Mumbai, Apr13 () : The much awaited Infosys balance sheet proved to be a disappointment for share brokers and sent the share price down by 10% in the noon.
Even though the market leader in IT posted a net profit of Rs 2316 crore for the quarter ending March when it had only Rs 1818 crore in the same period last year, the stock market was not happy.
Last financial year, Infosys posted Rs 7250 crore profits whereas this year it posted an increase of 22.1% and the profit was Rs 8852 crore.
The fourth quarter saw a profit decline of 2.4% which has created a downward trend in share price since this morning and if this continues, the profit margin will come down further in the coming quarter.
V Balakrishnan, Member of the Board and Chief Financial Officer admitted that volatile global currency market played havoc with its profit. Nasscom’s estimate for Infosys was 11-14 % growth in terms of dollar but the company had expected only 8-10%.
SD Shibulal, CEO and Managing Director, Infosys said a new strategy would be put in place since the IT sector would continue to face a slow recovery. On hearing this, shares in Infosys Ltd fell 8.5 per cent in the morning.
Infosys Ltd however maintained that its revenue in financial year ending March 2013 would be in the range of $7.6 to $7.7 billion which is a 8-10 % growth.This took its toll on other IT stocks.
India’s largest software service, TCS shares dropped by 5% to Rs 1,075.30 while Azim Premji’s Wipro shares dropped to 4% lower. Brokerage firm, CLSA based in Hongkong felt that the IT company has a tough task ahead and so would other IT sectors.
Citi said that the growth rate expected by Infosys was below expectation of Nasscom and hence would lose atleast 100 points on the earnings before interest and taxes (EBIT) margin. JP Morgan felt that IT sector growth looked doubtful. Barclays bank predicted that the stock will have a 10% downside.
The US and Europe based companies, which contribute business for nearly 75% of the revenue generated by Indian IT firms affected by a slow economic recovery is the major reason as well as the strong dollar for the drop.