Moneycontrol Bureau
Shares of Infosys are under tremendous selling pressure, dragging it 9 percent in early trade on Thursday. Investors are worried about the software company as executive chairman Narayana Murthy on Wednesday said he is not at all happy at the way Infosys has performed.
Raising concerns about its growth guidance, he said Infosys hasn’t been able to cash in on the rupee depreciation and operating margins.
Addressing an investor concall hosted by Barclays, Murthy said, “We expect to be somewhere between 11.5 percent and 12 percent in our revenue growth. Much more like 11.5 percent compared to what is being proclaimed as the Nasscom industry growth rate and that is about 13 percent.” (Read the full story here.)
He added under normal circumstances, Infosys should have used the rupee depreciation to increase its margin to 41.5 percent but instead its operating margin has fallen by 45 percent and revenue growth has fallen by 22 percent in the last two years. Murthy remarked Infosys grew at 5.8 percent in FY12, FY13 when the Indian software industry grew at 11 percent. This growth is something he is not proud off.
Brokerages view
Most brokerages are worried and have started slashing target prices. Barclays has revised target to Rs 3960 from Rs 4150 per share. Deutsche Bank cut target price to Rs 3600 per share from Rs 3,800 share while Bank of America Merrill Lynch reduced target price to Rs 4,000 per share from Rs 4,300 per share.
However, Nilesh Shah MD & CEO of Envision Capital is not so underpinned by Murthy’s comments. He says Murthy has always used the strategy of under promising and over delivering. “Surely this is an indication that the company remains in a ‘work-in-progress’ mode but I still believe that the best is yet to come for the company,” he said.
At 09:18 hrs, the stock was quoting at Rs 3,400.00, down Rs 270.90, or 7.38 percent on the BSE.
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