The stock experienced a significant decline of 3.63%, reaching a daily low of Rs 1,415 compared to its previous closing value of Rs 1,468.30.
With Wednesday’s decline, the stock has dropped by 6.09% over the course of three trading days.
Infosys Ltd shares witnessed a significant decline in Tuesday’s trading session, marking the third consecutive session of losses. The stock plunged by 3.63% to reach a daily low of Rs 1,415 from its previous closing price of Rs 1,468.30. With today’s drop, the stock has recorded a 6.09% decline over the past three trading days.
Infosys, headquartered in Bengaluru, is set to unveil its quarterly (Q4 FY24) results on April 18. However, domestic equity benchmarks will remain closed on Wednesday due to Ram Navami celebrations.
Last week, Tata Consultancy Services (TCS) initiated the corporate earnings season on a positive note with results surpassing expectations.
Analysts anticipate Infosys to report a relatively unchanged profit for the March quarter, with sales growth expected to hover around 3-4% year-on-year (YoY).
According to Sharekhan, the IT giant is projected to witness a 0.5% decline in constant currency (CC) revenue, attributed to weakened discretionary spending and reduced contributions from significant deals. The brokerage foresees EBIT margins to remain steady for the quarter.
Nirmal Bang Institutional Equities anticipates Infosys to maintain its revenue growth guidance for FY25 within the 4-7% CC range. Margin guidance is expected to mirror that of FY24, ranging between 20-22% EBIT margin.
Nirmal Bang anticipates Infosys to register a revenue growth of 1.2% quarter-on-quarter (QoQ) in constant currency (CC) terms, with an additional benefit of 25 basis points (bps) from cross currency tailwinds.
In terms of technical analysis, the stock is likely to find support levels at Rs 1,400 and subsequently at Rs 1,355. “The stock has experienced a notable decline over the past two months from the Rs 1,730 level. With the current bearish sentiment, the next significant support level appears to be around Rs 1,355. To validate a bullish stance, it must convincingly surpass the Rs 1,500 zone, indicating potential for further upward movement. With the anticipation of Q4 FY24 results, there may be considerable volatility in the stock’s price action in the upcoming sessions,” noted Shiju Koothupalakkal, Technical Research Analyst at Prabhudas Lilladher.
Jigar S Patel, Senior Manager and Technical Research Analyst at Anand Rathi Shares and Stock Brokers, outlined the immediate support level for Infosys at Rs 1,400, with resistance expected at Rs 1,445. A definitive close above Rs 1,445 could potentially lead to further upward movement towards Rs 1,475. Patel projected a trading range between Rs 1,375 and Rs 1,475 for the upcoming month.
In other news, Infosys has declared the successful conclusion of the technology landscape separation program for Team Global Express, the Australian express logistics business.
How did this happen and what does this mean for Infosys?
Possible reasons for the drop include:
Recent Quarterly Performance: Following a slight increase in Q2 net profit and a downward revision of their FY24 revenue guidance, Infosys’ stock price experienced a 4% decline in July 2023 [2].
Q4 FY24 Earnings Expectation: Analysts anticipate muted growth of 3-4% year-on-year for Infosys’ Q4 FY24 results, scheduled for announcement on April 18th, 2024 [1]. This subdued performance may stem from factors such as reduced discretionary spending by clients and a decline in significant deals.
Global economic slowdown: A weaker global economy may prompt clients to tighten their IT budgets.
Increased competition: Intense competition within the Indian IT sector could exert pressure on Infosys.
Shifting client priorities: Client preferences may be evolving, focusing on different IT needs than Infosys’ traditional strengths.
The impact on Infosys hinges on the severity and duration of the revenue decline. In the short term, it could result in reduced profits and a decline in stock price. Over the long term, Infosys may need to adjust its business model to remain competitive.
