BENGALURU (Reuters) – Infosys shares fell as much as 10% on Friday, trailing peers and the benchmark index, after India’s No.2 software company cut its half-year revenue growth, fueling concerns about slowing demand for IT services.
The company cut its 2023 revenue forecast to 1%-3.5% on an ongoing basis from 4%-7%, with CEO Salil Parekh blaming customers who delayed making decisions on signing new contracts and starting existing contracts.
Infosys shares were leading the losses in both the benchmark Nifty 50 index and the Nifty IT index.
The drop in Infosys and the IT index was the highest since April 17 when Infosys first released full-year profit estimates, which disappointed investors and worries about demand for Indian IT services amid a global slowdown.
The cut guidance reinforced those concerns.
“Infosys cut guidance reflects a difficult macro environment leading to weakness in IT services spending in the near term,” PhillipCapital Institutional Equity Research said, cutting its rating on the stock to “neutral” from “buy.”
Last week, market leader Tata Consultancy Services also warned of an uncertain demand environment, while smaller peers HCTech and Wipro predicted muted growth.
Still, not all analysts were concerned about the rising market situation.
JM Financial said Infosys had erred on the side of optimism earlier and the forecast cut was a “course correction” rather than a sign of declining demand.
That was confirmed by Coforge, among the smaller IT firms, repeating its full-year guidance thanks to a strong order book.
In fact, on that day, the shares of Coforge small, Mphasis and Technology Services of L & T were the only gainers in the IT index of 10.
Infosys shares ended down 7.7% in morning trade. Still, the stock is up just 6% since April 17, when it was first issued in advance, while the IT index has gained about 11.5%.
(Reporting by Varun Vyas in Bengaluru; Editing by Sohini Goswami)
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