Infosys stock falls most on Sensex, Nifty post Q4 earnings

The Infosys stock fell the most on Sensex and Nifty after the Bengaluru-based IT firm reported a 2.4 per cent rise in its fourth-quarter net profit to Rs 3,960 crore. However, the company’s net profit on a quarterly basis fell 28.1 per cent. The IT services behemoth had reported a net profit of Rs 5,129 crore in the December quarter and Rs 3,603 crore in the corresponding quarter last year.

At 9:37 am, the stock was trading at 1,125 level, 3.70% and 4% lower on BSE and NSE, respectively. On Friday, the stock closed 0.58% higher at 1,169 level on BSE before the earnings were announced in evening.

The stock was trading below its 50-day moving average of 1,152.31 and 200-day moving average of 1,053 level. The firm cut its FY19 earnings before interest and tax margin guidance to 22-24% compared with the FY18 band of 23-25%.

“This will largely factor in investments in localized talent, revitalizing sales, Digital capabilities and delivery staff. The 1% revision amounts to $120m, and considering that these are investments in people, which will only come gradually, we see the lower end of the margin band as conservative, and expect it to be raised during the course of the year,” Motilal Oswal said in a report.

Credit Suisse said EBITA margin guidance of 22-24 percent (versus 24.3 percent in FY18) was 100 bps below expectations and is disappointing given that the currency is slightly supportive for now.

“A cut in margin guidance was the key disappointment in Infosys’ 4Q results even as 4Q performance and FY19E revenue growth guidance of 6-8% were in line with expectations,” said Jefferies India in a note to its investors.

Commenting on the earnings, Nomura said growth in developed markets was weak and among key verticals (Banking, Financial services and Insurance/Retail) growth was flat to negative. The firm maintained ‘reduce’ rating on stock with a target price of Rs 990.

The revenue of India’s second-largest software services firm increased 5.6 per cent to Rs 18,083 crore. The company said its revenues from digital offerings stood at $2.79 billion (25.5 per cent of total revenues) for FY18. The IT services firm has guided for 6-8 per cent constant currency revenue growth for FY19.businesstoday

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