Infosys ADRs slump after muted revenue forecast for FY25

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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US-listed shares of Infosys plummeted as much as 8% in pre-market trading on Thursday, after the company projected tepid revenue growth for the fiscal 2024–25.

The Bengaluru-based information technology services company now forecasts revenue growth of 1% to 3% on a constant-currency basis in the current financial year through March 2025. That compares with the 2% to 6% revenue growth estimated by analysts in a CNBC-TV18 poll.

While the American Depository Receipt (ADR) of Infosys had fallen more than 6% on three occasions in 2023, Thursday’s fall is the biggest for the year so far. It had fallen 9.8% on April 13, 2023, after a disappointing outlook for FY24. Similarly, it slumped 8.4% on July 20, 2023, after cutting the revenue forecast for last year.

The fourth quarter net profit of Infosys increased by 30.5% sequentially to ₹7,969 crore, largely driven by other income, which went up almost four-fold. The other income for the quarter stood at ₹2,619 crore, which includes interest income of ₹1,933 crore and an income tax refund of ₹38 crore. While the revenue of Infosys declined 2.3% to ₹37923 crore on a quarter-on-quarter basis (Q-o-Q), its operating margin came off 40 basis points to 20.1% in Q4FY24.

However, at $17.7 billion, the country’s second-largest IT company delivered its highest-ever large deal value in the financial year 2024. Further, the management sounded more optimistic about its outlook for its BFSI segment, though the manufacturing segment is growing at a slower pace.

“We have a good sense of the early part of the year and will have to see how the second half of the year develops,” said Salil Parekh, CEO and MD of the company post results.

Shares of Infosys have declined 14% over the last three months and the gauge for IT stocks has emerged as one of the worst performers since the sector is seeking to emerge from a slowdown triggered by higher interest rates and inflation. The Nifty IT index has lost almost 10% of its value over the last three months against 2% gains clocked by the benchmark Nifty50 during the same period.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow