India’s Infosys falls 15% on weak earnings outlook, sector drags
BENGALURU, April 17 (Reuters) – Infosys Ltd ( INFY.NS ) shares fell nearly 15% on Monday, dragging peers and the benchmark, after the company’s dismal revenue outlook raised concerns about demand for Indian IT services amid global bank crisis and recession fears.
Infosys̵[ads1]7; outlook last week followed a disappointing quarterly report from bigger rival Tata Consultancy Services ( TCS.NS ), which highlighted concerns for the sector, which earns more than 25% of its revenue from just the U.S. and European banking, finance, services and the insurance sector. .
The collapse of two mid-sized US lenders in March had shaken the financial ecosystem and fueled an extraordinary government effort to reassure depositors and stop the system.
“Some of the macro challenges, especially around banking, financial services and insurance (BFSI) have become bigger and that means project cancellations or delays in the deal-making cycle,” said Apurva Prasad, vice-president of institutional research, HDFC Securities.
Prasad said he expected a sequential decline for companies such as HCLTech ( HCLT.NS ), Wipro ( WIPR.NS ) and Tech Mahindra ( TEML.NS ) on a constant currency basis.
Infosys, India’s second-largest IT services firm, said on Thursday it expects revenue growth of 4-7% on a constant currency basis for the fiscal year ending March 2024, well below analysts’ expectations of 10.7% growth, as clients canceled some projects and postponed spending on growing fears of a recession.
The previous lowest annual growth rate was a 5.8% increase in fiscal year 2018.
Infosys fell as much as 14.7% to 1,185.3 rupees on Monday, in its biggest intraday percentage drop since October 2019. The Nifty IT index (.NIFTYIT) fell as much as 7.6%.
Bengaluru-based Infosys’ net profit of 61.28 billion rupees ($748.21 million) in the January-March quarter also missed analysts’ expectations of 66.24 billion rupees, according to Refinitiv IBES.
Smaller rival HCLTech ( HCLT.NS ) is due to report results later this week, while Wipro ( WIPR.NS ) is expected next week.
($1 = 81.9020 Indian Rupees)
Reporting by Nishit Navin; edited by Eileen Soreng
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