Brokerages Expect Infosys To Trade With Negative Bias Post March Quarter Earnings 

Technology major Infosys Ltd.’s promise to return up to $2 billion to shareholders failed to enthuse analysts fretting over a weaker-than-expected guidance.

The country’s second-largest software firm forecast revenue growth of 6.5 percent to 8.5 percent for financial year 2017-18 on a constant currency basis, lagging analyst projections for growth of 7.2 percent to 9.4 percent.

The Bengaluru-based company reported 1 percent fall in net profit at Rs 3,562 crore in the March quarter as against Rs 3,599 crore in the October to December period. The consensus of analyst estimates tracked by Bloomberg stood at Rs 3,570 crore.

Shares of Infosys fell as much as 2.9 percent in early trade on Thursday.

Here’s a look at the first reactions from brokerages:

IDFC Securities

Expect the stock to trade with negative bias on three factors:

• Soft quarterly performance,
• Lack of clarity on timeline of share buyback
• Conservative guidance (implying 2.1 percent to 2.9 percent compounded quarterly growth rate)

ICICI Securities

Positives:

• Company to pay Rs 13,000 crore via dividend/share buyback to shareholders during FY18E.
• Additionally, the company revisited its dividend payout policy to 70 percent versus 50 percent earlier.

Kotak Securities

• Expect 4-6 percent cut in our FY18-19 earnings estimates
• Stock trades at inexpensive valuations
• Rating: Add

Sharekhan

• The company has disappointed by providing lower-than-expected financial year 2018 revenue growth guidance of 6.5 percent-8.5 percent YoY in constant currency terms.
• This is below Cognizant’s revenue growth guidance of 8-10 percent.

Also Read:

Infosys’ Guidance Disappoints; Stock Falls Despite Promise Of $2 Billion For Shareholders