Infosys Shares Drop Nearly 3% After Revenue Forecast Disappoints

Infosys shares dip: Infosys, India's second-largest software services exporter, experienced a sharp decline in its share price, dropping as much as 2.9 per cent on Friday. The dip followed the company's announcement of an annual revenue forecast below expectations, sparking doubts regarding the anticipated early recovery in the sector.

As of 09:19 a.m. IST, Infosys shares were down 2 per cent at 1,390 rupees, marking their lowest level since November 2023. Year-to-date, the stock has declined by 8 per cent, making it the worst performer among top-tier Indian IT services companies. In contrast, larger rival Tata Consultancy Services (TCS) has seen a 2.3 per cent increase in its shares, while the Nifty IT services index has dropped by 5.7 per cent.

Analysts expressed disappointment with Infosys' quarterly performance and outlook, with some terming it "disappointing." Ambit Capital noted that results from both TCS and Infosys suggest a more modest recovery than previously anticipated, citing sluggishness in large segments, existing business leakages, and weaker discretionary demand.

Following Infosys' results, at least fourteen analysts have lowered their target price for the company, according to LSEG data. The median target price among 39 analysts has fallen from 1,720 rupees to 1,650 rupees since March 19.

The missed revenue guidance for fiscal year 2024 by Infosys has raised concerns about growth predictability, impacting hopes for recovery among Indian IT companies in fiscal year 2025, as noted by Emkay Global.

Additionally, Infosys' revenue forecast has led some analysts to revise their outlook for the next two fiscal years, citing elevated execution risk and limited near-term revenue upside potential, according to Macquarie analyst Ravi Menon.

With Reuters Inputs