The trading in Infosys’ April futures on the National Stock Exchange, a day before the results suggests futures and options (F&O) players were expecting muted guidance. The April futures had settled three per cent lower compared to the day’s high, adding 144,875 shares in open interest, indicating short build-up.
The selling pressure increased on the day of the results, with April futures sliding 12.50 per cent and fresh addition of 1.35 million shares in open interest. In the cash market, the gross deliverable positions on the Bombay Stock Exchange and the National Stock Exchange soared 536 per cent to 5.76 million shares, accounting for over one per cent equity capital of Infosys.
Options traders have build-up shorts in 2,400-2,550-strike calls and have covered short positions in 2,500-2,800-strike puts. The participants also bought 2,300-2,400-strike puts on expectations of fresh fall.
The knee-jerk reaction to the Infosys stock, according to an analyst at Ambit, was primarily on account of the poor overall results which suggest the second-largest software company is growing below the industry, and industry giant Accenture.
| THE STORY SO FAR Revenues ($ million) | ||||||
| Guidance* | Actuals | % rise | Results day | Mkt price | % chg** | |
| FY 02 | 538 | 545 | 1.30 | 11-Apr-01 | 404.85 | -16.00 |
| FY 03 | 645 | 754 | 16.90 | 10-Apr-02 | 471.86 | 4.77 |
| FY 04 | 955 | 1063 | 11.31 | 10-Apr-03 | 380.57 | -26.78 |
| FY 05 | 1387 | 1592 | 14.78 | 13-Apr-04 | 686.27 | 6.82 |
| FY 06 | 2054 | 2154 | 4.87 | 15-Apr-05 | 978.3 | -6.93 |
| FY 07 | 2780 | 3090 | 11.15 | 17-Apr-06 | 1615.15 | 6.94 |
| FY 08 | 3985 | 4176 | 4.79 | 13-Apr-07 | 2087.6 | 2.15 |
| FY 09 | 5010 | 4663 | -6.93 | 15-Apr-08 | 1510.8 | 6.21 |
| FY 10 | 4435 | 4804 | 8.32 | 15-Apr-09 | 1370.8 | -2.72 |
| FY 11 | 5620 | 6041 | 7.49 | 13-Apr-10 | 2782.35 | 3.69 |
| FY 12 | 7190 | 6994 | -2.73 | 15-Apr-11 | 2988.8 | -9.59 |
| FY 13E | 7623 | 7636E | ||||
An analyst at Motilal Oswal blamed it on a significant miss in the fourth quarter revenue guidance, tepid margin and weak outlook for FY13. The analyst said the company required a high ask rate in seasonally weak quarters to meet the top-end of the guidance. All these do not just bode negatively for Infosys, but raise concern on the FY13 growth prospects for the sector.
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The market reaction to the Infosys guidance given at the beginning of the year has been 50-50 in the last 10 years. The stock had reacted 16 per cent in April 10, 2001, 26.8 per cent in April 9, 2003 and 12.6 per cent on April 13, 2012.
In the last one year, Infosys stock prices have fallen 20 per cent, mostly due to its underperformance and muted guidance compared to its peer, analysts say. However despite the lower guidance for FY13, analysts are expecting the Infosys share price to move between 2,550 and 2,883 in the next one year.
The guidance of eight-10 per cent growth in dollar revenues in FY13 was below even the most conservative of estimates, especially after the improving macro outlook in the US and the 11-14 per cent industry growth guidance by Nasscom. In line with the company’s expectation, analysts have revised the dollar revenue guidance for FY13 from $7,911 million to $7,636 million.