Shares of country’s second largest IT major — Infosys — crashed 22 per cent on Friday eroding Rs35,740 crore of its market value after the company announced its lower-than-expected earning for the fourth quarter and muted sales outlook for 2013-14. The crash of Infosys’ shares dragged Sensex down by nearly 300 points with the BSE 30-share index closing at 18,242.56, while Nifty slumped 65.45 points to end at 5,528.55 point.
Disappointing revenue guidance at 6-10 per cent for this fiscal affected investors’ sentiments, who were expecting the company to set a target of 12 per cent growth as, Nasscom expects industry to grow at 12-14 per cent in the current fiscal year. Frustrated investors offloaded stock, pulling it down by over 22 per cent to Rs2,268 during the day. Other frontline IT stocks, including Tata Consultancy Services and Wipro traded sharply lower. TCS fell by 1.63 per cent while Wipro sank 4.72 per cent on BSE.
“The lower-than-expected results and the FY-14 guidance (6%-10% revenue growth and no EPS guidance) reflect the uncertain macro environment and the pricing pressure which the company is experiencing. Infosys is experiencing delays in decision making by clients and also delays in ramp-ups,” Head of Private Client Group Research, Kotak Securities Dipen Shah commented on Infosys result.
“The lack of stronger revenue growth despite the pressure on realisations which the company is facing in the non-discretionary space, is concerning. We expect the stock to remain under pressure,” he opined.
Infosys reported 3.3 per cent rise in fourth-quarter net profit but forecast lower-than-expected revenue growth on challenging global economy.
The company reported a consolidated net profit of Rs2,394 crore for the January-March quarter of 2012-13 fiscal and posted 18.09 per cent rise in revenues at Rs10,454 crore. On the muted sales guidance for FY’14, Infosys CEO and Managing Director S D Shibulal said: “That is a reflection of the volatility, which we have seen over the last two quarters. The environment remains volatile as well as mixed. There are challenges in the US and Europe.”