Early on June 23, when US IT giant Accenture provided failing revenue guidance, worries over the Indian software giant's earnings caused shares of Infosys to trade in the red. Despite a 5 percent year-over-year increase in sales for the quarter that ended in May on a constant currency basis, Accenture still lowered its full-year growth target, lowering the upper end by 100 basis points.
This change in the forecast may be explained by a significant slowdown in bookings growth, particularly in the outsourcing industry, which points to heightened scrutiny of IT spending.
Accenture's earnings, which reveal a negative market environment that hurt sentiment for local IT competitors like Infosys, have raised concerns about a reduction in deal bookings.
Investors have also expressed alarm over the recent departures from Infosys of two senior executives, Narsimha Mannepalli and Vishal Salvi, who had delivery-related responsibilities. "This development has the potential to revive concerns among investors regarding an uptick in leadership attrition following the exits of co-presidents Ravi Kumar and Mohit Joshi over the past three quarters, brokerage company Motilal Oswal Financial Services noted in its research.
Even though MOFSL regards this as a risk that can be managed, it thinks that any supply-demand imbalance in project management might potentially shorten Infosys' project timeframes shortly.
The price of Infosys' shares on the National Stock Exchange at 9.21 am was Rs. 1,270.15, down around 1% from the previous close.
Despite the short-term downturn in demand, MOFSL is nevertheless optimistic about the company's long-term prospects. As the macro situation stabilizes, IT services companies may experience a significant rebound. The brokerage company also believes that Infosys is a compelling "buy" at its current price after the stock fell over 30% from its peak as a result of recent bad earnings.
