reversal of ₹38 crore. Net tax reversal of ₹913 crore (standalone) and net tax reversal of ₹38 crore (consolidated) on account of orders received under Sections 250 and 254 of the Income-tax Act, 1961.

EPS Analysis #

• Basic EPS: Increased to ₹63.39 in fiscal 2024 from ₹57.63 in fiscal 2023, at a 10% growth.
• Diluted EPS: Increased to ₹63.29 in fiscal 2024 from ₹57.54 in fiscal 2023.

Cash Management Analysis #

Cash Flow and Liquidity Analysis #

Operating Cash Flow (OCF), Investing Cash Flow (ICF) and Free Cash Flow (FCF) Components #

• OCF: Consolidated OCF of ₹25,210 crore for FY24, increasing from ₹22,467 crore in FY23. The increase is attributed to improved net profit, adjusted for non-cash items, partially offset by higher income tax payments.
• ICF: Consolidated ICF for FY24 was ₹(5,009) crore, compared to ₹(1,209) crore in FY23. This was majorly driven by investments.

Working Capital Management Efficiency #

• Consolidated Days Sales Outstanding (DSO) increased to 71 days in FY24 from 62 days in FY23.
• Infosys had a consolidated working capital of ₹50,638 crore as of March 31, 2024.

Capex Analysis #

• Total consolidated capital expenditure on tangible assets are 1,761cr and are classified as infrastructure, computer equipment, vehicles and buildings.

Dividend and Share Buyback Trends #

• The Company paid an interim dividend of ₹18 per share in FY24, and announced a final dividend of ₹20 per share and special dividend of ₹8 per share for shareholder approval.
• The Company’s Capital Allocation Policy aims to return approximately 85% of free cash flow cumulatively over a five-year period through dividends and/or share buybacks.
• A buyback of equity shares was approved for 9,300Cr, which was completed during fiscal 2023.

Debt Service Coverage #

• The Company is debt-free, except for lease liabilities.

Liquidity Position #

• Infosys maintains a strong liquidity position. Consolidated cash and investments were ₹39,005 crore as of March 31, 2024.

Segment-wise Financial Analysis of Infosys Limited #

Profitability Ratios (3-Year Trends) #

Return on Equity (ROE) #

• FY24: 32.1%
• FY23: 31.2%
• FY22: 29.1%

Operating Margin #

• FY24: 20.7%
• FY23: 21.1%
• FY22: 23%

Net Profit Margin #

• FY24: 17.1%
• FY23: 16.4%
• FY22: 18.2%

Liquidity Metrics #

Current Ratio #

• As at Mar 31, 2024: 2.6
• As at March 31, 2023: 1.9

Efficiency Ratios #

Trade Receivables Turnover Ratio #

• FY24: 5.6
• FY23: 6.2

Days Sales Outstanding (DSO) #

• FY24: 71
• FY23: 62

Leverage Metrics #

Debt-to-Equity Ratio #

• As at Mar 31, 2024: 0.0
• As at Mar 31, 2023: 0.1

Working Capital Ratios #

Net Capital Turnover Ratio #

• FY24: 2.9
• FY23: 5.0

Segment Performance Analysis #

Revenue and Profitability Metrics with Growth Rates #

• Financial Services: Revenue decreased by 3.7% year-over-year, from ₹43,763 crore to ₹42,158 crore. Segment operating income decreased by 14.0%, and operating margin declined from 24.8% to 22.1%.
• Retail (Includes Retail, Consumer Packaged Goods, and Logistics): Revenue increased by 6.1% year-over-year, from ₹21,204 crore to ₹22,504 crore. Segment operating income increased by 7.6%, while operating margin increased from 30.2% to 30.6%
• Communication (Includes Communication, Telecom OEM, and Media): Revenue decreased by 0.5% year-over-year, from ₹18,086 crore to ₹17,991 crore. Segment operating income decreased by 1.9%, and operating margin decreased from 20.8% to 20.5%.
• Energy, Utilities, Resources, and Services (EURS): Revenue show a growth of 8.1% year-over-year from, ₹18,539 crore to ₹20,035 crore. Segment operating income show a growth of 7.1%, and operating margin decreased from 27.8% to 27.6%.
• Manufacturing: Revenue increased significantly by 17.1% year-over-year, from ₹19,035 crore to ₹22,298 crore. Segment operating income increased by 34.8%, and operating margin improved from 16.4% to 18.8%.
• Hi-Tech: Revenue increased by 4.6% year-over-year, from ₹11,867 crore to ₹12,411 crore. Segment operating income increased by 6.6%, and operating margin increased from 24.9% to 25.4%.
• Life Sciences (Includes Life Sciences and Healthcare): Revenue grew by 14.2% year-over-year, from ₹10,085 crore to ₹11,515 crore. Segment operating income increased by 12.9%, while operating margin decreased from 25.4% to 25.2%
• All Other Segments (India, Japan, China, Infosys Public Services, and other enterprises in Public Services): Revenue increased by 13.6% year-over-year, from ₹4,188 crore to ₹4,758 crore. Segment operating income increased by 124.2%, and operating margin improved significantly from 8.1% to 16.0%.

Key Products / Services Performance #

• The document mentions Infosys Cobalt (cloud services) and Infosys Topaz (AI-first offering) as key offerings resonating with clients.

Geographic Distribution and Market Penetration #

• North America: Accounted for 60.1% of total revenue in fiscal 2024, a slight decrease from 61.8% in fiscal 2023. Revenue was ₹92,411 crore, with a year-over-year growth of -1.9%.
• Europe: Contributed 27.6% of total revenue, up from 25.7% in the previous year. Revenue was ₹42,267 crore, with a growth of 12.2% year-over-year.
• India: Represented 2.5% of total revenue, a slight decrease from 2.6%. Revenue was ₹3,881 crore, with a year-over-year growth of -0.5%.
• Rest of the World: Accounted for 9.8% of total revenue, slightly down from 9.9%. Revenue was ₹15,111 crore, with a year-over-year growth of 4.2%.

Growth Initiatives and Challenges #

• The company’s strategy emphasizes scaling agile digital, energizing the core, reskilling employees, and expanding localization.
• Key priorities include the AI-first journey, scaling cloud capabilities, expanding capabilities in digital technologies (AI, product engineering, cybersecurity, human experience), strengthening employee value proposition, cost-effective and agile operations, and delivering on ESG commitments.
• Challenges include intense competition, managing talent acquisition and retention, adapting to technological disruptions, and navigating the evolving regulatory environment.

Strategic and Management Analysis #

Long-Term Strategic Goals and Progress #

• Infosys’ strategy focuses on navigating clients’ digital transformation, scaling agile digital offerings, energizing the core, reskilling employees, and expanding localization.
• The Company has become a leader in 60 digital offerings.
• Significant large deal wins (US$17.7 billion TCV) indicate relevance in executing complex transformation programs.
• Significant focus on AI, cloud, cybersecurity, and immersive technologies.
• ESG Vision 2030 guides overall sustainability and social responsibility goals, with carbon neutrality achieved for the fifth consecutive year.

Competitive Advantages and Market Positioning #

• Infosys differentiates itself through industry expertise, end-to-end service capabilities, digital solutions, scalability, established platforms, and a distributed agile global delivery model.
• The large deal TCV of US$17.7 billion demonstrates competitiveness in complex transformation programs.
• Infosys is recognized as a leader in AI services by multiple analysts.
• All segments demonstrate high operating margins, indicating strong competitive positioning and efficient operations.

Innovation Initiatives and R&D Effectiveness #

• Infosys is investing in AI, particularly generative AI, through Infosys Topaz and cloud capabilities via Infosys Cobalt.
• Focus areas include software engineering, process optimization, customer support, advisory services, and sales and marketing.
• The Company has Living Labs and partners with the Infosys Innovation Network.
• Infosys has been curating technology and trends across business verticals and contributing to thought leadership.

M&A Strategy and Execution #

• Infosys has a strategic M&A approach to enhance capabilities, deepen industry expertise, and expand its geographical footprint.
• Acquisition of Danske IT (now Idunn Information Technology Private Limited) was completed in fiscal 2024.
• An agreement has been entered into to acquire InSemi Technology Services Private Limited.
• The Board also approved the acquisition of in-tech Holding GmbH.

Management’s Track Record in Execution #

• Management has delivered revenue growth and maintained robust operating margins, while achieving strong free cash flow generation (US$2.9 billion).
• Return on equity (ROE) improved to 32.1%, showcasing efficient use of shareholder capital.
• Large deal wins and the increase of 8 in the number of US$ 50 million + clients Y-o-Y reflect successful execution of the Company’s strategy.

Capital Allocation Strategy #

• The Company has a stated Capital Allocation Policy to return approximately 85% of free cash flow cumulatively over a five-year period through dividends and / or share buyback / special dividends.
• For fiscals 2020-2024, 85% of free cash flow has been returned to shareholders.
• The company paid interim and declared final and special dividends consistent with the Capital Allocation policy.

Organizational Changes and Their Impact #

• Infosys has transitioned to a hybrid work model, with new offices in tier-2 and tier-3 cities in India.
• Jayesh Sanghrajka was appointed as CFO effective April 1, 2024, succeeding Nilanjan Roy.
• Leadership changes across the organization resulted in the highest ever large deal signings of USD 17.7 Billion.
• The Company launched Infosys Accessibility Living Labs, a learning space that fosters empathy and awareness of accessibility challenges.

ESG Framework: Infosys Analysis #

Environmental Metrics and Targets #

• Infosys has been carbon neutral for five years in a row, across Scope 1, 2, and 3 emissions.
• 67.52% of electricity in India operations is sourced from renewables, without purchasing any renewable energy certificates.
• Infosys holds 29.6 million sq. ft. of the highest-level green-certified building space.
• Building Energy Performance Index (EPI) is 70 kWh/sq. m/p.a.
• Data center efficiency: Weighted average Power Usage Effectiveness (PUE) of data centers is 1.55.
• 68% of internal IT application workload has been migrated to the public cloud.
• Infosys has committed to maintaining carbon neutrality across Scope 1, 2, and 3 emissions every year as part of their ESG Vision 2030.
• There is a focus on decarbonizing the supply chain, with training provided to suppliers representing a large part of CAPEX spend on climate change and disclosures.

Social Responsibility Programs #

• Infosys Springboard initiative, a digital learning platform, has 7.9 million registered learners globally.
• The “Tech for Good” initiative has empowered over 119 million lives through solutions in e-governance, education, and healthcare.
• Infosys Foundation works in areas of education, healthcare, women empowerment, and environmental sustainability.
• The Aarohan Social Innovation Awards provided ₹2 crore to eight social innovators.
• Infosys Foundation USA provided computer science and maker-focused programming to 1.1 million students and 47,000 educators in the US in the fiscal year.
• The Infosys Science Foundation awards the Infosys Prize, honoring outstanding achievements in research across six categories, with a purse of US$100,000.
• The company recorded an investment in employee well-being, as employees wellbeing score reached 91%
• Diversity goals includes achieving 45% female representation in the workforce by 2030; current representation is 39.3%.

Governance Structure and Effectiveness #

• The Board has nine members: one executive director, one non-executive and non-independent director, and seven independent directors, including two women.
• The Board has six committees: Audit, Corporate Social Responsibility, Nomination and Remuneration, Risk Management, Stakeholders Relationship, and Environment, Social and Governance (ESG). All committees comprise only independent directors.
• A Cybersecurity Risk Sub-Committee, under the Risk Management Committee, assesses and enhances preparedness for cybersecurity risks.
• The Board evaluation process was completed during fiscal 2024, conducted by external consultants, Egon Zehnder.
• The Company complies with all applicable secretarial standards.

Sustainability Investments and ROI #

• Infosys states that it incorporates environmental considerations into all aspects.
• Investments in renewable energy: 60.2 MWp solar PV capacity across Infosys campuses, with 67.52% of electricity for India operations from renewable sources.
• Investments were made in collaborative tech infrastructure.
• Investment in over 29.6 million sq.ft. of highest-rated green buildings.
• The CAPEX investments in energy conservation projects amounted for'3.4 crore.
• Infosys has invested over ₹1,615 crore in capital expenditure on its various campuses including energy and water conservation, and waste management.

ESG Ratings and Peer Comparison #

• Infosys was rated as a leader in ISG’s Environmental, Social and Governance Services (ESG) Provider Lens™ study in US, Europe and Global.
• Recognized as a leader in Avasant’s Tech-enabled Sustainability Services 2023-2024 RadarView™.
• Recognized among 2024 World’s Most Ethical Companies® by Ethisphere for the fourth consecutive year.
• Received multiple awards at The Asset ESG Corporate Awards 2023.
• Recognized in the LEADERSHIP category in the Indian Corporate Governance Scorecard Assessment by Institutional Investor Advisory Services (IiAS) for the eighth year in a row.

Regulatory Compliance and Future Preparations #

• The company is preparing for compliance with the Companies Act, 2013, and the Listing Regulations.
• Infosys is one of the first IT services companies globally to achieve ISO 42001:2023 certification (Artificial Intelligence Management System).
• The Company is compliant with secretarial standards issued by the Institute of Company Secretaries of India.
• A whistle blower policy exists, and processes are in place to address ethical concerns and fraud.
• Compliance with data privacy regulations across various jurisdictions, including GDPR and CCPA, is a focus.
• The BRSR reporting is in accordance with SEBI guidelines, and the BRSR Core disclosures have been independently assured.

Segment-wise Financial Analysis #

Financial Services Segment #

Management Guidance and Assumptions #

• Management’s guidance is based on an expectation of continued demand for digital transformation services.
• Assumes relevance of service offerings, particularly consolidation programs, will continue.

Market Growth Forecasts #

• Shift in client spending towards AI and generative AI will be crucial for growth.

Planned Strategic Initiatives #

• Scaling cloud capabilities (cloud advisory, data on cloud, cloud security, SaaS, PaaS, IaaS, and private cloud).
• Expanding capabilities in AI, product engineering, cybersecurity, and human experience.
• Prioritizing the AI-first journey and client navigation to AI.

Efficiency Improvement Targets #

• A comprehensive margin expansion program (Project Maximus) is in place, but specific targets are not disclosed.

Potential Challenges and Opportunities #

• Challenge: Revenue growth declined by 3.7% in constant currency in fiscal 2024.
• Opportunity: Positioned to support clients to leverage advances in AI and generative AI and other technologies.

Retail, Consumer Packaged Goods (CPG), and Logistics Segment #

Planned Strategic Initiatives #

• Focusing on scaling AI and cloud capabilities.

Efficiency Improvement Targets #

• The Group-wide Project Maximus will apply, but specific targets are not disclosed.

Potential Challenges and Opportunities #

• Challenge: Optimizing sales and service processes due to cost-of-living pressures, particularly in the UK.
• Opportunity: Revenue growth was 6.1% in constant currency in fiscal 2024. Further growth potential with GenAI-powered tools.

Communication, Telecom OEM and Media Segment #

Planned Strategic Initiatives #

• Participate in overall Group strategic initiatives, such as scaling cloud, AI.

Efficiency Improvement Targets #

• Project Maximus will apply, but specific targets are not disclosed.

Potential Challenges and Opportunities #

• Challenge: Revenue growth slightly declined, by 0.5% in constant currency in fiscal 2024.
• Opportunity: The Company is the Digital Innovation Partner for global sporting events.

Energy, Utilities, Resources and Services Segment #

Planned Strategic Initiatives #

• Participate in overall Group strategic initiatives, such as scaling cloud, AI.

Efficiency Improvement Targets #

• The Group-wide Project Maximus will apply, but specific targets are not disclosed.

Potential Challenges and Opportunities #

• Opportunity: Demonstrated strong revenue growth of 8.1% in constant currency in fiscal 2024.
• Opportunity: Vertical platforms like Energy-as-a-Service are opening up new opportunities.

Manufacturing Segment #

Planned Strategic Initiatives #

• Participate in overall Group strategic initiatives, such as scaling cloud, AI.

Efficiency Improvement Targets #

• Project Maximus will apply, but specific targets are not disclosed.

Potential Challenges and Opportunities #

• Opportunity: Achieved the highest revenue growth among the segments at 17.1% in constant currency in fiscal 2024.
• Opportunity: Recognized as a leader in Manufacturing Intelligent Operations Services, 2024.

Hi-Tech Segment #

Planned Strategic Initiatives #

• Participate in overall Group strategic initiatives, such as scaling cloud, AI.

Efficiency Improvement Targets #

• Project Maximus will apply, but specific targets are not disclosed.

Potential Challenges and Opportunities #

• Opportunity: Achieved revenue growth of 4.6% in constant currency in fiscal 2024.

Life Sciences and Healthcare Segment #

Planned Strategic Initiatives #

• Participate in overall Group strategic initiatives, such as scaling cloud, AI.

Efficiency Improvement Targets #

• The Group-wide Project Maximus will apply, but specific targets are not disclosed.

Potential Challenges and Opportunities #

• Opportunity: Demonstrated strong revenue growth of 14.2% in constant currency in fiscal 2024.

All Other Segments #

Planned Strategic Initiatives #

• Participate in overall Group strategic initiatives, such as scaling cloud, AI.

Efficiency Improvement Targets #

• The Group-wide Project Maximus will apply, but specific targets are not disclosed.

Potential Challenges and Opportunities #

• Opportunity:: Achieved strong revenue growth of 13.6% in constant currency in fiscal 2024.
• Opportunity:: Growth potential in emerging markets.

Audit and Regulatory Analysis #

Auditor’s Opinion and Qualifications #

• The Independent Auditor’s Report issued by Deloitte Haskins & Sells LLP provided an unmodified opinion on the Standalone and Consolidated Financial Statements for the year ended March 31, 2024.
• No qualifications, reservations, or adverse remarks were reported in the Auditor’s Report for fiscal 2024.
• No instances of fraud were reported by the statutory or secretarial auditors.

Key Accounting Policies and Changes #

• Accounting policies were consistently applied, except where a newly-issued accounting standard was adopted, or a revision to an existing standard required a change.
• The Group uses derivative financial instruments such as foreign exchange forward and options contracts to hedge the risk.

Internal Control Effectiveness #

• The Company’s Board of Directors asserted responsibility for establishing and maintaining adequate internal financial controls.
• The auditors issued an unmodified opinion on the adequacy and operating effectiveness of the Company’s internal financial controls.
• The Company has an adequate internal audit system commensurate with its size and nature of business.
• No material weaknesses in internal controls over financial reporting, including corrective actions, were reported.

Regulatory Compliance Status #

• The Company complied with all applicable secretarial standards issued by the Institute of Company Secretaries of India.
• The Company complied with the corporate governance requirements under Regulations 17 to 27 and website disclosure requirements per Regulation 46(2) of the Listing Regulations.
• No penalties were imposed by any stock exchange, SEBI, or SEC, nor were there instances of non-compliance with legal requirements or capital market matters over the last three years.
• The Company has provided appropriate policies in adherence to principles.

Legal Proceedings and their Potential Impact #

• The Company is subject to legal proceedings and claims in the ordinary course of business. Management expects that these actions, when ultimately concluded, will not materially and adversely affect the Company’s results of operations or financial condition.
• McCamish, a subsidiary, experienced a cybersecurity incident, and a class action complaint has been filed; related costs are currently indeterminable.

Related Party Transactions #

• The Company entered into various transactions with its subsidiaries, which are conducted at arm’s length and in the ordinary course of business.
• There were no contracts, arrangements, or transactions during fiscal 2024 under the scope of Section 188(1) of the Act.
• No materially significant related party transactions occurred that might conflict with the interests of the Company at large.
• Infosys provided guarantee for performance of certain contracts entered into by its subsidiaries.

Subsequent Events #

• The Board approved the acquisition of in-tech Holding GmbH, a provider of Engineering R&D services, subject to customary closing adjustments.
• There have been no other material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of the report, other than the above.

Analysis of Accounting Quality and Regulatory Risk Assessment #

• The consistent application of accounting policies and the absence of material qualifications in the auditor’s report indicate high accounting quality.
• The unmodified opinion on internal financial controls further supports the reliability of financial reporting.
• The Company’s established framework and practices to ensure compliance with regulatory requirements minimize risks associated with non-compliance.
• The ongoing review of cybersecurity measures indicates a proactive stance.
• A principal risk faced by the Company relates to client spending and investments and therefore in addition to intense competition may cause a decrease in the Company’s revenues.
• The Company’s relentless focus on execution enabled it to deliver growth and operating margin resilience. The Company generated US$2.9 billion of free cash flow.