Infosys share price: Why are Infosys shares sinking today? | Business

Infosys shares are down over 10% on Monday after disappointing Q4 results. Not only Infosys, but other leading IT stocks like TCS are down today after subdued Q4 results and rising global uncertainties.
Infosys Ltd shares have slumped due to a few factors. Firstly, the company’s revenue outlook was deemed dismal due to the impact of banking turmoil in major markets, specifically the United States and Europe. This outlook followed a disappointing quarterly report from larger rival Tata Consultancy Services, highlighting worries for the sector which earns more than 25% of its revenue from just the US and European banking, financial, services and insurance sector. Additionally, the collapse of two mid-sized US lenders in March had left the financial ecosystem shaken and driven an extraordinary government effort to reassure depositors and backstop the system.

Q: What was Infosys’ revenue outlook and how did it affect the company’s shares?

A: India’s second-largest IT services firm on Thursday said it expects revenue growth of 4%-7% for the fiscal year ending March 2024, well below analysts’ expectations of 10.7% growth, as clients deferred spending due to growing fears of a recession. This slow growth rate is the lowest the company has seen since fiscal 2018, which had a 5.8% increase. Infosys’ outlook led to its biggest intraday percentage drop since October 2019, and it dragged other IT stocks, with the Nifty IT index dropping as much as 7.6%.

Q: What was Infosys’ net profit in the January-March quarter and how did it compare to analysts’ expectations?

A: Infosys’ net profit of 61.28 billion rupees ($748.21 million) in the January-March quarter missed analysts’ expectations of 66.24 billion rupees, according to Refinitiv IBES. However, it’s important to note that the company’s revenue outlook was the primary factor that led to the significant drop in its share price.

Q: What is the impact of the uncertain environment on Infosys’ growth?

A: “Given the uncertain environment in the near term, growth can be back-ended for Infosys, in our view,” PhillipCapital said in a note. The uncertain environment refers to the current economic climate and growing fears of a recession, which is causing clients to defer spending.
Infosys’ outlook followed a disappointing quarterly report from larger rival Tata Consultancy Services, highlighting worries for the sector which earns more than 25% of its revenue from just the US and European banking, financial, services and insurance sectors.
The collapse of two mid-sized US banks in March had left the financial ecosystem shaken and driven an extraordinary government effort to reassure depositors and backstop the system.
(With inputs from agencies)