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    Infosys share price: Stock down more than 9% on Q4 results; below Rs 3000

    Synopsis

    Infosys shares closed down 9.59 per cent on BSE at Rs 2988.80. Infosys results lagged market expectations despite a 13.7% rise.

    MUMBAI: Infosys shares closed down 9.59 per cent on BSE at Rs 2988.80. Shares fell after the Indian outsourcing firm reported lower-than-expected fourth quarter net profit, and dragged the broader market down.

    Infosys Technologies Ltd , India's No. 2 software services exporter, lagged market expectations despite a 13.7 percent rise in quarterly profit, hurt by higher expenses in a seasonally weak quarter.

    Here is what the experts have to say about the prospect of Infosys and other IT stocks after the quarterly results.

    Sandip Kumar Agarwal, IT Analyst, Antique Stock Broking

    The Street's expectation for EPS guidance for FY12 was around Rs 140 and if you see Infosys never guides very aggressively. Last year also, they guided Rs 110 for FY11 and outperformed it by approximately Rs 9.

    We should not see what they have guided Rs 128. We believe that it is a good company and is fundamentally very strong, and they will definitely outperform it. So, there is nothing bad in that.

    Secondly, more disappointment has primarily come from the quarter numbers. The Street was expecting very high profit of Rs 1,856 crore, and the actual profit came a little lower than that. Revenue also came a little lower and that is the primary reason of the disappointment. Otherwise, the revenue guidance for FY12 in dollar terms is also 18% to 20% which is very strong and the Street was also expecting 17% to 19%.

    I think they have guided good revenues for FY12, and only the EPS guidance is slightly low. This could be partly because they might have taken into account wage inflation and other things, but at the same time we believe consultancy revenue is picking up. You have around $2 billion contract which will come for renewal in this year and most part of it is at a very high. So, definitely Indian top tiers Infosys and TCS will gain from those contracts and based on that margins will improve. So, it is not that disappointing in my view.

    When asked about his call on Infosys, Sandip Kumar Agarwal said, "Yes, at Rs 3,000 levels, I would be a buyer."

    Ashwani Gujral, Chief Market Strategist, ashwanigujral.com

    Infosys could move lower because clearly the results are subdued and you are sitting on a large rally. Global markets are a bit jittery. So, there could be more downside. This may not be the right time to buy.


    Deepak Mohoni, Director, trendwatchindia.com

    At the moment, the best strategy for a short-term trader if he has taken positions in anticipation of good Infosys results, for instance, should use the day's low so far as a stop loss because the knee jerk reaction to the results has happened. Now, the next few minutes or one hour would reveal whether there are buyers present at these lower levels. If they are not, we are going to see intraday lows. That would mean that people are for the moment shunning technology companies.

    So, that is the lookout. You have a good benchmark now, that is the day's low. So if you have TCS or Wipro, look at the day's low. If those stocks start falling below, then cut the positions go somewhere else.

    ERIC LIN, MANAGER OF THE INDIA FUND AT PRUDENTIAL PLC'S FUND UNIT IN TAIPEI

    "The quarterly result missed market expectations, but investors already took that into account. The biggest concern for Infosys' prospect this year is the slow recovery of the US and European economy." "We don't think the result will hurt Infosys' leading position in the industry. The company has a cash-cow business, and its long-term competitive edge remains."

    ROHIT ANAND, SECTOR ANALYST, PINC RESEARCH, MUMBAI

    "For the fiscal year, the challenge should mainly be on the margin front as salaries are again expected to rise 10-12 percent. The uncertainty regarding the top layer of management is also worrying."

    NITIN JAIN, SINGAPORE PRINCIPAL INVESTMENT MANAGER, KOTAK MAHINDRA'S FUND MANAGEMENT

    "There is pressure on margins. That is a combination of both cost pressures and rupee. Even the outlook is below market expectation. The revenue guidance is broadly in line with expectation, but where we see some disappointment is lower earnings guidance, which means there will be margin pressures."

    TEJAS DOSHI, VICE PRESIDENT RESEARCH, SUSHIL FINANCE, MUMBAI

    "In terms of dollar revenue growth, they are in line with what the expectations were. Overall rupee revenue growth that they have guided for is also fine. But the shocker is 5-7 percent net profit growth that they have guided for. One needs to understand what's driving profitability growth so less. That is far lower than expected."


    NEERAJ DEWAN, DIRECTOR, QUANTUM SECURITIES, NEW DELHI

    "The margins are definitely under pressure in this quarter also and that is why the numbers are below expectations. A major worry is the guidance. The street was expecting a much better guidance, and the performance of the company in the upcoming quarters is expected to be subdued because the rupee is strengthening and then wage hikes due to competition and inflation will add to further pressure." "At the current price the stock is 25 to 26 times earnings this year and that is expensive, so this correction was due. I do not see a major correction in the stock in the coming months but the upside will definitely be capped."

    K.K. MITAL, HEAD OF PORTFOLIO MANAGEMENT AT GLOBE CAPITAL, NEW DELHI:

    "Guidance especially was not upto expectations. I am hopeful they will revise guidance later in the year and that it will improve. Also, some announcements like the resignation of Mohandas Pai is not perceived well in the market. Management clarification on guidance and board members will give some moral boost to investors."

    GAJENDRA NAGPAL, CEO, UNICON FINANCIAL IN NEW DELHI

    "Infosys has a history of generally beating market expectations. So, street is disappointed. Also, market may now bring down its expectations from the entire IT pack."





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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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