Shares of Infosys fell as much as 6 per cent in the morning trade as the company has reported less-than-expected margin guidance for the fiscal year 2018-19.
After opening on a weak note, the stock fell to an intra-day low of Rs 1,099, down 5.98 per cent from its previous closing price. On the NSE, the stock fell 5.92 per cent to an intra-day low of Rs 1,102.00.
The stock was the biggest contributor to the losses on the Sensex.
Global brokerage Nomura in a research note said “growth weakness in developed markets, BFSI and retail is a negative. We expect the stock to react negative to the margin guidance cut.''
The report further noted that “guidance for FY19 growth is in line with consensus, though a cut in EBI margin guidance to 22-24 per cent (as against 23-25 per cent earlier) was a disappointment''.
Infosys, on April 13, had reported a consolidated net profit of Rs 3,690 crore, or Rs 16.98 per share, in January-March 2018 quarter as compared to Rs 3,603 crore, or Rs 15.77 a share in the same period a year back.
For 2018-19, Infosys expects its revenue to grow in the range of 6-8 per cent in constant currency terms and 7-9 per cent in the US dollar terms. For financial year 2018-19 Infosys expects operating margin range at 22 per cent to 24 per cent.
The company said its revenues grew 5.6 per cent to Rs 18,083 crore in the January-March quarter compared with Rs 17,120 crore in the year-ago period. Net profit was up 11.7 per cent at Rs 16,029 crore, while revenues grew 3 per cent to Rs 70,522 crore in FY2017-18 over the previous year.
According to Morgan Stanley, FY19 margin guidance has surprised negatively. Credit Suisse says EBITA margin guidance of 22-24 per cent (versus 24.3 per cent in FY18) is 100 bps below expectations and is disappointing given that the currency is slightly supportive for now.
Morgan Stanley expects the stock to pare some gains, given strong YTD price performance and disappointing outlook for next year. Infosys stock had risen 12.4 per cent this year up to Friday.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.