Infosys shares witnessed a sharp decline of 7% in early trade on Friday, a day after the IT major announced its quarterly earnings. The stock plummeted to a low of Rs 1,420.10 on the Bombay Stock Exchange (BSE), leading to a significant drop in the company's market valuation by Rs 35,746 crore. The market capitalization of Infosys fell to Rs 5.87 lakh crore from Rs 6.22 lakh crore in the previous session.
Earnings Details
The company reported a consolidated net profit of Rs 5,986 crore for the quarter ended March 31, 2023, which was a decline of 7.3% compared to the same period last year. Revenue from operations grew by 8.8% year-on-year to Rs 37,441 crore, but the growth was below analysts' expectations. The company's guidance for the financial year 2023-24 also disappointed the market, with revenue growth projected at 4-7% in constant currency terms, which was lower than the expected 6-9%.
Reasons for the Fall
The market reaction was primarily driven by the weak guidance and the slowdown in the company's key verticals, including financial services and retail. Analysts noted that the demand environment remains challenging due to macroeconomic uncertainties and cautious client spending. The company's attrition rate, however, showed improvement, declining to 20.9% from 24.4% in the previous quarter.
Impact on Investors
The sharp decline in Infosys shares impacted investor wealth significantly. The stock's fall also dragged down other IT stocks, with the Nifty IT index declining by over 4%. Market experts advised investors to remain cautious and monitor the company's performance in the coming quarters.
Infosys management stated that they are focused on cost optimization and improving operational efficiency to navigate the challenging environment. The company also announced a dividend of Rs 17.50 per share for the financial year.
