Infosys’ American Depository Receipts (ADRs) opened 9.7 percent lower on the New York Stock Exchange, on July 20, and closed 8.4 percent down. This is following the software major slashing its revenue guidance for FY24 to 1-3.5 percent from 4-7 percent, with the demand environment becoming increasingly difficult.
The ADR opened at $16 today, after closing the previous session at $17.71.
Salil Parekh, CEO and MD of Infosys, said in the press conference following the earnings release of Q1FY24, that the company is seeing clients either stopping or slowing down transformation programs and discretionary programs, particular in financial services, mortgages, hi-tech, telecom, and retail.
He added that deal signings and start dates have been delayed, and a lot of the revenue from the larger and mega deals will be seen only towards the later part of the financial year. A combination of both is why, Parekh said, the company slashed its revenue guidance for the year.
Revenue guidance
In an interaction with Morgan Stanley in early June, the company had expressed confidence about meeting the lower end of the 4-7 percent revenue growth in constant currency terms in FY24. Even then, it had said that achieving the higher end of that band would be difficult unless some of the high-end deals closed at a faster pace.
Infosys has slashed its revenue guidance but maintained its operating margin guidance at 20-22 percent.
In Q1FY24, the company reported a 11 percent increase YoY in its net profit to Rs 5,945 crore. The number missed miss market expectations.
Its consolidated revenue increased 10 percent YoY to Rs 37,933 crore, while its operating margin came in at 20.8 percent, down from last quarter’s 21 percent.
The company saw disappointing numbers in the previous quarter too.
While the IT major had affirmed a revenue growth guidance in constant currency at 16-16.5 percent at the end of last quarter, it posted a full-year revenue growth of 15.4 percent. Sequentially, revenue for the quarter declined 2.2 percent in reported terms, and fell 3.2 percent in constant currency terms, coming in at $4,554 million
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