Shares of technology giant Infosys saw a decline of up to 2% on Friday, April 19, following the company’s announcement of missing revenue estimates and providing a softer guidance for the financial year 2025.
The US-listed shares of Infosys managed to recover slightly, trading 1% down at the opening after experiencing an 8% drop in pre-market trading on Thursday.
At 12:02 pm the shares of Infosys are trading down by 1.40% at Rs 1,399.35 on NSE.
Infosys revealed a muted constant currency (CC) revenue growth forecast of 1-3% for FY25, which was below analyst estimates of 2-6% in CC terms, along with operating margin guidance set at 20-22%.
Despite securing deal values worth $4.5 billion in the quarter, with 44% of it comprising net new deals, the Bengaluru-based company decided to lower its revenue guidance. Notably, the deal value for FY24 reached an all-time high of $17.7 billion, a factor the management believes will support them in the upcoming financial year.
Over the last three months, Infosys shares have witnessed a 14% decline, making the IT sector one of the worst performers amid efforts to recover from a slowdown induced by rising interest rates and inflation.
Simultaneously, the Nifty IT index also experienced a nearly 10% decrease in value over the same three-month period, contrasting with the 2% gain recorded by the benchmark Nifty50.
Brokerages and Analysts on Infosys
Global brokerage firm Jefferies has maintained a ‘buy’ rating on Infosys stock, with a price target of ₹1,630. The brokerage attributed the decline in CC revenue to the impact of contract renegotiations and reduction in scope, despite noting healthy net new deal wins.
Whereas commenting from the same Nirvi Ashar – Fundamental Analysta at Religare Broking says that Infosys results came in below our expectations but was well within the management guidance. We believe, as clients are still on the back foot regarding signing new discretionary deals.
Ashar also adds that the positive outcome on revenue growth may delay by 1-2 quarters but expect overall FY25 to be better than FY24. The growth is expected to be driven by demand for its Gen AI & Cloud as well as automation technology.
Commenting on the long term view Sonam Srivastava, Founder and Fund Manager at Wright Research says that acknowledging the potential benefits from an anticipated acceleration in IT spending within the next two to three years, they also recognize near-term challenges. The long-term view remains more positive, with analysts expressing continued confidence in Infosys’ long-term growth trajectory.