Shares of Infosys were the top laggards in today’s trade as the stock plunged over 12% to Rs 1,219 apiece. While, shares of LTIMindtree, Persistent, and Tech Mahindra fell over 6%. LLTS, Coforge, HCL Tech and Mphasis also declined over 5%.
In Q4 FY23, Bengaluru-based Infosys reported 8% growth in its net profit at Rs 6,128 crore, while revenue from operations jumped 16% to Rs 37,441 crore. Both revenue and profit figures were below the analysts’ estimates. An ET Now poll had projected the net profit to be around Rs 6,550 crore while the revenue figure was pegged at Rs 38,850 crore.
Meanwhile, TCS reported a 16.9% year-on-year (YoY) rise in its March quarter revenue at Rs 59,162 crore while profit rose 14.76% YoY to Rs 11,392 crore. Both the top and bottomline figures were below Street estimates.
However, despite calling Infosys’ January-March 2023 quarter results “shocking”, global brokerage firm Jefferies maintained a ‘buy’ rating on the second-largest IT services company for a price target of Rs 1,570.
Jefferies said FY24 guidance suggests a weak demand outlook and therefore cut its FY24-25 estimates by 3-6%. It sees potential stock fall on weak Q4 results as an attractive buying opportunity. Key risks include weaker revenue growth, lower margin, unfavourable currency and corporate action, the brokerage said.
Meanwhile, brokerage firm Nomura has downgraded Infosys to Neutral with a price target of Rs 1,290. The brokerage firm said guidance and deal wins indicate a weak outlook for the company.Nomura has cut FY24-25 EPS by 8-9% and reduced the valuation to 18X from 21X earlier. It further said the growth differential with Tata Consultancy Services is set to narrow.
Brokerage firm YES Securities maintained its ‘buy’ rating on Infosys with a revised target price of Rs 1,676, which shows an upside potential of 37% from the current market prices.
“Infosys (INFO) reported weak financial performance for the quarter. Both, the sequential revenue growth and EBIT margin were below expectation. It reported a decrease in revenue by 3.2% QoQ in cc terms led by unplanned project ramp downs in retail, hitech, BFSI and telecom verticals,” the brokerage said.
YES Securities further said the current deal pipeline and the ongoing macroeconomic uncertainties are being considered in revenue guidance of 4-7% in CC terms for FY24.
Kotak Institutional Securities said Infosys’ revenue growth guidance of 4-7% YoY and EBIT margin guidance of 20-22% for FY2024E were lower than its expectations of 5-7% and 21-23%, respectively.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
