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Infy scrip takes a hit

Mumbai, March 13: Infosys today plunged almost 9 per cent after executive chairman N.R. Narayana Murthy said its dollar-denominated revenues would grow at around 11.5 per cent this fiscal — at the bottom end of its guidance for the year, trailing peers such as TCS and HCL Tech.

Infosys had earlier projected dollar revenues to grow by 11.5 to 12 per cent in this fiscal.

On the BSE, the Infosys scrip ended lower by 8.54 per cent, or Rs 313.40, at Rs 3,357.50 after hitting an intra-day low of Rs 3,340. The sharp fall in its stock price came after few brokerages cut their target price following the remarks made by Narayana Murthy and CEO S.D. Shibulal in an investor conference on Wednesday.

The Infosys scrip has been heading north over the past few months after the company reported better-than-expected numbers for the past two quarters. A depreciating rupee (that improves margins of IT firms) coupled to a turnaround in the US economy added to the upbeat sentiment. There has also been a growing optimism that the turnaround measures undertaken by Murthy since he assumed helm last year is bearing fruit.

However, observers were in for a surprise on Wednesday when Murthy said that revenue growth in this fiscal could come at around 11.5 per cent, which indicated that the current quarter would not be as rosy as expected.

Market circles said the caution expressed by the top Infosys management could also impact their estimates for the next fiscal. Incidentally, Shibulal had on Wednesday said the sluggish growth in January-March quarter because of muted client spending, particularly in retail, could spill over to 2014-15.

Brokerages now feel given these remarks, Infosys could guide for an 11 per cent growth in dollar revenues for the next fiscal.

Murthy expressed “great concern” over declining revenue growth with the rate of growth declining 77 per cent during March 2011 to March 2013. He also expressed disappointment over operating margins.

“Under normal circumstances, our operating margin should have been 41.5 per cent. But it ended up as 23.5 per cent as of date and that means it is a drop of approximately 45 per cent. Therefore, revenue growth went down 77 per cent and margin growth went down 45 per cent during the period 31st March 2011 to 31st March 2013. These are matters of great concern for us,” he had said.

 
 
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