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Business News/ Markets / Stock Markets/  Infosys ADR crashes 8% on NYSE after IT major slashes FY25 revenue growth guidance to 1-3%
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Infosys ADR crashes 8% on NYSE after IT major slashes FY25 revenue growth guidance to 1-3%

Infosys ADR crashed eight per cent to $15.95 on the American stock exchange after the IT major slashed its FY25 revenue guidance to 1-3 per cent from the previous 1.5 -2 per cent in the December quarter.

Infosys ADR crashed eight per cent on NYSE after Q4FY24 results (File Photo: Reuters)Premium
Infosys ADR crashed eight per cent on NYSE after Q4FY24 results (File Photo: Reuters)

Infosys ADR: American Depository Receipt (ADR) shares of India's second-largest software services provider witnessed a sharp decline on the New York Stock Exchange (NYSE) after revealing its January-March quarter results for fiscal 2023-24 (Q4FY24). Infosys ADR crashed eight per cent to $15.95 on the American stock exchange after the IT major slashed its FY25 revenue guidance to 1-3 per cent from the previous 1.5 -2 per cent in the December quarter.

On Thursday, April 18, the Sahil Parekh-led tech giant reported a rise of 30 per cent in net profit at 7,975 crore, compared to 6,134 crore in the year-ago period. The revenue for the quarter under review came at 37,923 crore, up 1.3 per cent year-on-year (YoY). The revenues in constant currency (CC) terms remained flat YoY and declined by 2.2 per cent sequentially.

American Depositary Receipt (ADR) serves as a tool for the foreign companies to trade on US stock markets, just like the regular shares of US companies. Also, in theory, an ADR is similar to a special certificate issued by a US bank.

Infosys Q4 Results: Key metrics

The company expects a revenue growth of 1-3 per cent in constant currency for FY25 and operating margin of 20-22 per cent. "Growth guidance for next year is higher than where we finished for this year. The difference is small. As we go into the industries, we see financial services to see a better outlook in the next year compared to the past year," said Infosys MD and CEO Parekh.

Also Read: Infosys Q4 result: Net profit jumps, attrition rate declined; top 5 highlights of Infosys Q4 earnings

The growth projection is lower compared to the outlook of between four per cent and seven per cent for the just-ended 2023-24. Infosys posted an operating margin of 20.1 per cent during the reported quarter and 20.7 per cent for FY24. During the financial year ended March 2024, net profit increased 8.9 per cent to 26,233 crore from 24,095 crore recorded in FY23.

The annual income from operations increased 4.7 cent to 1,53,670 crore in FY24 from 1,46,767 crore a year ago. The company's employee headcount fell 7.5 per cent to 3,17,240 at the end of FY24 from 3,43,234 in FY23. The full-year headcount fell for the first time in 23 years, while attrition rate declined to 12.6 per cent in the March quarter from 12.9 per cent in the December quarter.

The large deal total contract value of Infosys for FY24 was the highest ever at $17.7 billion, with 52 per cent being net new. "We delivered the highest-ever large deal value in 2023-2024. This reflects the strong trust clients have in us. Our capabilities in Generative AI continue to expand. We are working on client programs, leveraging large language models with impact across software engineering, process optimisation, and customer support," said Parekh.

Infosys board recommended a final dividend of 20 per equity share for FY24 and a special dividend of 8 per equity share. The board reviewed and approved the capital allocation policy for the next five years from FY25-FY29 after taking into consideration the strategic and operational cash requirements.

Also Read: Infosys Q4 Results: At 7.5%, full-year headcount drops for first time in 23 years; attrition down 12.6% QoQ

Additionally, Infosys also announced that it will acquire a 100 per cent stake in German firm in-tech in an all cash deal for 450 million euros, or about 4,000 crore. in-tech develops solutions in e-mobility, connected and autonomous driving, electric vehicles, off-road vehicles and railroad. The acquisition is expected to close in the first half of FY25.

Analysts had not expected Infosys to slash the growth guidance. "It's shocking," said Nirmal Bang Equities analyst Girish Pai. "It is possible they are being conservative."

"Potential factors dragging growth could include an election year particularly in the U.S. and interest rates being higher for longer, or if this is the normalisation of spending surge during the pandemic," he said.

Ahead of the announcement of March quarter results, shares of Infosys settled O.41 per cent higher at 1,420.55 apiece on the BSE

 

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ABOUT THE AUTHOR
Nikita Prasad
Nikita covers business news and has been producing news on digital platforms since 2018. She writes on economy, policy, markets, commodities, industry. Her core areas of interests include infrastructure, energy, oil and gas, railways, and transport/mobility. She has worked for business news channels like Moneycontrol, NDTV Profit, and Financial Express in the past. If you have story ideas/pitches/reports or quotes/views to share, reach her at nikita.prasad@htdigital.in.
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Published: 18 Apr 2024, 06:38 PM IST
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