 "TCS, Wipro, Infosys, IT Companies")
Shares of information technology (IT) companies were under pressure as Nifty IT index plunged 8 per cent in Monday’s intra-day trade, after sector giants Tata Consultancy Services (TCS) and Infosys posted weaker set of numbers for the January-March quarter (Q4FY23).
Shares of Infosys, Wipro, and Mphasis hit their respective 52-week lows and tanked up to 15 per cent on the National Stock Exchange (NSE) in intra-day trade.
At 09:47 am; Nifty IT index, the worst performer, was down 6 per cent, as against 1 per cent decline in the Nifty50 index.
Among individual stocks, Infosys was down 11 per cent to Rs 1,231.85, after hitting a 52-week low of Rs 1,185.30 in intra-day tradde, whereas shares of Persistent Systems and LTIMindtree were down up to 7 per cent. Others like L&T Technology Services, Coforge, Tech Mahindra, Mphasis and HCL Technologies declined up to 6 per cent.
On the overall sector, analysts at Nomura remained cautious as they believed FY24F will be a year of revenue growth disappointment.
"The increasing macro-economic headwinds are likely to create challenges in terms of growth, as enterprises delay their decision-making, and prioritise cost optimisation projects with upfront benefits, over transformation projects with back-ended returns," the brokerage firm said.
Moreover, analysts said that a detailed analysis and interaction with industry participants suggested that that macro-slowdown and higher inflation in developed markets are likely to impact tech budget outlook for most industries in 2023, and moderate revenue growth rate of Indian IT companies in FY24F versus FY23F.
Meanwhile, Infosys reported weak set of numbers and missed Bloomberg estimates both on revenue as well as profit front. While Bloomberg estimated revenue to be Rs 38,769 crore, the company reported revenue growth at Rs 37,441 crore, up 16 per cent year-on-year (YoY), and down 2.3 per cent quarter-on-quarter (QoQ).
Infosys’ performance during the quarter under review was subdued, owing to unplanned project ramp-downs and delays in decision-making by the company’s clients. The IT major’s revenue growth guidance for FY24 was in the range of 4-7 per cent, lower than Street expectations, and much below the rise the company clocked in FY23. Margin guidance for FY24, on the other hand, was in the range of 20-22 per cent, against Street estimates of 21-23 per cent.
The earnings' season started on a sombre note with Q4 scorecards that fell short of expectations, but more importantly the management commentary of India's top two IT services companies was punctuated with words of caution about prevailing customer sentiments across BFSI, technology services and certain other verticals, particularly in the US.
The results of top-tier companies TCS and Infosys have tripped on global uncertainties and missed street estimates, setting a subdued tone for Q4 show by the IT pack, and experts see choppy 1-2 quarters for the industry, and subsequent recovery therein. CLICK HERE FOR FULL REPORT
