Stock Market Analysis: Infosys Disappoints Analysts

Infosys's Stock Stumbles: A Deep Dive into Analyst Disappointment

Written by: Supriya Kadu

Edited by: Pinky Deshmukh

Last Updated: April 22, 2024

Infosys Shares Fall: Infosys, India's second-largest software services exporter, had a dramatic drop in its share price on Friday, falling up to 2.9%. The decline came after the company announced a lower-than-expected yearly revenue forecast, casting doubt on the sector's projected early comeback.

As of 09:19 a.m. IST, Infosys shares were down 2% to 1,390 rupees, the lowest price since November 2023. Up to date, the stock has fallen 8%, making it the worst performer among top-tier Indian IT services businesses. In comparison, bigger rival Tata Consultancy Services (TCS) had a 2.3% increase in its shares, while Nifty IT Services fell 5.7%.

Analysts expressed disappointment with Infosys' quarterly performance and outlook, with some calling it unsatisfactory. Ambit Capital stated that the results from both TCS and Infosys indicate a more limited rebound than previously anticipated, citing sluggishness in big segments, existing business leakages, and weaker discretionary demand.

According to LSEG data, at least fourteen analysts have reduced their target prices for Infosys in response to the company's performance. The average target price among 39 analysts has dropped from 1,720 rupees to 1,650 rupees since March 19.

Infosys' missed revenue projection for fiscal year 2024 raised concerns about growth predictability, which will have an impact on recovery among Indian IT companies in fiscal year 2025, according to Emkay Global.

Furthermore, Macquarie analyst Ravi Menon notes that Infosys' revenue forecast has caused several analysts to adjust their outlook for the next two financial years, citing heightened execution risk and limited near-term revenue growth potential.

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