After the IT giant cuts its growth forecast for FY24, Infosys shares fall by more than 10%

After the June quarter results for India’s second-largest IT business were released on Thursday, Infosys shares fell more than 10% in early trade on Friday.

The share price fell by 10.40% from its previous close of Rs 1,448.85 to an intraday low of Rs 1,311.60 on the Bombay Stock Exchange (BSE).

Infosys shares were down 7.48 percent at Rs 1,341.50 at 10:20 a.m. The wide NSE Nifty50 was down 103 points or 0.52 percent at 19,876.15, while the BSE benchmark Sensex was trading 610.24 points or 0.90 percent down at 66,961.66.

Infosys said on Thursday that its net profit for the April-June quarter was lower than anticipated despite increasing 11% to Rs 5,945 crore. The IT giant has reduced its FY24 growth forecast to 1-3.5% due to customers delaying decisions in the face of macroeconomic uncertainty throughout the world. Infosys reduced its revenue forecast for the fiscal year from its prior projection of 4–7% to 1-3.5% in constant currency.

Salil Parekh, CEO of Infosys, stated, “We had a good Q1 with large mega deals, but we have seen some of the deal signing and start dates being delayed.”

In the first quarter, Infosys’ sales increased 10% to Rs 37,933 crore.

The stock price on the New York Stock Exchange (NYSE) dropped by 8.41% and ended the day at $16.22 per share after Infosys’ discouraging forecast call following its quarterly results.

We view the miss as more of a perception issue than an operational one because the earlier guidance was too optimistic in the current environment, Motilal Oswal Securities said in its earnings review. “While the guidance cut is concerning and should be negative for the share price in the short term (partially due to the 11% gain in the last month), we view the miss as more of a perception issue than an operational one.”

“Despite the 325 bps reduction in guideline at the mid-point, we decrease our below-guidance FY24 forecasts (previously at 3.8% YoY CC) by 120 basis points (bps) to account for the remark on a weaker demand and project delays. Despite Infosys’ lower FY24E revenue growth of 2.6% YoY CC, the brokerage said, “We take confidence in the current 1Q-4QE revenue growth run rate estimate, which is close to those of its rivals.

It has maintained a “Buy” recommendation on the stock with a 1,600 rupee target price. IDBI Capital, on the other hand, downgraded the company from Buy to Hold and set a target price of Rs 1,440.