Shillong, July 21: Infosys American Depositary Receipt (ADR) experienced a significant drop of more than 9% in pre-market trading following the company’s decision to revise its revenue guidance.
The Infosys ADR was trading at $16.07, leading to concerns among analysts about the profit miss and the sharp reduction in revenue guidance based on Infosys’ Q1 results.
Additionally, IT major Wipro’s ADR also declined by 3.5% on the same day.
IANS reported that in Q1, Infosys achieved $4,617 million in revenues, exhibiting a year-on-year growth of 4.2% and a sequential growth of 1.0% in constant currency.
The company reported a large deal Total Contract Value (TCV) of $2.3 billion for the quarter, with a net new addition of 56.1%. The operating margin for the quarter remained stable at 20.8%, and the Return on Equity (ROE) improved by 180 basis points to reach 32.8%. The attrition rate decreased further to 17.3%.
Despite these figures, Infosys revised its revenue guidance for FY24 to 1.0-3.5%, while retaining the operating margin guidance at 20-22%.
CEO and MD of Infosys, Salil Parekh, expressed satisfaction with the Q1 performance, emphasizing a growth rate of 4.2% and large deals valued at $2.3 billion, providing a strong foundation for future growth. He also mentioned the expansion of generative AI capabilities and the transformative impact of their offering, Topaz, on the overall service portfolio.
Infosys CFO, Nilanjan Roy, attributed the resilient Q1 operating margins to the company’s focus on cost optimization and operational discipline, including improved productivity measures and higher utilization.
Furthermore, he highlighted the robust free cash conversion of 96.6% of net profits and the successful execution of a strong capital allocation policy, resulting in higher payouts to investors and an improved ROE of 32.8%.