Infosys shares fall over 6% In early deals on Monday, a business of 1,628 was traded on the BSE after the fourth quarter results of FY12 were lower than expected. Infosys market capitalization fell 6,92,281 crore on BSE, loss to investors 40,000 crore in initial deals. The Nifty IT index was the biggest loser and fell around 4%.
India’s second largest IT service provider Infosys‘ Net profit up 12% 5,686 crore for the quarter ended March 5,076 crore in the year-ago period while its revenue grew by almost 23% 32,276 crore as compared to 26,311 crore year-on-year (YoY).
Infosys’ margin performance in the March quarter was poor due to lower utilization and client contract provisions and third party costs.
“Going forward, increased travel, convenience, communication expenses, higher onsite/offsite pay revisions are likely to adversely impact margins; and declining employee utilization rates. The tailwinds are pyramid optimization, improving Daimler profitability, reducing sub-con costs and pricing power,” said analysts at ICICI Securities.
Increased margin pressure coupled with slowing of revenue/TCV along with macro environment has prompted brokerages to maintain uts downgrade rating on Infosys shares with target price 1,570 (before: 1,628).
Infosys forecasts 13-15% revenue growth for the current fiscal amid a strong deal pipeline and continued demand for digital and cloud computing services. The company’s operating margin for FY23 is 21%-23%.
People at Edelweiss believe that this quarter’s slow growth is an aberration in the strong-medium-term growth trajectory and maintained a ‘Buy’ rating on the IT stock with a target price of twelve months. 2,426, as management highlighted, the demand environment remains strong and they see a significant pipeline of large deals.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.