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India’s No. 2 IT services provider, Infosys shares fell as much as 4.5% on Friday following a reduction to the upper end of the business's yearly revenue projection stoked more concerns about a potential delay in the sector's demand recovery.
Although the shares of the Bengaluru-based company pared some of its losses to trade down 3%, it continued to drag on the Nifty IT index (.NIFTY IT), which fell 0.7%, compounding the severe 1.6% decline from the previous session.
According to multiple analysts, the IT company's decision to lower its projection for the upcoming quarter is representative of the short-term difficulties facing the $245 billion industry, as customers reduce discretionary spending following a pandemic surge. They don't think there will be a need for IT service providers in the near future.
To this Head of Research at Profitmart Securities, Avinnash Gorakshakar commented "Conversion of existing orders into revenue is a problem for all IT companies since clients are delaying the execution of these orders,"
Infosys stated on Thursday that, after previously estimating 1%–3.5%, it now forecasts full-year revenue growth at 1%–2.5%, excluding foreign exchange volatility.
Even the second quarter growth of 62.95 billion rupees also missed the expectations and was valued at 62.12 billion rupees.
After falling 1.2% at the beginning of the session, HCLTech (HCLT.NS) turned around and was trading 2.8% higher.
While sales, at 266.72 billion rupees, fell short of analysts' expectations of 268.14 billion rupees, HCLT's profit increased by 9.8% and just outperformed projections of 37.12 billion rupees.
"U.S. and Europe are still not in a healthy shape, new order wins and their execution is not expected in the 6-8 months."
William Blair, an analyst in U.S Based Investing Banking Services said, "Infosys continues to grapple with unplanned ramp-downs and longer sales cycles for large deals. We expect this environment to continue throughout fiscal 2024,"
Also, Read, Accenture's 2023 Salary Freeze in India
