The second-largest software exporter in India, Infosys, saw a sharp decrease in its stock of about 9% in early trade on Friday.
Details on in early trading, Infosys shares decline by about 9%
This decline followed the company’s decision to cut in half its forecast for full-year revenue growth as well as weak first-quarter profit figures.
The company’s revenue projection was dramatically decreased from its previous forecast of 4-7 percent on a constant currency basis to 1-3.5 percent, indicating a difficult period lies ahead.
The Infosys stock experienced its biggest drop since April 17 with this sudden dip, and the benchmark Nifty 50 index suffered significant losses as a result.
Salil Parekh, the chief executive of Infosys, ascribed the decrease in revenue guidance to clients’ procrastination in making important choices.
Clients also reduced discretionary spending as a result of the ongoing global price pressures and recessionary anxieties, which presented new difficulties for Indian IT service providers.
According to Phillip Capital, “Overall, Infosys’ guidance cut reflects tough macro environment leading to weakness in IT services spending in the near term.” Additionally, the firm lowered Infosys’ stock rating from “buy” to “neutral” with a target price of Rs 1,390.
As indicated by the most recent warning from the market leader Tata Consultancy Services, the uncertain demand environment has been a recurring source of worry for Indian IT companies.
Additionally, less well-known competitors like HCL Tech and Wipro reported and forecast moderate growth, pointing to a general industry trend of caution and restraint.
Along with Infosys, shares of other IT firms including Persistent, Wipro, HCL Tech, Tech Mahindra, and TCS also decreased between 1% and 3%.
