Infosys down on poor guidance

Infosys is among the top five losers on the BSE, going down over 4.5% to Rs.713.70 and it has underperformed the sector by almost 4%.

The market is not too happy with the financial performance of the company, especially on the EBIT and on the revenue guidance part.

The company reported an EBIT of 21.5%, going down 110 bps on a sequential basis, coming in much lower than expected.

Post this, Infosys future guidance was not too encouraging, leading to many brokerages downgrading the stock.

The company guided revenue to increase 7.5% to 9.5% in constant currency terms in the year ending March 2020 and it forecast an operating margin 21% to 23% for fiscal year 2020 estimates, from an earlier guidance of 22-24% for fiscal year 2019.

The lowering of EBIT guidance is on account of increased investments for further growth into enhancing digital competencies, large deal capabilities and localisation. The management stated that the aggressive investments on sales revitalization are completed and the pace of investments will be less intense in FY20 estimates.