Infosys Tumbles 15% On Weak Revenue Forecasts, Drags Sector

(CTN News) – As a result of global financial sector turmoil and recession concerns, Infosys Ltd (INFY.NS) shares fell nearly 15% on Monday, lagging peers and the benchmark index.

As a result of the company’s dismal revenue outlook, concerns about the demand for Indian IT services were raised.

The outlook provided by Infosys last week follows a disappointing quarterly report by Tata Consultancy Services (TCS.NS), which has raised concerns about the sector, which earns more than 25% of its revenue from the banking, financial, services and insurance sectors in the U.S. and Europe.

Due to the collapse of two mid-sized U.S. lenders in March, an extraordinary government effort has been put into reassuring depositors and ensuring that the system is backstopped in the future.

Apurva Prasad, vice president of institutional research at HDFC Securities, stated, “Some macro challenges in the banking, financial services and insurance (BFSI) space have become more significant, which has resulted in the cancellation or delay of deals.”

On a constant currency basis, Prasad believes that HCLTech (HCLT.NS), Wipro (WIPR.NS) as well as Tech Mahindra (TEML.NS) will suffer sequential declines in their net profits.

Infosys, India’s second-largest IT services firm, on Thursday, said it expected revenue growth of 4% to 7% on a constant currency basis for the fiscal year ending March 2024.

In addition to this, clients cancelled a number of projects and delayed spending as a result of growing fears of a recession, as well as falling short of analysts’ projections of 10.7% growth.

A 5.8% increase in fiscal year 2018 was the previous slowest growth rate, which occurred in fiscal year 2017.

As of Monday morning, Infosys’ stock price dropped as much as 14.7% to 1,185.3 rupees, its biggest intraday percentage drop since October 2019. As a result, the Nifty IT index (.NIFTYIT) dropped as much as 7.6% during this period.

It has been reported by Refinitiv IBES that Bengaluru-based Infosys has posted a net profit for the January-March quarter of 61.28 billion rupees ($748.21 million), which fell below analysts’ expectations of 66.24 billion rupees for the quarter.

The smaller rival HCLTech (HCLT.NS) is due to Infosys announce its results later this week, while the larger competitor Wipro (WIPR.NS) is due to announce its results next week.

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