Shares of Infosys fell over 12 percent on Monday in opening deals at after the IT major reported a weak set of numbers for the March quarter of FY23 (Q4FY23). Its results came in below Street estimates for the quarter under review.
The stock shed as much as 12.2 percent to hit its intra-day low of ₹1,219 per share.
In Q4, the firm posted a 7.8 percent year-on-year (YoY) rise in consolidated net profit at ₹6,128 crore. It gave 4-7 percent revenue growth guidance for FY24 amid macroeconomic uncertainties, well below analysts' expectations of a 10.7 percent growth. This revenue growth guidance is the slowest in six years. Before this, the IT firm posted a 3 percent revenue growth in fiscal 2018.
Infosys, during the Q3 earnings announcement in January this year, had raised FY23 revenue guidance to 16-16.5 percent against the previously projected band of 15-16 percent.
"Infosys’ guidance of 4-7 percent YoY revenue growth (in cc) for FY24 (vs 13-15 percent for FY23 at the start of the previous year) and our expectation of 6-8 percent YoY guidance represent significant moderation in demand. Net new deal wins at $440 million in 4Q were the lowest reported number since the pandemic i.e:1QFY21. A widened FY24 revenue growth guidance band (300bp vs 200bp usually guided) represents higher uncertainty in the demand environment," Nomura India said in a report. The brokerage downgraded the stock to 'Neutral' and cut its target price to ₹1,290.
Its consolidated revenue in constant currency terms jumped 15.4 percent YoY in the fourth quarter of FY23 at ₹37,441 crore. On a sequential basis, the revenue fell by 3.2 percent.
Meanwhile, dollar revenue for the quarter came in at $4,554 million, down 2.2 percent QoQ.
For the full year FY23, the net profit was up 9 percent on year at ₹24,095 crore, while revenue was 20.7 percent higher at ₹1,46,767 crore.
"As the environment has changed, we see strong interest from our clients for efficiency, cost and consolidation opportunities, resulting in a strong large deal pipeline," Infosys CEO and MD Salil Parekh said in a statement.
The company said it does not have a "clear view" for the full year and that the impact was bigger in the United States than in Europe.
It won large deals worth $2.1 billion in the quarter, less than the $2.3 billion it won a year ago.
“The stock has seen a sharp gap down opening post its result, currently is trading around its key support of 200-week moving average around 1200. however one should avoid catching the falling knife as long we don't see a reversal sign or base formation. the stock may continue to underperform in the near term with the bearish gap left today between the 1300 - 1400 range to act as resistance,” said Rajesh Bhosale - Equity Technical and Derivative Analyst, Angel One.