Infosys, Wipro hit 52-week lows

In past one-week, Wipro slipped 8% after the company reported disappointing Q2F17 results and a sluggish IT revenue guidance for Q3FY17.

Shares of two information technology (IT) majors Infosys (Rs 994) and Wipro (Rs 454) hit their respective 52-week lows on BSE in intra-day trade on Friday.

At 11:22 am, Wipro was down 0.59% at Rs 460 and Infosys down 0.57% at Rs 1,000, as compared to 0.01% fall in the S&P BSE Sensex. Both these stocks have underperform the market post July-September (Q2FY17) results.

In past one-week, Wipro slipped 8% after the company reported disappointing Q2F17 results and a sluggish IT revenue guidance for the third quarter ending December 2016 (Q3FY17). The benchmark index was down 0.55% during the same period.

After reporting around 1% constant currency (CC) revenue growth in Q2FY17, Wipro has guided for 0%-2% quarter on quarter (QoQ) CC revenue growth for Q3FY17, including the benefit from Appirio acquisition.

Analysts at Prabhudas Lilladher however, retain ‘accumulate’ rating on the stock.

“We believe company is realigning its revenue portfolio to cater to the emerging IT spends, through both organic initiatives and acquisitions. These efforts will likely yield results in medium?term while near term revenue and margins may remain soft,” the brokerage firm said in Q2FY17 results update.

The stock of Infosys was down 2.6% against 0.95% rise in the Sensex, since October 14, after the India’s second-largest software exporter has cut its annual revenue forecast for the second time in three months.

Infosys’ new forecast is that it will grow 8% to 9% in dollar revenue, down from 10.5 to 12% it projected in July. The lower forecast indicates that Infosys will see flat revenue over the next six months, analysts said.

“The company has downgraded its USD revenue growth guidance for FY2017 to 8- 9% on CC basis. We expect the company to post around 9.0% USD revenue growth in FY2017. It aims to reach a milestone of achieving sales of US$20bn by FY2020. Also, the company plans to utilize cash properly through increased dividends and acquisitions, so that it can increase its capital efficiency,” Angel Broking said in a note, with maintain a ‘buy’ rating on the stock.