Worst day for Nifty IT in 11 months as Infosys disappoints Street with Q4 results, dividend

A sharp fall in Infosys shares on Monday dragged the Nifty IT — whose 10 constituents include Tata Consultancy Services (TCS), Wipro, HCL Technologies and Tech Mahindra — 4.7 per cent for the day. Besides Infosys, TCS, LTIMindtree and Tech Mahindra posed the maximum pressure on the IT index.

Blue-chip IT companies TCS and Infosys, the largest software exporters of the country by market value, reported weak set of Q4 results last week. | Image: Reuters

A sharp fall in Infosys shares on Monday dragged the Nifty IT — whose 10 constituents include Tata Consultancy Services (TCS), Wipro, HCL Technologies and Tech Mahindra — 4.7 per cent for the day. All of the 10 stocks finished the day in the red, with Infosys being the worst hit with a fall of 9.4 per cent.

Besides Infosys — which closed weaker by Rs 130.2 at Rs 1,259 apiece on NSE, TCS, LTIMindtree and Tech Mahindra posed the maximum pressure on the IT index.

Here's how the entire IT basket fared:

TRENDING NOW

Stock	Change (%)	CMP
Tata Consultancy Services (TCS)	-1.6	3,139
MPHASIS	-1.8	1,740
WIPRO	-1.8	361.7
L&T Tech Services (LTTS)	-2.6	3,440
HCL Technologies (HCLTECH)	-2.8	1,042.3
COFORGE	-3.3	3,894.7
PERSISTENT	-4.1	4,210
Tech Mahindra (TECHM)	-5.2	1,030.5
LTIMindree (LTIM)	-7	4,323
Infosys (INFY)	-9.4	1,259

Infosys Q4 results: What bothered the Street?

On Friday, Infosys reported a seven per cent quarter-on-quarter fall in net profit to Rs 6,128 crore for the three months to March 2023. Its revenue contracted 2.3 per cent sequentially — in rupee as well as dollar terms, to Rs 37,441 crore and $4,554 million respectively, according to a regulatory filing.

The IT major's margin — a key measure of profitability — shrank by 50 basis points to 21 per cent.

According to Zee Business research, the company's quarterly profit was estimated at Rs 6,600 crore, revenue in rupees at Rs 39,000 crore, revenue in dollars at $4,738 million and margin at 21.2 per cent.

The Infosys board recommended a dividend of Rs 17.5 per share, subject to shareholders' approval. Read more on Infosys Q4 results | Key highlights

Many brokerages downgrade Infosys after IT major's Q4 results

The release of the quarterly Infosys numbers triggered a barrage of downgrades and target price reductions by top brokerages.

Credit Suisse revised its rating for Infosys to 'neutral' from 'outperform' and reduced its target price by Rs 520 to Rs 1,240 — implying a potential downside of 10.7 per cent from Thursday's closing price.

Brokerage	Rating	Target
CLSA	Revised to 'outperform' from 'buy'	Cut to Rs 1,550 from Rs 1,800
JPMorgan	Revised to 'Underweight' from 'neutral'	Cut to Rs 1,200 from Rs 1,500
Citi	Revised to 'neutral' from 'buy'	Cut to Rs 1,400 from Rs 1,675
Morgan Stanley	Overweight	Cut to Rs 1,475 from Rs 1,625
Credit Suisse	Revised to 'neutral' from 'outperform'	Cut to Rs 1,240 from Rs 1,760
Jefferies	Buy	Cut to Rs 1,570 from Rs 1,770
Nomura	Revised to 'neutral' from 'buy'	Cut to Rs 1,290 from Rs 1,660
Macquarie	Revised to 'neutral' from 'outperform'	Cut to Rs 1,400 from Rs 1,770
HSBC	Buy	Cut to 1,550 from Rs 1,775

TCS kicked off Q4 results season on a weak note

Last week, TCS reported five per cent sequential growth in net profit to Rs 11,392 crore for the January-March 2023 period. Its rupee revenue expanded 1.6 per cent to Rs 59,162 crore, and dollar revenue 1.7 per cent to $7,195 million, according to a company statement.

The Tata group IT giant's margin remained flat at 24.5 per cent on a sequential basis. TCS announced a dividend of Rs 24 per share.

According to the Zee Business analysts, Tata Consultancy Services' quarterly profit was pegged at Rs 11,600 crore, rupee revenue at Rs 59,200 crore, dollar revenue at $7,202 million and margin at 24.8 per cent.

EDITOR'S TAKE | Anil Singhvi sees support for Infosys futures at Rs 1,200-1,245 levels

Zee Business Managing Editor Anil Singhvi pointed out that the Q4 results of TCS slightly lagged expectations in terms of profit, revenue and margin, but fared marginally better on the new orders front. However, he also said that "there was no silver lining in terms of new orders".

The TCS management commentary was neutral, "not too good, not too bad", the market expert said.

Singhvi highlighted that the IT major reported a weak set of results with a poor guidance. Infosys pegged revenue growth in constant currency terms revenue growth at 4-7 per cent for the year ending March 2024, and operating margin at 20-22 per cent. Read more on Infosys guidance

He sees support for Infosys futures coming in at Rs 1,200-1,245-odd levels.

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