Infosys shares fall over 9%; mcap declines by Rs 59,349 cr post earnings announcement

New Delhi: Shares of Infosys on Monday tanked more than 9 per cent, wiping out Rs 59,349.66 crore from its market valuation, after the company reported a lower-than-expected growth in the fourth quarter net profit and gave a weak 4-7 per cent revenue growth guidance for FY24.

The stock tumbled 9.40 per cent to settle at Rs 1,258.10 on the BSE. During the day, it plunged 12.21 per cent to Rs 1,219 -- its 52-week low mark.

On the NSE, it fell 9.37 per cent to finish at Rs 1,259.

Infosys was the biggest drag on both the benchmark indices Sensex and Nifty.

The company's market valuation also declined by Rs 59,349.66 crore to Rs 5,21,930.34 crore.

The 30-share BSE Sensex fell 520.25 points or 0.86 per cent to finish at 59,910.75, pulled down by Infosys and weak trends in other IT counters.

"The real damage was done by the frontline IT stocks with Infosys coming under severe hammering after its corporate earnings failed to meet street estimates. Besides disappointing results, worries of weak IT spending by multinational giants on gloomy economic conditions and recessionary fears have weighed heavily on the sector over the past few months," Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities Ltd, said.

Other IT firms also faced heavy drubbing, with Tech Mahindra, HCL Technologies, Tata Consultancy Services and Wipro falling in the range of 1-5.25 per cent.

The IT index tanked 4.77 per cent to settle at 26,887.72.

"The worse-than-expected Q4 results from Infosys with only 4-7 per cent revenue growth for FY24 will drag down IT stocks impacting the Nifty," V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

On Thursday, Infosys reported a lower-than-expected growth in the fourth quarter net profit and gave a weak 4-7 per cent revenue growth guidance for FY24 amid the tightening of IT budgets by clients following a turmoil in the US banking sector.

Infosys' latest report card was a disappointment on several fronts - the company missed revenue guidance for FY23 hit by "unplanned project ramp downs and decision-making delays by some clients", the company said.

With global macroeconomic uncertainties looming, it has given a subdued 4-7 per cent revenue growth forecast for FY24, with top management cautioning that "the environment remains uncertain".

The company had last given single-digit revenue guidance in FY19.

India's second-biggest software services firm posted a 7.8 per cent year-on-year growth in consolidated net profit at Rs 6,128 crore for the March quarter. But the profit fell 7 per cent when compared to the preceding December quarter.

Revenue growth in constant currency for FY23 came in at 15.4 per cent, lower than the guidance. Notably, during the Q3 earnings announcement in January this year, Infosys -- which competes in the market with Tata Consultancy Services (TCS), Wipro and other IT firms -- had raised FY23 revenue guidance to 16-16.5 per cent (against the previously projected band of 15-16 per cent).

Infosys' Q4 year-on-year growth was 8.8 per cent and the sequential decline was 3.2 per cent in constant currency terms.

Revenue rose 16 per cent year-on-year in the fourth quarter of FY23 to Rs 37,441 crore but declined 2.3 per cent when compared to December 2022 quarter.