Infosys scrip crashes 4% after FY16 $-revenue guidance cut

Despite positive opening and the stock hitting a one-year high of Rs 1,219, shares slipped into the red and ended with a loss of 3.88 per cent at Rs 1,122.50 on the BSE. 

During the day, it had tumbled 5 per cent to Rs 1,108.90. On the NSE, the stock dipped 3.81 per cent to Rs 1,122.90 at <g data-gr-id="43">close</g> of trade. 

The company’s market valuation was down Rs 10,415.96 crore, to Rs 2,57,832.04 crore. On <g data-gr-id="41">volume</g> front, 12.71 lakh shares of Infosys changed hands on the BSE and over 1 crore shares were traded at the NSE during the day. The stock was the worst performer among the blue-chips on both Sensex and Nifty. “Infosys Q2 results are quite impressive. Slashing the <g data-gr-id="44">full year</g> dollar revenue guidance is <g data-gr-id="38">reflection</g> of management’s realistic market expectation. The dip in the stock price is perhaps an <g data-gr-id="45">over reaction</g> to the cut in revenue guidance and profit-booking to a certain extent,” said Nithin Kamath, Founder & CEO, brokerage firm Zerodha. Infosys, India’s second-biggest software exporter, reported a 9.8 <g data-gr-id="46">per cent</g> rise in September quarter consolidated net profit on Monday but trimmed its dollar sales growth forecast for the current fiscal on dollar woes.

The company also said its Chief Financial Officer Rajiv Bansal has resigned. Consolidated net profit in July-September rose to Rs 3,398 crore compared with Rs 3,096 crore in the year-ago period, the company said in a statement. Revenue was up 17.2 per cent to Rs 15,635 crore in the second quarter ending September 30 from Rs 13,342 crore in the year-ago period. For the full fiscal, Infosys said revenue in dollar terms is likely to grow 6.4 per cent to 8.4 per cent, lower than previous guidance of 7.2 to 9.2 <g data-gr-id="37">per cent</g>, as broad weakness in IT spending and a stronger dollar are making clients wary.

While the company did not give reasons for the cut in growth forecast, the appreciation of the dollar against major currencies is said to be the main cause. “Though the company posted better-than-expected numbers but factors like lower revenue guidance in dollar terms, CFO resignation and dip in volume growth, dented the sentiments and triggered profit taking,” said Jayant Manglik, President, Retail Distribution, Religare Securities.

<g data-gr-id="33">Weakness</g> was also seen in other IT stocks, with TCS falling 1.42 per cent and Wipro, 1.02 <g data-gr-id="28">per cent</g>. The IT index was down 2.08 <g data-gr-id="29">per cent</g> to settle at 11,280.57.