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Infosys shares on Wednesday hit a six-month low on the back of lower-than-industry revenue guidance and high attrition.
India’s second largest software exporter saw its stock price dip to ₹3,159.9, down 3 per cent from Tuesday’s closing price. This dip in the stock price takes Infosys to levels that seen on October 10, according to data available with the stock exchanges.
Also, this dip comes in the backdrop of the company’s stock price rallying since October and even reaching a historical high of ₹3,847 in March. However, the going has not been smooth since then.
A slew of top management exits, coupled with low growth expectations for fiscal year 2015 has market watchers worried. “If attrition is not contained, measures taken to improve productivity will not bear fruit,” according to Ankita Somani, IT and Telecom Analyst, Angel Broking.
The company is battling attrition, which at the end of fiscal 2013-14 stood at 18.7 per cent or nearly 36,268 employees, which includes a bulk of middle- and entry-level employees, in addition to senior-level exits.
“The fact that this is a volume attrition is a real cause of concern,” said Sundararaman Viswanathan, Manager — Consulting, Zinnov.
Despite this gloomy scenario, most analysts are upbeat about the prospects of the company in the 2015 fiscal due to improvement in outsourcing demand and the company’s reorganisation efforts. According to a report put out by Espirito Santo Securities India analysts Nitin Padmanabahan and Soumitra Chatterjee, an improving US economy and good growth in consulting and systems integration, which have contributed 60 per cent to revenues, will see Infosys’ growth improving through the year.
Also, since CEO SD Shibulal’s announcement to retire as CEO, MD and board member by January 2015, two months earlier than expected, either on the date of the last board meeting before his superannuation in January or when his successor is ready to assume office, whichever date is earlier, analysts believe that the successor would have sufficient time to drive Infosys’ future growth strategy.
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