Infosys shares brace for steep fall as ADR plunges on NYSE in pre-market session

Shares of Infosys will brace for a steep fall on Friday morning, as hinted at by its American Depositary Receipts (ADRs) that were down nearly 7 per cent in the pre-market session on NYSE. The Infosys ADR was trading at $16.50 apiece, down 6.83 per cent, as the IT firm revised downward its FY24 constant currency (CC) revenue guidance to 1-3.5 per cent compared with 4-7 per cent suggested earlier. It has maintained its Ebit margin guidance at 20-22 per cent.  While a few brokerages did anticipate some downward revision in revenue guidance, a 1-3.5 per cent growth target missed their forecasts by a wide margin.

It maintained its Ebit margin guidance at 20-22 per cent, in line with expectations.

Earlier in the day, the second largest domestic IT firm said its net profit (after minority interest) grew 10.9 per cent year-on-year (YoY) to Rs 5,945 crore for the June quarter compared with Rs 5,360 crore in the same quarter last year. This was against 14-18 per cent growth in the bottom line anticipated by analysts for the quarter.

Net sales for the Bengaluru-headquartered firm rose 10 per cent YoY to Rs 37,933 crore from Rs 34,470 crore in the corresponding quarter last year. Revenue growth came in line with Street expectations.

Operating margin for the quarter stood at 20.8 per cent, up 80 basis points over 20 per cent in the year-ago quarter, but down 20 basis points QoQ from 21 per cent in the March quarter. This was in line with analyst estimates.

Revenue came in at $4,617 million in dollar terms, with the IT firm clocking 1 per cent sequential (up 4.2 per cent YoY) sales growth in constant current (CC) terms. Analysts were expecting a sequential growth of 0.5-0.8 per cent.

Besides, the Bengaluru-based firm said it will conduct a 60-minute conference call at 6:00 pm, where the senior management will discuss the IT major's performance and answer questions from participants. Ahead of its quarterly results, Infosys shares were trading at Rs 1,450 on BSE, down 1.65 per cent. The top Nifty performer of Nifty in the last one month, Infosys shares fell as analysts do see tepid sequential revenue growth, a sequential fall in margin on wage hikes and chances of lowering of FY24 revenue guidance by the IT giant.