The BSE Sensex slumped as much as 391 points, while the Nifty slipped 125 points in intraday trade. The huge selloff in Infosys came despite the company announcing a bonus issue and higher dividend payouts, moves that will benefit shareholders.
Fund manager Sandip Sabharwal tweeted, "Companies announce bonus on good results and outlook; Infosys strategy creating stock positivity by bonus on poor results difficult to understand."
Here's why Infosys came under huge selloff on Friday
1) In dollar terms, Infosys reported a 0.4 per cent sequential drop in revenues (in constant currency) during the fourth quarter, a big negative considering all its competitors had reported an uptick in dollar revenue growth. TCS had reported a 1.6 per cent growth in dollar revenues, HCL Tech grew at 2.7 per cent and Wipro posted a 1.2 per cent growth.
Vishal Sikka, CEO of Infosys, accepted that the company lost momentum in the March quarter. "I am disappointed that we could not do better in Q4 despite good performance in the first three quarters," he said.
2) For 2014-15 year, Infosys reported a constant currency dollar revenue growth of 5.6 per cent, missing its own estimates of 7-9 per cent growth. For the 2015-16 fiscal year, Infosys expects to grow at 10-12 per cent in constant currency, which is seen as ambitious after taking into accounts is latest performance. (Also read: Bonus Payouts, 25,000 Promotions Helped Contain Employee Exits, Says Infosys)
3) Infosys reported an operating or EBIT margin of 25.7 per cent in Q4, lower than Street estimates of 26 per cent. Operating margin in the March quarter is 100 basis points lower than margins in the December quarter.
Infosys shares ended 6 per cent lower at Rs 1,995.20 and underperformed the sub-index of IT stocks on the National Stock Exchange, which closed 2.8 per cent lower. (Read: IT Stocks Fall as Infosys Misses Q4 Estimates)
via Business - Google News http://ift.tt/1DJApfh
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