Market cool to Infosys' Swiss co buy; deal size disappoints

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26 Aug, 2025 12:21

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Moneycontrol Bureau

Infosys shares were up around 1% at Rs 2520, as the market does not appear to be too impressed with the company’s latest acquisition in the consulting space. Earlier today, Infosys announced that it has acquired Switzerland-based consulting firm Lodestone Holding AG for USD 350 million (around Rs 1960 crore).

The view among analysts is that the deal size is not significant to make a difference to Infosys’ earnings, as the company grapples with slowing revenue growth caused by a combination of internal and external factors.

Infosys said the acquisition would give it another 200 clients in the consulting business, and push up combined revenues to over USD 1 billion, making it one of the large players in the global SAP consulting business.

Infosys has around Rs 20,000 crore of cash on its books, and the market has been hoping for some large-sized deal that could boost Infosys’ numbers.

Key company officials had briefed analysts late last months, and most of them (analysts) retained their cautious outlook.

This is what Deutsche Bank said in its note on August 28:

"The conversation with the CFO suggests there has been no change in the business outlook since the June quarter. In the long term, despite a supportive valuation, we are worried about (a) market share loss, (b) dwindling growth in traditional services, (c) inferior positioning in the new growth market (Continental Europe) and (d) reduced focus on  (below) USD 50 mln clients."

This is what Nomura said in its note on August 30.

"We continue to remain cautious on Infosys on 1) The company growing slower in cost efficiency segments both on higher margin thresholds and mix issues with a smaller/less focused IMS practice 2) High discretionary dependence impacted by macro uncertainty 3) overhangs of visa related inquiries and 4) High dependence of 2H deal flow for street and our double digit growth expectations to be met.