India's IT titan, Infosys Ltd, announced its Q1 FY 2023-24 results on July 20, taking a surprising turn as the revenue guidance for FY24 was significantly pared down to 1-3.5% from the earlier band of 4-7%. The revised projection is based on several factors including a challenging demand environment and delays in decision-making, among other reasons.
In reaction to this, shares of Infosys tumbled nearly 10% to hit an intraday low of Rs 1,305 on the National Stock Exchange (NSE) on Friday, June 21.
A Sneak-Peak into the Results
Despite the slashed revenue guidance, the IT behemoth maintained its operating margin or EBIT guidance at 20-22%. Infosys recorded an 11% surge in net profit, escalating to Rs 5,945 crore from the prior Rs 5,362 crore reported in the year's corresponding period.
The consolidated revenue also reflected growth, recording a 10% increase to Rs 38,494 crore for the quarter ending in June. This was up from Rs 35,146 crore in Q1FY23. The operating margin for the quarter was 20.8%, with growth of 0.7% year-on-year, and a decline of 0.2% sequentially.
The total contract value (TCV) of major deals for the quarter stood at $2.3 billion, with net new accounting for 56.1%
Ratings by Brokerage Firms
Post Q1 results announcement, brokerage firms display varied opinions on the stock. Here's a summary of their revised ratings and target price adjustments.
Although the downscaling of the guidance could cause short-term volatility in the Infosys stock, it appears to be more of a perception issue than an operational one. The previous guidance might have been overly optimistic considering the current market conditions.
Despite these near-term challenges, we remain confident in Infosys' potential for long-term growth. As the macroeconomic conditions improve, the company could experience a positive shift in its growth trajectory.
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