Jan 17, 2025 11:40 AM IST
Infosys shares dropped nearly 6% despite beating Q3 estimates, raising concerns about earnings quality
Shares of India’s No.2 IT company Infosys fell nearly 6% on Friday despite beating third-quarter result estimates, as analysts raised concerns about the quality of earnings.
Infosys dragged the IT sector down by 2.6% on the day, with eight of the 10 constituents trading in the red. The stock was on track for its worst day in nearly one-and-a-half years.
The company’s revenue growth was driven by a higher component of “third-party items” in its deal pipeline, “which drove concerns around the quality of the beat and raise”, Morgan Stanley analysts said in a note.
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“Given that the commentary on small deals pipeline is not showing any meaningful signs of inflection, we now assume the (industry-wide) recovery to be more gradual than before,” the analysts said.
Infosys fell 5.8% in Mumbai on Friday, following a near 6% drop overnight in its U.S.-listed shares.
(Reporting by Indranil Sarkar, Manvi Pant and Anuran Sadhu in Bengaluru; Editing by Mrigank Dhaniwala)
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